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“Today Shapes Tomorrow

 Published Every Monday    Volume  138 Special Edition August 3, 2009














































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Chapter 12 – Results of Price War – Signs of victory in week-10

Last week we discussed details of the ninth week.    For week-10, you kept the price to $0.50 per cup.  This week rumors were very strong that “Jack & Jill Lemonade” losing money, and it cannot survive at $0.50 per cup price.

Competition is a good thing!  Competition helped you to be on your toes and be creative in finding good business solutions on the way.  The competition among businesses is certainly good for consumers as they all got good quality lemonade at a lower price.  Did you know that American customers are the most demanding customers in the world?  You should take pride in the fact that you successfully survived the price war and competed for the toughest customers in the world.

So let us discuss how week-10 worked out?

SALES – You sold 100 lemonades this week.  Looks like rumors of “Jack & Jill Lemonade” going out of business has further helped your business as consumers prefer sustainability over uncertainty.  Your customer base has increased. It is very likely “Jack & Jill Lemonade” will role its tent and close business next week.

CUSTOMERS – Your customer base has increased and more of “Jack & Jill Lemonade” customers are coming to your stand.

PRODUCT AND SERVICES – You are still keeping the quality of lemonade good.

PRICE – You kept the price to $0.50 per cup and do not plan to increase, even if “Jack & Jill Lemonade” goes out of business, say next week.  Is this is a good idea?

STRATEGIC ANALYSIS (Home work for you) –

  • Looks like you survived the price war.  It is all but certain that “Jack & Jill Lemonade” will close.  You are the only lemonade stand in the neighborhood left.  Now you have to decide if you should raise your price to $0.75 or $1.00 per cup?

  • Can you keep up with the 100-120 cups a week work load and volume?  Will you need to hire more and how will it all work out for your profits? Is it worth the money to expand the business?

  • Your 12-week plan to run the lemonade stand is just two weeks away and you have to decide on what are you going to do with the profit and cash you have build?  How do you plan to pay your parents and friends who provided you with cash to start the business? How do you plan to exit the business when your school starts to open?

Keep up the good work!  This is how your Week-10 numbers look –

 


Learn more about…

What is Credit History?  Why is it important to have a good credit history? Volume 12.    

What is Economy, Business, Workers, Goods,  Services,  Stock, DOW, S&P500, and NASDAQ in Volume 16. 

Does it pay to study hard? Volume 17.    

What is Currency and Foreign Currency Exchange rate? Volume 14What is stronger or weaker currency? Volume 20. What does the dollar slide mean? Volume 32.


How does money grow in a bank? Volume 21. 

What is Fed Funds rate and Discount rate? Volume 22

What does the interest rate cut mean for you? What is APR? Volume 23. 

How to read stock information? Volume 25. 

What is “Black Monday”…Crash of 87”? Volume 31.

Who are CEO, CFO, Shareholders, and the Board of Directors? What is SOX? Volume 33


What does “$4.95 + Tax” means?  Volume 47.


What is a Recession?  What is a Depression? Volume 48.


What is Mergers & Acquisition (M&A)?  What is a Merger?  Volume 49.


What is ADR?  Volume 62.


What does buying back of shares means?  Volume 63.

Why is consumer confidence so important?  Volume 64.


 

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