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Sir,
1) June 15, when answering the outsource or not question I took fixed o/h on each product i.e. $4000 as a saving. Which made my buy-in cost for each product = Price less $4000. I did this because these o/h were directly attributable. However, I was incorrect in my approach. Kindly guide.2) Which model should the answer contain if it asks to evaluate “strategic position”?
3) When evaluating an or. internally I see there is financial performance and strength & weakness. However, your notes say value chain, BCG matrix, product life cycle as internal appraisal but these are the ones that are specifically asked for. So how to go about evaluating internally?
4) Is an introduction and/or conclusion necessary to a question?
Regards
1 $4,000 has been taken as a saving Eg Product A, current monthly costs (including 4,000) = 32,000, compared to buy-in costs of 23,000.
2 Strategic position = assess internal and external factors. So, just about every model could be used. Which you use (in whole or in part) depends on the information given, For example, if no information is there about market share you won’t get far with BCG. If there is no info about P, E, S, T, E or L you won’t make any headway with PESTEL.
3 External (O,T) = PESTEL and 5 Forces. Internal (S, W) = finance, product life cycle, resources, BCG etc.
4 Not usually. Only if asked to write a letter or a report or to give a recommendation. Otherwise don’t waste time.
for question 1 again, sir. I approached $4000 as a saving and subtracted that from the price of buy-in in order to calculate buy-in cost. I did this because these are directly attributable. However, my approach was wrong. I want to know why. Because if Fixed O/H are directly attributable to a product so can’t they be saved as expenses if the process is outsourced/terminated?
Regards
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