Corporation is a small information systems consulting firm that specializes in helping companies implement sales management software.
Question:
Corporation is a small information systems consulting firm that specializes in helping companies implement sales management software. The market for Sunway's products is very competitive. Tocompete, Sunway must deliver quality service at a low cost. Sunway bills clients in terms of units of workperformed, which depends on the size and complexity of the sales management system. Sunway
presents the following data for the years
2018 and 2019.
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Required
Calculate how much of the change in operating income between
2018
and
2019
is due to industrymarket-size factors, costleadership, and product differentiation. How successful has
Sunway
been in implementing itsstrategy?
Begin by selecting the formula you will use.Then, enter the amounts and calculate the change in operating income due to industrymarket-size factors. Determine whether the amount has a favourable effect on operating income or unfavourable effect. (Hold all decimals in interim calculations. Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)
Change in operating income
x (
/
) =
due to industry market size
x (
/
) =
Before calculating the change in operating income due to productdifferentiation, you must calculate the growth in market share due to product differentiation. Begin by selecting the formula you will use.Then, enter the amounts and calculate the growth in market share due to product differentiation. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)
Change in operating income
% x
x
=
due to a decline in selling price
% x
x
=
Now, calculate the change in operating income due to product differentiation. Label each component as to whether the amount has a favourable effect or an unfavourable effect on operating income. (Label each component as favourable"F" or unfavourable"U".)
Growth in market share due to product differentiation
Change in operating income due to product differentiation
Before calculating the change in operating income due to costleadership, you must calculate the growth in market share due to productivity improvement and the strategic decision to reduce the selling price. Begin by selecting the formula you will use.Then, enter the amounts and calculate the growth in market share due to the reduction in the selling price. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Hold all decimals in interim calculations. Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)
Growth in market share
x (
/
) =
due to reduction in selling price
x (
/
) =
Now, determine the change in operating income due to cost leadership. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Label each component as favourable"F" or unfavourable"U".)
Change in operating income due to cost leadership
How successful has
Sunway
been in implementing itsstrategy?
Sunway
has been
has not been
successful in implementing its cost leadership strategy.
Sunway
was unable to pass along increases in labourcosts, due to the decrease in selling price of
$nothing.
However,
Sunway
was able to take advantage of
productivity
sales volume
total revenue
gains to reduceprice, gain marketshare, and increase operating income.
Expert Answer:
