Strategy - Strategic Management and Performance Systems

Black Eagle Pty Ltd makes premium range dog biscuits used to provide high level nutrition for dogs, which it introduced to the competitive premium dog food market in 2016. Premium dog foods cost 3 times more than the supermarket brands of dog foods. Black Eagle realises that it would be competing against well-known brands that have held a significant market share, based on their reputation, for many years. From the feedback received at trade fairs during 2017, Black Eagle has been generally regarded as an equal or better standard of quality than the other premium providers. However, the product was initially provided at a low introductory price to encourage customers and retailers to purchase Black Eagle's dog food. Black Eagle is now seeking to increase the price each year as the firm's reputation grows.

Black Eagle produces very few defective products and insists upon the highest quality materials from its suppliers. Conversion Costs in each year depend on production capacity defined in terms of units that can be produced, not the actual units produced. Selling and customer-service costs depend on the number of customers that Black Eagle can support, not the actual number of customers it serves.

See Table 1 below for information.