Case analysis of Bayjo Ltd.
Comm101 Section103
Jinghui Huang
Student number 19263145

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10/19/2014

Recommendation #1
Bayjo Ltd should not accept the order of scooters from Merida Ltd but Bayjo Ltd should accept the order of bicycle from Giantco. Cooperate with other companies is a good way to gain credibility.
People tend to choose products from well-known brands since they perceive that these goods are reliable. If a company cooperates with another firm that has good reputation among customers, the company will gain more customers and expand its customers’ segment. As a result, sales increase and more profits are generated.

Recommendation #2
Bayjo Ltd needs to cut down the labor cost in Skateboards department and reduce the selling price.
Too much labor cost largely reduces the profit. Company that depends too much on labors may experience many problems such as wage dispute or strike. This can affect the operation severely. For
Skateboards, Bayjo Ltd need to buy up-to-date machines that can run automatically in producing skateboards since the old machine manually operated, and its maintenance cost is too large. As a result, the variable cost of Skateboards is so large that small amount of profits are generated. Also, reducing selling price is also a strategy to gain more customers and increase sales. Bayjo Ltd can have competitive advantages over its competitors from lower selling price.

Recommendation #3
Blakay should deal with company’s personnel issues. Employees are supposed to participate in working toward common goals. When employees commit to company and engage in operation, they care more, they are more productive, give better service, and even stay in their jobs longer. Thus, all these satisfy customers’ requirements, and customers buy more and refer more often, which drives sales and profits higher.

Recommendation # 1
In this situation, Gintco wants to cooperate with Bayjo Ltd in order to gain more benefits while
Merida Ltd just wants Bayjo Ltd to produce scooters for them. Considering the potential losses and gains from each order is essential for decisions.

*For Merida Ltd.
The price that Merida Ltd provides to Bayjo Ltd is $118, which is lower than Bayjo Ltd’s regular price.
The profit will be lower if we accept the order. Moreover, it is unwise to cooperate with Merida since it meets financial problems. Merida may not be able to pay for their orders, so this could be a high-risk transaction. Bayjo Ltd gets nothing if Merida experience bankruptcy.

*For Giantco
Selling price per unit

$195

Variable cost per unit

($208+$30+$55) X 50% = $146.5

Total profit for 1800units: ($195-$146.5) X 1800= $87300
From the calculation above, Bayjo Ltd can receive $87300 per year if it signs contract with Giantco.
Giantco is large well respected furniture, so the risk of not receiving money from it is relatively low.
It can also be assumed that Bayjo Ltd can receive a relatively fixed profit per year from Giantco.
And the contract is lasted for three years; Bayjo Ltd will build long-term relationship with Giantco.

In addition, Bayjo Ltd may also be able to expand the customer segment from this cooperation. The bicycles are sold for $220 per unit and the price is much lower than that of Bayjo Ltd’s regular bicycle
($840). The price becomes affordable for most of consumers, so it is obvious that this cooperation targets at mid-and low-end users and general use. Giantco has great reputation in the market and among customers. Bayjo Ltd can access to target market more easily if it cooperates with Gintco, increasing the chances to expose the bicycles to customers. Also, it would be more convenient for various customers to buy the bicycles. Bayjo Ltd can gain broader visibility from this cooperation as well as new customers in the long-run. This cooperation attracts more and more potential customers; it brings more sales to Bayjo Ltd, and thus increases the profit.

Recommendation # 2

Direct labor to Sales percentage =