Revenue, Cost Concepts, and Market Structure Proposal Paper

Revenue, Cost Concepts, and Market Structure Proposal Paper

Travis B. Taylor

University of Phoenix


Maria H. Ramjerdi

September 6, 2010

To:   Clear Hear, President and CEO
From:     Chief Economist Staff Analyst
Subject:   Clear Hear – Market Structure Proposal
The economic analysts here at Clear Water are very much aware of the current problem of operating the product line we have in-house and manufactured on-site at full capacity. In addition, the staff is aware as well of the of the customer relationship problems the company has with Big Box at this current time. Before presenting a proposal intended to resolve these issues we took into consideration the company runs two product lines in the factory. We took into consideration as well that this is a fast-moving manufacturing company that sets high values and standards for itself and its leadership. Our Business Development Specialist Kendra Sherman is meeting with the company’s production manager Lisa Norman to discuss an order she received for 100,000 cells phones identical to Clear Hear’s alpha model. Ms. Sherman has made it known that the order is intended to support a current order that our largest customer, Big Box, is making with a telephone service provider their customer. Therefore, this company will need to make some decisions. I am sure you are aware with any big deal, there are almost always stipulations. The company has been provided with a delivery date of 90 days by Big Box. Ms. Norman seems to be most interested by the fact she will be able to use the excess capacity of 70,000 units. However, we know that Ms. Norman’s bonus is based on keeping the factory running at full capacity. Profitability is the basis for the largest part of her bonus. Therefore, because Big Box is only willing to pay $15 per cell phone Ms. Norman should be concerned with...