To: The Business Owner, Anne Smith Dance concerts
From: Manager, XYZ consultants
Date: February 22, 2017
Subject: Final Report on business review of Anne Smith Dance Concerts
Following signing of contracts between Anne Smith Dance Concerts and XYZ consultants, our firm began the work of reviewing your business structure. This was done with the aim of us gathering information on how the business is performing to enable us advice on how to increase your revenues by $150,000. In this report you will find information on what we found and the recommendations for your consideration.
From the current books that we reviewed the business is currently making profits of $ 154,750. It is however important to note that this is not evenly distributed among the four concerts offered by the company. One concert “Christmas Spectacular” contributes 193% of the profits while Jazz and Tap dance produce -99% of the profits.
When a business is faced with a situation where they want to increase sales they have two options. It can either reduce costs or increase revenue. In this case we suggest something different from the two. Considering that Jazz and Tap dance segment of the business is making a loss of (153,500) the business could consider stopping to offer this service all together as it is not profitable.
From the above analysis we hereby recommend to the management of Anne Smith Dance concerts that it needs to stop offering Tap and Dance concerts. This product ic consuming more than 50% of the company`s profits.
Thank you for your cooperation!
Multi-product even analysis
Businesses carry out certain types of analysis in order to understand their operations, profits/losses and costs. A business can either have one or many products or services. A business with many products and services needs to carry out product even analysis to get to understand how each product is performing (Eckel & Neary, 2010). Businesses that have products that are not performing then have to make a decision on whether to stop offering them, market the product more, improve production or reduce production units.
Shortcomings of Multi-product even analysis
Despite its importance for business intelligence, multi-product even analysis comes with some shortfalls (Eckel & Neary, 2010). Multi-product even analysis compares products offered by the same company. Due to the secrecy in corporate data comparing products of different companies is a challenge. Comparing products within the same company is not sufficient. The comparison of products which target different customers, charge different prices and are also manufactured differently is not fair.
Demand and resources constraints
Businesses at times have to engage the services of consultants so as to carry out the analysis. These resources have to be well catered for and the management needs to see the importance of this exercise. A products demand is also not comparable with another which has different specifications is also difficult.
Multi-product even analysis is an important exercise for business intelligence. Despite its strategic importance it is faced with numerous shortfalls which include demand and resources constraints. Businesses need to find ways in which multi product analysis can be carried out across competing products offered in an industry.