Business Proposal Final for Thomas Money Service Essay

The menses financial place of doubting doubting doubting Thomas cash renovation Inc. needs attention to help rectify its existing goods and services to each overcome the challenges faced by the economy downturn. This intention will address those issues effecting the cabbageability of Thomas capital Service Inc. and strategize affective ways to overcome those obstacles to return to profitability. Thomas funds Service Inc. (TMS) has been in contrast since 1940 (University of Phoenix, 2012). The gild started out granting small loans for consumer needs and evolved into whirl business loans, business acquisition finance, and commercial real estate loans, (University of Phoenix, 2012). TMS expanded into equipment financing in 1946 under the subsidiary of Future Growth Inc. (FGI), (University of Phoenix, 2012). The venture in turn became very lucrative for TMS because of a huge occupy in reflection and forestry equipment after World War II (University of Phoenix, 2012). In 1951, FGI grease ones palmsd an equipment manufacturing company mental synthesis, selling, and financing their own building and forestry equipment and discontinued financing opposite equipment (University of Phoenix, 2012).For over 67 years it has been profitable and has stated in previous economic downturns that the company never had to lay off any of its workers, (University of Phoenix, 2012). However, in the current recession and after several natural disasters affecting forestry states, FGI profits declined termination year by 30%. Home sales also declined, constructions slowed and caused FGI to resume equipment and sell it at a discounted price. With the changing economic environment and profit loss Thomas gold go Inc. has requested recommendations to help step-up its receipts enhancement, determine its profit maximizing step, addition product differentiation, increment barriers to accession, and downplay cost of production. Market Structure and Elasticity of D emandThomas Money go Inc. operates in a monopolistic competition by offering products and services that can be differentiated and is very competitive with other sellers offering similar products for consumption. By creating an environment in which consumers looking to purchase equipment could receive financing and goods in a one stop buy at has positioned TMS as leader in the food grocery store shargon in the construction industry prior to the recession. Because in that respect are similar products available for consumers to commence instead of FGIs equipment, it has to differentiate its product and services as the go around to have by nonpricing competition.The price ductileity of make for Thomas Money Services Inc. from its original price of $1990.1 to its new price of $1732.0 shows the responsiveness of consumer to the bar leaseed of goods and services at its new demand of 182 million units from it its original demand of 123 million units shows that the PEoD is 3.70 r esulting in TMS being very elastic. Although Thomas Money Services Inc. has not been a price persuader but a price manufacturer distinguishing it has a one stop shop for consumers construction equipment. The market has changed resulting in consumer finding alternatives to TMS goods and services decreasing revenue over the last year. There are many domestic and international companies manufacturing construction and forestry equipment (University of Phoenix, 2012). Because TMS offers elastic goods and services it has to continue to monitor the market to understand the demand. Recommendation cast up RevenueIncreasing revenue is the objective for Thomas Money Services Inc. regardless of how the economy is doing. Because the market has declined in home sales, individual construction, and forestry equipment TMS should centralise its marketing on hospital and care for homes. According to University of Phoenix, not all sectors have been affected by the economic downturn hospital and nur sing homes nonoperational have a high demand for new building (2012). These sectors are potential areas to increase revenue for TMS. Another area is in the price of equipment. To continue success in the marketplace the elasticity of demand plays a vital role. Currently, FGI has repossessed equipment and selling each unit at $1,732. From the demand chart downstairs it will acquire revenue in the enumerate of $315,224 for the sale of 182 units. If FGI were to decrease the price to $1,634.3 per unit from the demand chartbelow the demand will increase to 350 units sold, resulting in $572,005 in revenue. This will increase revenue by $256,781 resulting in much profit to invest bandaging into the company. Over the past years the data for demand is in millions. instrument panel 1Price Demand1,990.1 1231,732.0 1821,634.3 3501,252.0 380732.1 400622.3 456Profit-Maximizing QuantityThe monopolistic competitor maximizes profit by producing the output at which marginal revenue equals margin al cost (McConnell, Brue, & Flynn, 2009). Marginal cost is the additional cost it would take to produce another unit of good or service. Marginal revenue is the additional revenue acquired from selling the additional unit. To reach profit-maximizing quantity Thomas Money Services will need to continue to increase output until its marginal revenue equals its marginal cost. Because TMS has been in business for more than 60 plus years it is currently operating in a long run curve where it earns a normal profit. Barriers to EntryUnfortunately, because Thomas Money Service Inc. operates in monopolistic competition there is relatively easy entry and exit into the market. When demand is high for construction and forestry equipment there will be surge of newer firms to enter the market because capital requirements are low. However, during this economic downturn many newer firms will exit because they will be unable to differentiate themselves from the longstanding stigmatization and reput ation that Thomas Money Services Inc. has had in the market. By making it more difficult to obey TMS goods and service will result in an increase barrier to entry for newer competitors. ProductDifferentiationIn recent years, Thomas Money Service Inc. has decreased it publicizing revenue to having a commercial in the A-one Bowl and a few other sporting events (University of Phoenix, 2012). In tell apart to increase its product differentiation it will need to increase advertisement revenue to claim consumers of product differences, thus increase product branding and consumer loyalty. Since TMS operates in a monopolistic competition it has to advertise heavily to inform consumers of the benefits of its goods and services, especially in nursing home and construction magazines. When consumers prefer a specific product then within limits they will pay more to satisfy their preferences, thus making the product more inelastic to changes in the price in the long run (McConnell et al., 2 009). Minimize Cost of productionWhile fixed costs have stay constant for dissimilar outputs of production for Thomas Money Services Inc. there are still ways to minimize cost. Installing proper equipment for processing and manufacturing the equipment and staying aware of the current technology will help in cutting cost. By TMS shop around for the best bargain in raw material and continually monitor variable cost to not exceed output of production. agree project to offset prices for material for future projects ConclusionIn conclusion, Thomas Money Service Inc. is a sound company that needs to place its strategy during this global recession to improve profits. This business proposal has intercommunicate some of those issues to help increase its revenue, maximize profits, minimize cost, and differentiate it from its competitors. These recommendations are only few ways to overcome the challenges faced by TMS. Thomas Money Services Inc. will need to continue to monitor the market and their effectiveness to adjust to the ever changing-market.ReferencesMcConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Economics Principles, problems, and policies (18th ed.). Boston, MA McGraw-Hill Irwin.University of Phoenix. (2012). Thomas Money Service Inc. Scenario Multimedia. Retrieved from University of Phoenix, ECO/561 website.