【正文】 lt in x 80, or $200 in sales. At a profit margin of fifteen percent, these sales will return a total profit of $30. The $30 profit is not sufficient to cover the printing and mailing costs of $32. Therefore, the client should reject the printing arrangement at 32 cents per copy.CHEMICAL SWEETENER MANUFACTURERYour client manufactures a chemical sweetener used in beverages and other food products. The chemical will e off patent in one year. You have been asked to predict what might happen to the profitability of this product when the product es off patent.Information to be divulged gradually:This is the only product of its kind, in terms of taste and safety (lack of harmful health effects) as proven in lab tests. The brand name of the product has slowly bee a mon household word.The largest two customers (75% of your sales) are two worldwide beverage panies. The panies feature the brand name of your client’s chemical on their product, and consider it a sign of quality. In addition, the cost of the chemical sweetener represents % of their total costs.The costs to manufacture the product are extremely low (about 20% of the price of the product). Currently, the margins on this chemical are almost 40%.Solution:This is a classic customer analysis problem. While most products that e off patent quickly drop in price (. pharmaceuticals), this product will be able to retain some of its premium due to the strong brand name. Because the major two customers feature the chemical name on their product, and because the chemical represents such a small portion of their total costs, they can be expected to be willing to continue to pay the premium into the future. Therefore, the outlook for the product is good even after the patent expires.24 / 55TELECOMMUNICATIONS DIVERSIFICATIONA Baby Bell pany is interested in diversifying into other areas besides telemunications. They are considering entering the market for electronic home security systems. Would you remend that they do so?Suggested frameworks:Use an industry attractiveness framework, such as Porter’s Five Forces, to determine whether this is a business you want to be in, or at least to determine what kind of returns you can expect to achieve. then, use the value chain to look at where value is added in the home security business. finally, once you feel you understand the market, determine if the core petencies of the Baby Bell are likely to match the demands of the home security markets.Interviewer Notes:The pany is a holding pany. They have previously made unsuccessful forays into software and into real estate.The home security business is highly fragmented. The top five players in the industry generate less than 4% of the total industry revenues. This implies that the industry largely consists of small, regional panies.10% of all residences currently own an electronic security systems.This is some sense a razor and razor blade sort of business. The economics are:Item Retail Price Cost / MarginEquipment and Installation$500 $1,500 010% marginMonthly Service $20 / month $5 / monthWhat strengths / petencies of the Baby Bell pany are useful in this market? Consider: Installation expertise, operator services, transmission system (phone lines)It turns out that the “expensive home” segment of this market is saturated. Growth has been slow in recent years.Price sensitivity is unknown in “moderatepriced home” segment.The conclusion is that this business is a reasonably good fit for the pany, but that more market research needs to be done to assess the growth and profit potential of each segment of the market.25 / 55ALUMINUM CAN MANUFACTURERAn aluminum can manufacturer has discovered a way to improve its manufacturing process. As a result, its manufacturing cost has been reduced from $ to $ cents. How can the manufacturer best exploit this cost advantage?Suggested frameworks:Remember basic economics. The firm can either use a peration strategy or price skimming strategy. Consider the impact of either strategy on the pany and its petitors. Also, don’t fet to think about any substitutes for aluminum cans.Interviewer Notes:Clearly, the client should either drop price or reap additional profits.It turns out that the client is the leader in its market with a 40% share and supplies directly to major beverage manufacturers. The number two player in the market has about 30% of the market and the rest is shared by many small petitors.Aluminum cans have a lower priced substitute, steel cans, which have inferior printing and stamping characteristics. Steel cans are used by customers who do not want to pay the premium for aluminum cans.If the client drops prices, other petitors will have to follow since this is a modity market and not following would mean a quick demise. The lowering of prices might increase the client’s market share marginally, but some smaller petitors will have to start exiting the industry and larger petitors will have to start investing to discover the client’s cost advantage.At the same time, steel can users sill start switching to aluminum cans, thus hurting manufacturers in that market. The resulting growth in the aluminum can market will attract steel can manufacturers to enter it. Since some steel can manufacturers have deep pockets and a strong backing, these new entrants could pose a future threat to our client. In conclusion, it is best to retain prices and generate extra profits for now. The cost advantage may help another day during a price war.FILM PROCESSINGThe CEO of the largest domestic manufacturer of photo film want to enter the film developing business. He needs your advice on how to go about evaluation this idea. What would your approach be?Suggested frameworks:This is and industry entry question。 look at industry attractiveness with Porter