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- Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 1) - Editor, 16 February 2008 - No Comments yet
- Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 2) - Editor, 16 February 2008 - No Comments yet
- Can a ‘Made in USA’ Financial Planning Strategy save Us from Recession? (Part 1) - Editor, 13 February 2008 - No Comments yet
- Can a ‘Made in USA’ Financial Planning Strategy save Us from Recession? (Part 2) - Editor, 13 February 2008 - No Comments yet
- Price Competition is the Principal Stock Value Destroyer (Part 1) - Editor, 12 February 2008 - No Comments yet
- Price Competition is the Principal Stock Value Destroyer (Part 2) - Editor, 12 February 2008 - No Comments yet
- Iroquois Confederacy Fundamentals for National Financial Planning (Part 1) - Editor, 10 February 2008 - No Comments yet
How do you justify a Gross Margin loss? Some elements of expense are beyond management control. A US product that uses semiconductors made in Europe has to cost more in 2008 than during the previous year. Who should bell the depreciated dollar cat? Unilever is a prominent example of a major corporation which has opened 2008 by confessing that sales have grown faster than profits. We have published an article earlier entitled “Price Competition is the Principal Stock Value Destroyer”. This piece is a sort of counter-point. We want to examine cases in which stock investor interests are best met through selling price increases.
Pricing Strategies That Appease Customers and Stock Investors Simultaneously (Part 1)
Price Points Protect Stocks from Market Losses
Pricing gets more involved the deeper you delve! There is no getting away from the process however, whether you buy and sell stocks, run a corporation, or work in a mom-and-pop store. Pricing affects all of us, whether customers, and makers of things, or providers of services. Incomplete information is a major stumbling block in pricing, regardless of where you may stand. Customers are never going to say that they would love price increases! The demand elasticity of price (market share loss to a price increase) is a subjective matter for the best executives.
Are we alone? Every country is free to do business here. India and some Middle-East countries are different. Profitable sectors are reserved for local control. US corporations ship jobs overseas. Does this make sense when we have an unemployment issue? It is easy to point fingers at Washington. However, no one is forced to buy foreign goods. Each one of us can take pride in ‘Made in USA’. Will that stimulate our economy?
Where Can Nationalism Take Financial Planning?
Search engines are ready and waiting if you have never heard of Mahatma Gandhi. He may appear frail and even comic in this century, but Nelson Mandela and Dr. Martin Luther King count amongst his followers. He fought foreign control over his land and people, through the financial planning weapon of self-reliance. That is pretty much the reverse of globalization. Gandhi asked his fellow country-people to give up clothes made in Great Britain, and to use their own farm inputs instead.
Even rapid business growth has its downsides. Small stock investors are the most affected stakeholders of this aspect of financial planning, because employees, suppliers, bankers, regulators, and private equity can abandon ship well in time. Plateaus of growth and cyclical downturns are ubiquitous to business. Many elements of cost mount inexorably out of management control, but stock investors may feel nothing until it is too late! It is a convention to present voluntary retirement schemes, reductions in head-count, and consolidation moves in cost-saving light, but why allow such structures to develop in the first place? It is glamorous at some junctures to expand market share at the cost of gross operating margins, but they are almost never in the interests of loyal stock investors.
EVA and Risk Perspectives of Operational Pricing Effects on Stocks
A professional manager who is committed to supporting a positive stock price trend has to consider economic value addition (EVA) and the significant risks of a business, when he or she takes diligent decisions regarding pricing decisions for products and services. Outcomes of such thinking may be entirely different from ones which are short-term or poorly-informed about the lasting impacts of direct and indirect price reductions. The telecommunications sector in emerging countries serves as an illustrative example of how stock investors can be affected by pricing decisions at the tactical level.
The Declaration of Independence could not have matched the applause that a 2008 State of the Union address or a campaign speech evokes! Is this a pointer to how the United States has evolved over the past two hundred years? Independent observation can be confusing because the lines between a healthy and a sick economy are so blurred! This article brainstorms on alternative financial planning options, using the distant past to chart course for an equally nebulous future. This piece follows from one we have published earlier entitled “Alternative Financial Planning to Revive a Flagging National Economy”.
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