JET 2 TASK 2: Financial Analysis Western Governors University MBA Program
JET2 TASK 2 2 (A1) Budget Concerns
Investopedia defines Budget as an "estimation of the expenses and revenues over a specific future period of time. Budgets can be made for a group of people, family, person, country, business, government, organization or anything else that makes or spend money. The budget is a micro economic concept that shows the trade-offs made when one good is exchange for another." When looking at the year 9 budget for CB first thing that jumped out at me was the sales goal of 3510 is a 5247450. This is my first immediate concern considering that the storyline has clearly stated it is a down market due to the reductions in monies for sponsored professional riders from their sponsors. This is the main sources sales for the Carbonlite model from CB. The professional riders not having the same resources they had in year 7 when sales went to 4000 from the 3000 sold in year 6. which meant CB's revenue went from 4485000 in year 6 to 5980000 in year 7. This 33.3% jump was followed by 15% drop from 4000 units sold in year 7 to 3400 units sold in year 8. Again this drop was due to the cut in sponsorship money for the professional riders which ended up reflecting at the drop in revenue as well from year 7 to 8 of 5980000 to 4485000.
These facts do not seem to warrant an increase in sales from 3400 units to 3510 units and an Increased Revenue to 5247450. Even though the increased projection is based on a slight 3.2% increase, there has been no evidence to support any increase.
JET2 TASK 2 3 If perhaps there was a plan in place to increase sales like you possible marketing campaign for the Carbonlite then perhaps this increase would have made sense. However when looking at the budget it shows projected advertising budget to be at 28412, which is still at the same two percent mark that has been in place the past three years. Which confirms that no special plans are in place to make a push to help promote the Carbonlite to increase its sales.
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My second concern was brought about while looking for the reasons to support the increased sales. Research and Development (RD); To refer to the definition of R&D; it states "to investigate activities that a business chooses to conduct with the intention of making a discovery that can either lead to the development of new products, or improvements of existing ones.
JET2 TASK 2 6 R&D is one of the means that businesses can experience future growth through the development of new products or processes to improve and expand their existing operations." When referencing the definition of R&D and the storyline where it states that CB's R&D department license is their products and make some improvements were necessary to lighten their components. with care taken to ensure reliability and durability are maintained.