A small company that sells hand-made wooden furniture in the U.S. has imported s
ID: 445762 • Letter: A
Question
A small company that sells hand-made wooden furniture in the U.S. has imported some of its stock from the Philippines for the past 10 years. The fees for shipping the furniture from the Philippines to the U.S. is regularly double to triple the cost of the furniture itself. It has decided to look into the possibility of setting up its own small shipping company to improve shipping service in a way that directly reduces its own costs and makes extra revenue by providing shipping to other companies.
What information will the company would need to make this decision? Is a marketing research project still warranted if the company has some familiarity with the Philippines from its past years of business and is reluctant to invest tens of thousands of dollars into research? Discuss the nature of risk, the degree to which some risks can be quantified while others are subjective, and the individual differences in evaluating which risks are “worth it”
Explanation / Answer
In order to make a decision whether to set up a shipping company or not several factors need to be taken into consideration such as the requirements of the potential markets, the potential customers and services expected by them. The company has a certain degree of familiarity with the Philippines from its past years of business. This knowledge involves important demographic features of the potential market which are crucial to identify the target market and a prerequisite to the marketing launch of a new product in this case the shipping service. Due to the already required information the company can avoid incurring the marketing research project report. Instead it can build on its existing information
There are several risks in setting up a shipping company which are as follows:
· Product risk which can be quantified as it is a controllable risk and the exact monetary cost can be estimated.
· Financial risk cannot be quantified as it not be possible to estimate it accurately in the monetary terms. If a person is able to articulate his business plans and growth plans successfully then only the investors can be given the confidence to invest more.
· Team risk also cannot be quantified as to be successful it is imperative to have a great team which again cannot be counted in monetary terms.