Gucci and Prada Essay Example | Topics and Well Written Essays - 1000 words

Gucci and Prada - Essay Example In this market price directly represent the quality of a product. There is need to outshine the competing firms by introducing goods that unique and fits the customer’s requirement. The two firms utilize the approach in an effort to maintain their profit margin while venturing into new markets. The two rival firms focus on unique products to attract customers. Gucci for instance introduced customized bracelets and handbags to a number of its Asian market. This was a counter move by the firm to emulate Prada who offer the same service across its wider market. The move by Gucci was aimed at attracting more customers form the Asian market to compensate the European market widely dominated by Prada. The unique service to the Asian market is aimed at increasing revenue by widening its market size (Passariello, 2015). The customized products are far much expensive compared to an ordinary good. Thus the luxury firms utilize the price factor to emphasize on quality. The two firms attract the high end market by unique and expensive goods in the market. The firms depend on loyalty and of customers and new components in market to promote their goods. This strategic plan allows the firm to directly connect to its clients and offer services based on the customer’s request. The two firms the high end market by offering services and goods with unique characteristics. Their ventures across the world target high income earners and celebrities across the world. This means that they offer a wider range of products to the same market group. The aim of the two firms is to create a loyal client base and satisfies their needs while at the same time increase the company’s revenue collection. Accessories and clothing from the two firms aim outshining each other across the world (Passariello, 2015). The high end market targeted by the firms’ bases their preference on quality and uniqueness. Gucci enjoys a

Financial Management Principles Essay Example | Topics and Well Written Essays - 750 words - 1

Financial Management Principles - Essay Example There a different capital budgeting valuation method that can be used to calculate how profitable a project will be. Four of these methods are payback period, net present value, internal rate of return and modified internal rate of return. The five basic steps on a capital budgeting model are: The Chief Financial Officer of Strident Marks wants to determine the viability of a project he wants to pursue. He applied the four capital budgeting valuation methods to establish financial metrics to arrive a decision. Exhibit A shows the mathematical calculations he performed to arrive at the results. The data he had from the project was an initial investment of $10,000. The project would generate $7500 each year for three consecutive years. The project’s discount rate was 10%. The revenue projections made the assumption that revenue inflows would be generated at the beginning of the year. The payback period analysis concluded that the return of original investment can be achieved in 1.33 years. The payback method is a simplistic method which only calculates the amount of years it takes to recover the original value of cash or assets invested in the project. If two or more projects are compared the project with the lowest time to recover the initial investment would be chosen. A major drawback of this method is that it does not take into consideration time value of money. The net present value (NPV) method application resulted in a value of $8651. This value is a good sign since the general rule to follow is that only projects whose NPV results in a positive total can be accepted. When comparing various projects a manager chooses the one with the highest NPV total. A firm that undertakes a project with a positive NPV improves the position of the stockholders because the project will increase the value of the company (Besley & Brigham). The internal rate