Bang and Olufsen Economics Essay examples

2028 Words May 12th, 2013 9 Pages
Bang & Olufsen

Written Examination – Economics

Assignment 1

Question 1.1
As mentioned in the text, Bang & Olufsen A/S have to launch several new products. Give examples of fixed and variable costs by developing and selling a new product.

Fixed costs * R&D cost * Marketing cost to campaigns * Building up sales and organization

Variable cost * Production cost * Sales provision, discounts * Distribution directly related to the sales of products

Question 1.2
Analyze and assess by using the subject's concepts ‐ why 2009 was a challenging year for Bang & Olufsen A/S.

The global financial crisis started in 2007 and from 2008 it is called financial crisis. This is considered to be the
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* The global financial crisis in 2008 changed the demand of the market and people could not afford anymore to buy these kinds of luxury products. * Competitors set up cheaper prices and in this way, affordable prices to customers. * The development of products was delayed during past years and it resulted a dissatisfaction regarding the expectations of customers.

Question 2.2
Explain why the supply curve rises upward from left to right.

* Because of the lack of developments the products could not represent the quality and could not exceed the expectations of customers so a shortage has been started up and the supply curve assumed to rises upward.

Question 2.3
Explain the following event in a demand‐supply plot.
Bang & Olufsen has increased labor productivity significantly in recent years, as a result of successful application of new technology. * Successful application of new technology causes an increase in supply. * The demand curve will remain unchanged, but after a while, because of the increase in supply, the demand will decrease and therefore the price will decrease as well.

Question 2.4
Discuss what might be causing the demand changes. 1. Increase/Decrease in quantity Demand * Increase in price causes a decrease in quantity demand * Decrease in price causes an increase in quantity

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