The Kroger Company
Business Dictionary defines capital equipment as valuable items other than real estate or software that is used to make a product, market a product, or provide a service (2015). The Kroger Company assigns all new equipment purchases for its stores a useful life ranging from three to nine years (Wikinvest, 2012). The Kroger Company makes the determination to purchase new capital equipment based on the useful life assigned to previous capital equipment purchases. This means that if a factory machine is purchased and was assigned a useful life rating of five years that once the machine begins to approach end-of-life status five year later that the Kroger Company will begin to look at replacing the piece of equipment. …show more content…
If Kroger decides to develop a new product it will do an extensive cost analysis to determine the exact cost it would incur if it manufactured the product on its own. After a cost analysis is completed and Kroger determines its own manufacturing costs it can reach out to its supplier to determine if any of them can produce the product at a lower price point. For example, Kroger might be able to produce a product for $1.50 per unit with the intent of selling it in its stores for $2.00 per unit resulting in a $.50 per unit profit. Furthermore, Kroger might receive news that one of its suppliers can produce the product at a reduced price of $1.00 per unit so Kroger could still sell the product for $2.00 per unit therefore doubling its per unit profit by contracting with one of its …show more content…
400). Litigation can be extremely expensive and even though Kroger employs an entire legal department filled with company attorneys it is still better to keep things out of the court system if at all possible. When contract issues arise, the first approach usually involves negotiation to see if both parties’ can come to some sort of agreement on their own. The problem with negotiating a contract or legal dispute is that negotiation only involves the impacted parties and can sometimes fail. If negotiations fail, it might be in both parties best interest to bring in a third party mediator to help facilitate a dialogue between both parties and see if a mutually beneficial agreement can be
Business Dictionary defines capital equipment as valuable items other than real estate or software that is used to make a product, market a product, or provide a service (2015). The Kroger Company assigns all new equipment purchases for its stores a useful life ranging from three to nine years (Wikinvest, 2012). The Kroger Company makes the determination to purchase new capital equipment based on the useful life assigned to previous capital equipment purchases. This means that if a factory machine is purchased and was assigned a useful life rating of five years that once the machine begins to approach end-of-life status five year later that the Kroger Company will begin to look at replacing the piece of equipment. …show more content…
If Kroger decides to develop a new product it will do an extensive cost analysis to determine the exact cost it would incur if it manufactured the product on its own. After a cost analysis is completed and Kroger determines its own manufacturing costs it can reach out to its supplier to determine if any of them can produce the product at a lower price point. For example, Kroger might be able to produce a product for $1.50 per unit with the intent of selling it in its stores for $2.00 per unit resulting in a $.50 per unit profit. Furthermore, Kroger might receive news that one of its suppliers can produce the product at a reduced price of $1.00 per unit so Kroger could still sell the product for $2.00 per unit therefore doubling its per unit profit by contracting with one of its …show more content…
400). Litigation can be extremely expensive and even though Kroger employs an entire legal department filled with company attorneys it is still better to keep things out of the court system if at all possible. When contract issues arise, the first approach usually involves negotiation to see if both parties’ can come to some sort of agreement on their own. The problem with negotiating a contract or legal dispute is that negotiation only involves the impacted parties and can sometimes fail. If negotiations fail, it might be in both parties best interest to bring in a third party mediator to help facilitate a dialogue between both parties and see if a mutually beneficial agreement can be