The question is can you propose a better value chain configuration than the one currently in place given all the other factors at play?
I wish I would, get the Apple CEO position, then take the opportunity and shut it down. Did I mention I hate them?
Which, of course, it is much worse than a 1000% profit margin. I don’t think profit margins can exceed 100%
The true product cost for a Foxconn manufactured Motorola RAZR phone (remember those) was about $100 USD to Motorola.
Motorola sold them to the phone carriers for $150 to $200 each depending on volume. The carriers subsidized the phones for about $200 selling them for zero to $100 each depending on length of phone contract.....back then they charged by the minute every time you used it.
It was the largest profit maker for any Motorola product EVER. The Nextel i1000 phone manufactured in Plantation Florida USA where I worked, also hit the $100 per phone profit margin, but its sales volume was nowhere near that of the RAZR.
Copying is an intelligent human approach in particular when it concerns survival. Building on already existing successful solutions. I know it leaves a bad taste when we see a direct copy of an industrial product but we have copyright systems and patent systems to handle that? For the Anglo-Saxon world among other, how many films and shows are close copies of other entertainment products with success? In the car industry, how many makes had to copy ideas from other makes in order to gain reliability?
Yes, today there is much copying in a fierce market but there has always been.
You must be joking, aren't you?
I got a price for a Chinese speaker $US 100 the cost of DHL was $US 220.00 from China to Perth West Australia. I don't think that is cheap. I ended up ,using an agent to send by surface
Maybe Trump should instead of giving trillions to Trillion-airs should try reducing the terrible poverty in the USA. The USA needs to up its game.
Australia economy is dependent on selling Iron ore and coal to China.
Maybe Trump should instead of giving trillions to Trillion-airs should try reducing the terrible poverty in the USA. The USA needs to up its game.
Australia economy is dependent on selling Iron ore and coal to China.
syn08 - not to be a pedant, but while markups over final production costs can be whatever percentage you think the market can bear, I don’t think profit margins can exceed 100%
You'd be surprised at some of the actual markups that are possible.
About 20 years ago I worked in a large retail electronics store as the weekend manager. One of the privileges on the computer system was being able to see the buy/sell prices so that I could negotiate 'discounts'.
There was a particular 5.1 surround sound system that I remember we were selling for $500. The buy in price for that one was $6/unit. So $494 markup minus overheads such as staffing and retail premises, you can guess it was a pretty good earner when all 200 units were sold, and that was at just our outlet.
The true product cost for a Foxconn manufactured Motorola RAZR phone (remember those) was about $100 USD to Motorola.
I miss my RAZR
avtech23 - having been involved in both the retail, wholesale /distribution and manufacturing trades for the best part of my 50yr business career, markups in the many hundreds of percent or even higher between production and final sale don't surprise me at all, but my point was that profit margins simply can't be more than 100%. Granted that's a confusion to which many folks fall victim, but in the context of syn08's certaintude (think of that as similar to Colbertian "truthiness") bears clarification.
Oswald Spengler, please do not infer that I subscribe to his sometimes extreme beliefs the theory of cyclical history is an interesting thing to think about.
I warned you.
http://fatuma.net/text/Spengler_Man-Technics.pdf
I got as far as ‘machine technik’ and was completely lost after that . . .
I wish I would, get the Apple CEO position, then take the opportunity and shut it down. Did I mention I hate them?
Difficult customer, but everyone loves the volumes.
Many motorcyclists don't see US motorcycles as real motorcycles! (I have one Japanese and one Italian)I know many in the US do not see Japanese motorcycles as real motorcycles but that aside.
5.1 surround sound system that I remember we were selling for $500. The buy in price for that one was $6/unit.
Nobody can make a usable 5.1 HT system for $6, so that had to be an unusual case. There are some exceptions, but it is usually a case of "dumping" or an overstock or outdated model being liquidated.
I can think of a product line where the company owns a 90% share of the market in the US and better than 50% worldwide, and the ASP is about 10X the rolled product cost. It isn't made in China, but isn't made in the US either. It's been in production since the 60's in different forms, and still is, so I can't get much deeper into the details. A huge sales and engineering staff is required to support it all though.
Why it doesn't matter if a Harley-Davidson is "Made in America" - CBS NewsMany motorcyclists don't see US motorcycles as real motorcycles! (I have one Japanese and one Italian)
Harleys sold in the U.S. are indeed assembled in one of four plants located in Wisconsin, Missouri and Pennsylvania. But the brakes and clutch are imported from Italy, the engine pistons are made in Austria, the bike suspension comes from Japan, and other electronic components originate in Mexico and China.
Nobody can make a usable 5.1 HT system for $6, so that had to be an unusual case. There are some exceptions, but it is usually a case of "dumping" or an overstock or outdated model being liquidated.
The product line could quite possibly have been acquired through a liquidation but huge retail markups were common particularly for the high-bling items such as CD mixing desks, laser light shows etc.
And it wasn't a particularly good system - blow mould plastic satellite speakers with the cheapest, nastiest speaker (although I still have some as my workshop sacrificial speakers).
But the brakes and clutch are imported from Italy, the engine pistons are made in Austria, the bike suspension comes from Japan, and other electronic components originate in Mexico and China.
Over this side of the world, certain items that claim to be 'product of australia' now start to carry a label to denote the proportion of imported ingredients versus nationally sourced.
Just today the wife pointed out a box of dumplings that (in big bold type) are 'proudly Australian owned, family made, traditional Australian recipe' etc..and in tiny writing on the back: Product of Vietnam
The dynamics of the global economy and the cycling of leading economies in it through the centuries is a complex game. Prior to the last half century or so the historical basis of dominant economy succession was usually catalyzed by a major power war. Now that those are (hopefully) off the table since Oppenheimer and Teller raised the stakes, we are in unexplored territory. A key element for winning the prize is a large and hungry workforce. The reality is that with success the hunger eventually subsides. It's tough to stay on top forever!
Oh and profit margins are in no way limited to 100%...a buddy recently bought a bottle of Pappy Van Winkle 15 year for $800. The cost of production was somewhere under $50. ($800-$50)/$50 is about 1500%. Of course that margin was taken in several bites.
Oh and profit margins are in no way limited to 100%...a buddy recently bought a bottle of Pappy Van Winkle 15 year for $800. The cost of production was somewhere under $50. ($800-$50)/$50 is about 1500%. Of course that margin was taken in several bites.
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