Reference no: EM132648741

CONTROLLABILITY OF REVENUES AND DECISION HORIZONS.

The Black Coffeehouse currently has one downtown location. The shop offers a number of different types of coffees and espressos, brewed to the customer's order. Black also offers a limited selection of cakes and pastries.

Required:

Problem a: Classify each of the following decisions as to its horizon. Indicate whether the effect on revenue arises primarily from the decision's impact on the price of goods and services, the quantity of goods and services demanded, or both.

1. How much to spend on advertising in the local newspaper. Black is relatively new to the area and does not have the name recognition enjoyed by some of the other coffeehouses competing in the same market.

2. Offering a points program with 1 point for each dollar spent in the store. Customers can redeem 25 points for a beverage of their choice.

3. Increasing the variety in the types of coffees offered from four to eight. Management has noticed that about 10% of customers would not find their chosen flavor and would have to settle for their second (and occasionally third) choice.

4. Adding to product variety by offering goat milk and soymilk-based drinks.

5. Increasing the flow of customers by reconfiguring the counter layout. Currently, having as few as five customers in line can block the entrance and make the shop look full from the outside even though plenty of seating is available inside.

6. Opening a branch in a suburb renowned for housing many "single and affluent professionals".