Macc.docx

COMPANY PROFILE

Business Name: Corkstreet Tailoring Executive Tailor Business Owner: Jasel P. Cabilao Business Address: M. Calo Street, Butuan City Contact Number: 09272646153 Business Type: Tailoring Business Nature of Business: Manufacturing Established in 2014, Cork Street Tailoring Executive Tailor became a reality when Jasel P. Cabilao established the said business. Corkstreet Tailoring Executive Tailor is one of the leading tailoring shop in Butuan City. It manufactures school uniforms, professional uniforms, and other customized garments. It tailors uniforms, may it be for school, office, or for teams and custom made costumes and gowns. It also offers alterations of clothing. Corkstreet Tailoring envisions to provide quality products and services that exceeds the expectation of our esteemed customers. Its mission is to build a long term relationship with our customers and provide exceptional services and products to our clients.

MARKET STRUCTURE

ECONOMIC BACKGROUND OF THE PRODUCT Corkstreet Tailoring manufactures uniforms and provides alteration services for clothes. In this analysis, the products offered that are given focus are blouse and slacks, or the Type B uniform of Father Saturnino Urios University for female students. This Type B uniform is a substitute to the Type A uniform of FSUU which is comprised of a blouse and a skirt. It is up to the students which type of uniform they prefer. Price Elasticity of Demand Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price. Assuming that if the price of Type B uniform increases from Php 1000.00 to Php 1500.00 and the quantity demanded decreased from 300 to 240 sets of Type B uniform for a month the price elasticity of demand is 0.56. To determine the Price Elasticity of Demand, use the formula, 𝑄2 − 𝑄1 𝑥100 (𝑄2 + 𝑄1 )/2 𝑃𝑟𝑖𝑐𝑒 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝐷𝑒𝑚𝑎𝑛𝑑 = 𝑃2 − 𝑃1 𝑥100 (𝑃2 + 𝑃1 )/2 300 − 240 𝑥100 (300 + 240)/2 = 0.56 (𝑖𝑛𝑒𝑙𝑎𝑠𝑡𝑖𝑐) 1500 − 1000 𝑥100 (1500 + 1000)/2 The price elasticity of demand is less than 1 therefore it is inelastic. If the price changes by 1%, the quantity demanded will change by 0.56%. A change in price will result in a smaller percentage change in the quantity demanded.

Cross- price Elasticity of demand Cross-price elasticity of demand is the percentage change in the quantity of good A that is demanded as a result of a percentage change in the price of good B. A shift in the price of one good can shift the quantity demanded for another good. As stated previously, the Type B uniform (blouse and slacks) is a substitute to the Type A uniform (blouse and skirt) of FSUU for female students. Assuming that the price of a set of Type A uniform increased from Php 900.00 to Php 1,100.00, and the quantity demanded for Type B would increase from 240 to 300 sets, the cross-price of demand is 1.11. To determine the cross-price elasticity of demand, use the formula, 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑥 (𝑄 + 𝑄𝑥2 )/2 𝐶𝑟𝑜𝑠𝑠 − 𝑝𝑟𝑖𝑐𝑒 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 = 𝑥1 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑦 (𝑃𝑦1 + 𝑃𝑦2 )/2 60 300 + 240 2 𝐶𝑟𝑜𝑠𝑠 − 𝑝𝑟𝑖𝑐𝑒 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 = = 1.11 (𝑆𝑢𝑏𝑠𝑡𝑖𝑡𝑢𝑡𝑒) 200 1100 + 900 2 From the positive 1.11 cross-price elasticity of demand, it can therefore be deemed that Type A and Type B uniforms of FSUU for female students are substitutes of one another. If the price of Type A increases then there will be greater quantity demanded for Type B uniform. Income Elasticity of Demand Income elasticity of demand measures the responsiveness of demand for a particular good to changes in consumer income. It is the percentage change in quantity demanded divided by the percentage change in income. Assuming that there had been an increase in the income of customers from Php 25,000.00 to Php 30,000.00 a month and the quantity demanded for a Type B uniform increased from 240 to 300 sets the income elasticity of demand is 1.22.

To determine the Income Elasticity of Demand, use the formula, 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄 (𝑄2 + 𝑄1 )/2 𝐼𝑛𝑐𝑜𝑚𝑒 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝐷𝑒𝑚𝑎𝑛𝑑 = 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐼 (𝐼2 + 𝐼1 )/2 60 (300 − 240)/2 𝐼𝑛𝑐𝑜𝑚𝑒 𝐸𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝐷𝑒𝑚𝑎𝑛𝑑 = = 1.22 5000 (30,000 − 25,000)/2 From the positive income elasticity of demand of 1.22, it can be deemed that Type B uniform is a normal good. Therefore as income increases the demand for Type B uniform also increases.

PRICING METHOD Good pricing strategy helps businesses determine the price point at which they can maximize profits on sales of their products or services. When setting prices, a business owner needs to consider a wide range of factors including production and distribution costs, competitor offerings, positioning strategies, and the business’ target customer base. (Maguire, 2018) Usually for a tailoring business like Corkstreet Tailoring, it considers the price of its competitors as a base in determining the price of its offerings. Generally, the prices are more or less same as that of the competitor. The market-oriented pricing method used for this kind of businesses is the going-rate pricing method. (Nitisha, 2015) In order for Corkstreet Tailoring to cope up with their competitors, applying going-rate pricing method is the most appropriate. Shown in the table below are the price rates applied by Corkstreet Tailoring for each garment or set of Type A and B uniform for female students of Father Saturnino Urios University. TYPE A Blouse – Type A Skirt Set of Type A uniform

PRICE ₱450.00 ₱400.00 ₱900.00

TYPE B Blouse – Type B Slacks Set of Type B uniform

PRICE ₱450.00 ₱500.00 ₱1000.00

REFERENCES