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Explain the impact on profits of the following BT products, as shown in Exhibit 2: - 4K Ultra HD - BT Public payphones. - Scottish Highers Business Management - Question e - 2018
Question e
Explain the impact on profits of the following BT products, as shown in Exhibit 2: - 4K Ultra HD - BT Public payphones.
Worked Solution & Example Answer:Explain the impact on profits of the following BT products, as shown in Exhibit 2: - 4K Ultra HD - BT Public payphones. - Scottish Highers Business Management - Question e - 2018
Step 1
4K Ultra HD
Answer
The impact on profits for the 4K Ultra HD product can be explained in terms of its development stage. In this stage, the product may not yet be generating sales, leading to losses due to the incurred development costs. If the product is still in development without a market release, it is expected to make a loss, as no revenue is being generated to offset these costs.
Step 2
BT Public payphones
Answer
The BT Public payphones are experiencing a decline stage in their product life cycle. During this stage, demand for payphones has decreased significantly, resulting in falling sales and profits. As usage declines, operational and maintenance costs may still need to be covered, which can further exacerbate the losses. Therefore, the overall impact on profits for BT Public payphones is negative due to reduced demand and potentially higher costs relative to income.