Awesome Avocados Case

500 Words2 Pages
Memorandum To: New Consultants From: Mariana Johnson, President & CEO Subject: Competitors in the market! In the midst of trying to secure the Awesome Avocado consulting account, the company has unexpectedly encountered some problems. When I wrote you last, Awesome Avocados was feeling the amazing effects of soaring profits. The company was in the midst of expanding production of its low-calorie avocado and its future was looking great. Unfortunately, things have taken a turn for the worse. More competitors have entered the market: these other companies have noticed Awesome Avocado’s profits and have begun producing and selling avocados. Due to this competition, even though sales have remained strong, Awesome Avocados has seen its profits fall. The attached table provides all the data you need to see that the company’s profits have dropped to nothing, since it could have made as much had it kept the money in the bank instead of using it to get into growing avocados.…show more content…
That nasty bug that eats the leaves of the avocado tree—the persea mite—is starting to destroy its trees in much the same way the boll weevil worked its way through cotton crops in the South. The CEO is now questioning the fate of the company. She argues that since other companies have the same price, and similar sales figures, on present trends that Awesome Avocados will be forced out of business by too many producers in the market. She believes that the declining profits is evidence that the business may fold, commenting that in highly competitive markets (such as this one has turned out to be), competition eliminates “economic profit”; meaning that (like Awesome Avocado) firms in the avocado industry are now barely making enough profit to cover their cost of

    More about Awesome Avocados Case

      Open Document