Introduction

The organization’s motive is to create a product that suits its targeted audience. customers tend to demand certain products per their needs.

An organization with a plan to survive and earn wants its product to meet the customer requirements.

Customer demand shows no pattern as it changes with certain factors like seasonality, taste and preferences, price of substitute goods, and many more.

Customers want that extra value addition in a product with the primary usage. Those features with the primary can prove to be the deciding factor to purchase that product. Companies use additional features as a tool to fulfill the different requirements of the customers.

One of the prominent factors for customers’ demand is price.

Price and demand are inversely related to each other.

The more the price is, is less likely it is that a large audience will buy the product. Companies should consider the price sensitivity e of their targeted audience before pricing their product.

Customers want that extra value addition in a product with the primary usage. Those features with the primary can prove to be the deciding factor to purchase that product. Companies use additional features as a tool to fulfill the different requirements of the customers.

Vertical Integration:

The organizations give the utmost significance to vertical integration while preparing the production process.

Vertical integration is the procedure of taking ownership of every step of the product, from production to distribution.

It helps the organization To have control over everything and not to rely on others.

For example, a mobile manufacturing company is producing every component of the mobile in their factory rather than purchasing the parts from different distributors and assembling them in the factory.

It helps the companies to take over the responsibility e of the quality of the product and may reduce the extra cost of purchasing the component from third-party sellers.

The degree of vertical integration is an industry-oriented activity.

Vertical integration suitable for one organization may not necessarily be apt for the other.

Organizations need to have a look at to which extent they can integrate their product line.

Competition is a significant threat to companies’ profitability.

A company dependent on a single or a few products can face consequences in the future. The acquisition is helpful to add a new stream of income to the companies’ portfolio by adding another product.

Many companies also aim at a new industry for future-proofing purposes.

The meaningful rendition of a product makes it able to compete in the market. Most customers set performance as the standard to buy a product. A well-performing product has additional attributes for various classifications. 

Term Cycle

The business should follow a set period with intervals for the inspection of profits and losses and the expenses incurred in the organization in that particular period.

It helps the business to analyze and compare the two periods, helping them to create strategies for the next term. Generally, April to March is considered an accounting period in most countries.

For example: If a business owner prepares books of accounts for his business from the last few years, he can analyze the profits & losses, and expenses to look at the scope of correction.

Flexibility:

Flexibility plays a significant role in providing the best possible product to their customers.

Flexibility helps to cater to the audience for their satisfaction.

It helps the organization to increase its market share to earn profits and future-proof its business.

Flexibility could be mainly of two types:

Production-Based Flexibility:

Production-Based flexibility is the process of shifting the production of goods from one product to another.

It can be helpful for the business to produce different products in small batches.

For Example, A bakery business catering to different products like cakes, biscuits, donuts, and related products needs certain flexibility.

Their bakery can get the demand for different products from different customers even within a day.

Volume-Based Flexibility:

Volume-Based flexibility states that an organization must know how to increase and decrease its volume of production as per the market condition.

It is not cost-effective to produce a higher volume of products, whose demand fluctuates with time. Organizations having these kinds of products need to have their resources flexible.