American Investment Management Services (AIMS) Case Study Help
Increase in Quote price over 100 transactions:
Considering all the activities; the highest number of activity is represented in online quotes. Due to this reason, the price of online quotes is increased by $0.2 over 100 transactionsin terms of turning unprofitable households to profitable ones. The revenue generation by the addition of $0.2 in each online quote over 100 transaction, was added to the revenues of the organization in order to obtain the total revenues for each customer profile. The total revenue amount of each customer profile was subtracted with costs, in orderto estimate the total profit to be generated by the organization. Thus, the addition of $0.2 in online quote resulted in profit generation in 3 categories i.e. Category 2 ($833545470), 3($46958760), and 6($6285653080).
Cost elimination:
Considering the total cost per unit in the year 1999 at the 25 percent excess capacity; the total cost per unit was estimated to be around $ 122.56. Based on 3,000,000 active households i.e. the idle capacity;the access capacity by 10 percent was about 300000; whereas by 25 percent; it was about 750000. Thus, the total activity with respect to 10 percent and 25 percent access capacity, were:3300000 and 3750000.The total cost estimated was around $404448000 and $459600000by 10 and 25 percent, respectively. Therefore, the cost saving by considering the 10 percent excess capacity in comparison to 25 percent, would result in the elimination of approximately $55152000 in future.
Recommendation:
Based on the evaluation of the two profitability enhancement programs; anincrease in online quote services by $0.2 over 100 transaction, is known to represent the substantial profitability. This is primarily due to the reason that an increase in the online quote price has significantly led the company towards having profitable growth in three customer profiles,with maximum number of households. Whereas, an increase in rep-assisted calls can also be considered because it represented profitable growth in the second category, with an average number of households. But, the overall evaluation of both the approaches tend to represent an increase in online quote price as they seem to be the most appropriate strategic recommendation to be implemented,to turn unprofitable households into profitable ones...................................
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