Explain Profit Maximisation Theory applying it in light of ASI and Allan Scheepers’ statement.

Description

You are the Business Planning Manager for All Supplies Incorporated (ASI). ASI is a leading consumer goods retailer (top 4) which has been in operation in the UK since 1910, currently controls 43% market share (the largest by market share) and has a huge network of stores across the UK and has huge retail shops and massive parking lots, fuel forecourts and in-shop restaurants. In addition to stocking known premium brands and ranges, ASI has links with manufacturers who produce some products exclusively for ASI. Those products are branded under ASI’s name and brand. ASI has been experiencing growth and profitability pressure over the past five years. The main shareholder Allan Scheepers holds 37% of the shares in ASI through inheritance – third generation. Considering ASI’s performance for the period ended 31 May 2022, Allan Scheepers expressed dissatisfaction with the profit decline. He was quoted saying, “… our primary objective is to maximise profits. We are the leading retailer with the largest retail shop network and nothing should stop us from maximizing profits. In any case, profit maximization was always my grandfather’s (the founder) primary objective when he was running the business. I was told he increased prices. I suggest we increase prices, especially our own brands since they are exclusive to us. Nothing must change and nothing can stop us…” Upon saying this, Allan Scheepers left the board room and the meeting ended as the atmosphere no longer supported sound business deliberations. Following Allan Scheepers’ statement, a meeting is scheduled for mid-July 2022 where further deliberations will be taken. As the Business Planning Manager, you are to prepare a business report considering Allan Scheepers’ statement. You are to write a report to ASI management. You are to: a. Explain Profit Maximisation Theory applying it in light of ASI and Allan Scheepers’ statement. Consider other issues of importance for ASI to improve. b. Apply appropriate economic theories (e.g demand, supply), business environment, business objectives, market structure and stakeholder issues, and discuss and evaluate various issues to be considered by management in decision making by ASI management. c. Conclude and produce recommendations for ASI’s management.