Which of the following types of firms do you expect to have high or low sales margins? Why?
a) Supermarket -
b) Pharmaceutical Company
c) Jewelry Retailer
d) Steel Company
a) Supermarket - It is high volume and low margin business because it is highly competitive in nature.
b) Pharma - It is a high margin business because it is not easy to get research and create new medicines. The firm has patents for long period which help them sell medicines at higher prices.
c) Jewelry - It is also a high margin business because it requires high amount of inventory to carry on an ongoing basis, which lead to higher cost. In order to recover those costs, they sell products at higher margin.
d) Steel - It is a global commodity and the margins are low because the prices are set in global markets depending on the demand/supply scenario.
Which of the following types of firms do you expect to have high or low sales...