Pet Care (PC)
PC is a private limited company. It was set up by Iqbal six years ago. PC is a company that
specialises in providing a pet grooming service for dogs. PC also sells a variety of products
such as collars, toys and a range of dog food. This helps Iqbal to increase the revenue of PC.
PC has been successful and there are now six branches in neighbouring towns. Each branch
has a manager and several part-time employees. As PC has grown Iqbal has found it difficult
to manage the administration of the company. He relies heavily on paperwork. For example:
• purchase orders to suppliers and invoices to customers are handwritten
• he records by hand financial transactions for each branch in separate accounting books
. He is planning to purchase a computer and accounting software. This will help Iqbal to use
process innovation to improve the efficiency of PC.
Branch A has been causing problems for Iqbal. He is studying some key financial data from
the previous six months.
Table 1: Previous six months financial data for branch A
Iqbal uses mark-up to set prices for PC and he expects the gross profit margin to be at least
50% in each branch. Iqbal is concerned about the high levels of inventory and wastage at
branch A; for example, $1000 of dog food had to be thrown away in the last six months.
Tony is the manager of branch A. He explained to Iqbal in their last meeting that unemployment
is rising in the town. Tony also argued that consumers are spending less on non-essential
luxuries. Tony said that using cost-based pricing strategies, such as mark-up pricing, is
making the pet grooming services and products too expensive.