I do not know where to start with micro/macroeconomic analysis. The following is

Question

I do not know where to start with micro/macroeconomic analysis. The following is my assignment: Assume that you have just been hired as a financial consultant to a startup company that plans to introduce a new beverage to the soft drink market. Your company’s product is advertised as a healthier alternative to soda and other artificially flavored drinks. The all-natural sparkling beverage has only 25 calories, 5 grams of sugar, no chemicals or preservatives, and comes in four fruit flavors: orange, pineapple, apple and grape. Two years ago the product was introduced in Florida. A phenomenal growth in sales since its introduction demonstrates that the product and its marketing possess tremendous potential. Accordingly, the company wants to explore possibly expanding sales of the product to the rest of the U.S. market. Although the company has been highly profitable, the management group has little to no financial experience. Most decisions to date have been made on the basis of ‘does it feel right’ as opposed to rigorous, data based financial analysis. The company has no system of financial oversight and the managers of the company have a limited understanding of sound management accounting practices. You have been asked to provide the company with a general analysis of this proposed project. Your specific task is to produce a report discussing the following key aspects of this expansion project: •A microeconomic analysis of the current state of the soft drink market in the U.S. and how any recent developing trends may affect the demand for this product. •A macroeconomic analysis of the state of the U.S. economy and the impact this may have on the demand for this new product. •A list of key management accounting practices that the company must put in place to support their planned expansion. Each item you list must be fully explained to the management group so they understand how and why the practice is necessary to manage the growth that will come with expansion of the product to different states. Be sure to consider the fact that the company will need outside financing and may even consider the possibility of going public in order to sell its stock on an exchange. Based on the quality of your report, the management group will decide whether or not to hire you to then help them develop a full capital budgeting plan for this project. Because this is something you would like to do, mainly because capital budgeting consulting pays extremely well, you want to make sure your report is well written, organized, professional and convincing. Length: 6-8 pages not including title page and references

Explanation / Answer

Our product has only 25 calories, 5 grams of sugar, no chemicals or preservatives, and comes in four fruit flavors: orange, pineapple, apple and grape. This is one of the key reasons for success since in the recent time the consumers have become more conscious of their health risks resulting from the carbonated drinks. Due to this they are opting for beverages that are non carbonated and have a few calories. Carbonated drinks have faced severe criticism from all sectors of the society for the ill-effects of high sugar content, artificial sweeteners, and other harmful ingredients in their products. Further the World Health Organization suggests that sugar should account for only 5% of total energy intake per day. That’s around 25 grams of sugar per day for an adult of normal body mass index. Our product completely fits into this criteria and this is the simple reason that the product will see great applauds from the audience.

2. Macro economic analyses basically studies about the following three aspects:-

It basically studies the above mentioned factors to find out whether the product introduced in the market would be responding to the factors mentioned in an affirmative way.

The Bureau of Economic analysis releases the personal income and outlay the monthly report indicating the changes in the individuals personal income, savings and the expenditures. The growing trend of the population and the rise of the middle class are the key factors that would drive the non – alcoholic beverage companies. Further the teen demography is one of the essential groups for this industry and this has shown increasing trends in the country.

3. A list of key management accounting practices that the company must put in place to support their planned expansion.

Following items need to be studied here:-

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