Selling beer at minus £6 a case

Controversy surrounds the World Cup promotions by some supermarkets, including Tesco and ASDA, to reduce the price of some of their range of beers to less than the amount of duty payable. The Licensed Victuallers Association are quick to point out that pubs and clubs cannot compete when the supermarkets could be losing £6 a case from this offer. The supermarkets can cross-subsidise the cost reductions with many other lines but the options for the licensed trade are much more limited.

This is a bold strategic move, but one which requires a real understanding of the competitive landscape, buying behaviours, and business costs. For a better understanding of the business issues here, have a look at business strategy, business simulations, and business costs. Then decide where you will drink your beer this summer.

The Cost of a Volcano

It is being reported that the affected Airlines have lost about £1.1 billion as a result of the travel chaos and plane free skies as a consequence of the unpronounceable Icelandic volcano. The head of the International Air Transport Association calculates that at the height of the disruption, airlines were losing £260 million a day. Mr Bisignani said that the final bill to the industry included costs of providing accommodation to stranded customers, feeding them and laying on other modes of transport, such as buses to either get people home, or nearer to home.

“We’ve seen a week without revenue but that has not stopped the costs,” he said.
So, how exactly do the costs impact a business? Just how long can a business survive without any income flowing in? These are just some of the questions we explore on our Understanding Business Costs course; follow the link to read more.