Cost structure and revenue streams

Coststructure and revenue streams

Part1: Cost structure

Productionof non-carbonated drinks will offer a lifetime solution to thePepsiCo`s broad customer base through improved health, stability andefficiency. In that case, the firm purposes on adopting a value-basedpricing system that takes into consideration the value of theproducts offered as opposed to the cost-driven pricing master planthat concentrates on cutting down the cost incurred during theproduction of the goods and services (Osterwalder, 2013). Two majorcosts will be reflected in the company`s financial analysis whichincludes the fixed and the variable costs. The following expensescan be identified considering the key activities and resourcesidentified earlier. The fixed costs will include rent, salaries andother charges for obtaining machinery and furniture. These expensesare expected to remain relatively constant in the long run. Thevariable costs encompass overhead costs such as travel expenses,miscellaneous expenses and the advertising costs among others. Thesecosts are expected to reduce since the firm enjoys significanteconomies of scale and scope.

PartII: Revenue streams

Thecustomer`s willingness and ability to pay will be a significantfactor when identifying the sources of income. However, the companywill derive its revenue from two principal sources which includetransaction and recurring activities. Below is a list of the statedearnings.

  • Income from the sale of goods and services

  • Benefits obtained from fee for using the company’s services

  • Client subscription fees

  • Income from activities such as lending, leasing or renting of the company’s paraphernalia.

  • Licensing which includes charges for the use of intellectually protected production techniques and revenues from brokerage fees.

References

Osterwalder,A. (2013). BusinessModel Canvas Explained.Retrieved from June 26, 2013,http://www.youtube.com/watch?v=NnQrQD991hY