Max Whitley, Manager of Whitley Construction, Builds New Homes in a Booming

question 8

Essay

Max Whitley, manager of Whitley Construction, builds new homes in a booming community in the Midwest. Although sales have slowed because of a national recession, it now looks as if the recession is about to end. Max wants to be ready with material, labor, and foremen to meet the demand for housing. Last year, Max built and sold 40 starter homes which is the most popular model. Max thinks that his sales will increase to 50 units over the current year. The going market price for this model (which Max and his numerous competitors have charged) has been $275,000. In addition, Whitley Construction's marginal cost of building this model averages $245,000.
(a) Based on these facts, recommend a course of action for Max.
(b) Suppose that the economic boom raises the cost of labor and raw materials, so that the additional cost of a starter house rises to $265,000. What is Max's most profitable course of action? Explain.

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Definitions:

Salesperson

An individual who sells products or services to customers, often directly interacting with them to facilitate sales.

Correct Action

The implementation of a decision or strategy that is deemed appropriate or beneficial in a particular situation to achieve a desired outcome.

Boomerang Close

A sales technique where objections from the customer are turned into reasons why they should make the purchase.

Rephrased Objection

A reworded or reinterpreted objection or concern raised typically in a negotiation or discussion.