Title: Maximizing BankGlobal’s Value: A Case for Launching the New Advertising Campaign in the U.S. Market
Introduction:
As the manager in charge of global operations at BankGlobal, the decision to launch a new advertising campaign in the U.S. market carries significant weight. This essay aims to evaluate the financial impact of the campaign on BankGlobal’s U.S. operations and analyze whether launching the campaign will maximize the bank’s overall value.
Thesis statement:
Despite the potential loss in foreign operations, BankGlobal should launch the new advertising campaign in the U.S. market due to the substantial increase in total revenues and the overall positive impact on the bank’s value.
Analysis:
Pre-Advertising Campaign:
Before delving into the financial impact of the campaign, let us examine the financial figures provided for both pre-advertising and post-advertising campaigns.
Total revenues: $18,610,900
Variable costs: $7,710,930
Direct fixed costs: $1,500,000
Indirect fixed costs: $10,461,600
Post-Advertising Campaign:
After implementing the advertising campaign, the following financial figures were observed:
Total revenues: $31,980,200
Variable costs: $11,712,850
Direct fixed costs: $1,500,000
Indirect fixed costs: $10,461,600
Financial Impact and Evaluation:
a) Total Revenues:
The advertising campaign resulted in a significant increase in total revenues from $18,610,900 to $31,980,200. This represents an increase of approximately 72%. The boost in revenue clearly indicates that the campaign successfully attracts customers and generates substantial income for BankGlobal.
b) Variable Costs:
Although variable costs increased from $7,710,930 to $11,712,850, this can be attributed to the additional expenses incurred during the post-advertising campaign. It is important to note that these costs are offset by the significant increase in total revenues.
c) Direct and Indirect Fixed Costs:
Both direct and indirect fixed costs remained unchanged at $1,500,000 and $10,461,600, respectively. Thus, these costs do not significantly impact the decision to launch the campaign.
Maximizing BankGlobal’s Value:
Considering the aforementioned figures, it is evident that launching the new advertising campaign in the U.S. market will maximize BankGlobal’s value. The increased total revenues resulting from the campaign outweigh the additional variable costs incurred.
Furthermore, it is crucial to take into account the potential loss of $8 million in foreign operations. While this loss may seem substantial, it should be evaluated in relation to the overall impact on BankGlobal’s global operations.
Conclusion:
In conclusion, launching the new advertising campaign in the U.S. market will have a positive financial impact on BankGlobal’s value. The significant increase in total revenues outweighs the additional variable costs incurred during the post-advertising campaign. By focusing on maximizing BankGlobal’s overall value rather than solely considering potential losses in foreign operations, it becomes clear that launching this campaign is a prudent decision for the bank’s long-term success.
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