英語難民と英語貴族
2019.12.26
値決めは社長の仕事、これを英語で伝える！
さて昨日の内容の英語版です。
Pricing is one of the most important responsibilities of top management
In Kyocera philosophy, Mr. Inamori *set out a sort of Moses’ ten commandments, which are actually composed of twelve mottos. The principle six is “ Pricing is one of the most important responsibilities of top management”. This article explains what this principle means and how we can interpret this motto in our day to day business.
Q: What does this motto imply?
A: Mr. Inamori said pricing is the key to generate revenue streams, however, he pointed out that some top management looks comfortable in leaving such an important responsibility to senior management. Mr. Inamori said, pricing, regardless of the product size and quantities, has always to be under the responsibility of top management. In other words, the pricing has strictly to be conducted by top management himself/herself.
Q: However, in the day-to day business, the sector manager, or department manager is responsible for the profit and loss of the sector/department. Would that be the case where the sectorial manger determines the price?
A: Under Mr. Inamori’s argument, the pricing has strictly been conducted by TOP management. This is the key of Mr. Inamori’s business theory. As mentioned above, taking into account the business motto number five, the ultimate mission of the company is generating the highest revenue and maintaining the minimum expense. Therefore, pricing should directly impact on the financial result, thus he reiterates that pricing has to be directly conducted by the top management.
Q: What are the key in pricing, for the top management to conduct the right pricing?
A: First, identifying the value of the product or service, that you are about to promote. Secondary, identifying the proper margin thoroughly analyzing your cost structure. Thirdly, anticipate the possible sales volumes as precise as possible. Fourthly, by simulating and analyzing, identify the balance of the price and the volume to maximize the figure of the price multiplied by the volume. Fifthly, double check whether the price you delivered is the highest point in which your targeted customer is willing to pay.
Q: What is the challenge for us to conduct this process demonstrated by Mr. Inamori?
A: Forgetting about all the prejudice and so-called market practice that you believe as the common sense. The poor analysis of the pricing is the cost-approach. Some leaders tend to establish the price based on the cost, how much investment/ expense has been spent to create that product or service. This is highly likely to end up poor pricing model. They consider that the cost should be a part of the price and can not be reduced. According to Mr. Inamori, the price is decided by the customer/ client. This is the business to design the product/ service to be profitable under the given price. Do not get caught by the price prevailing in your industry. Do not stick with the cost structure that you have believed in your life so far.
Q: So overall, what are the messages from this motto? A: Pricing is the lifeline for your business to be profitable. Therefore, top management should commit themselves to deliver the best pricing, taking into account the pricing guidelines as Mr. Inamori demonstrated.
