Question & Answer: Research CVP analysis and how it relates to a particular industry of your choice…..

Let us done a cost-volume-profit (CVP) analysis of online retailing industry in developing market like India,Brazil,Mexico, Indonesia etc.Due to revolution of information technology and communication technology in these countries,more people are using internet and the digital divide is bridging the gap.Thanks to the service like Google,Facebook etc,people are kepping themselve updated about the recent trend in their domestic market as well as international market.Online retailer like Walmart,ebay,Alibaba,Flipkart etc are venturing into the model and investing massive amount in their operation including supply-chain management, warehousing,developing the system and massive promotion measures.

CVP analysis of this industry shows us that the sellers are selling their product much lower than the offline market.They are pilling up huge losses and mountain debt by investing large amount in the process.In India two major e-commerce companies Amazon and Flipkart have losses upto 200% of their process.But they are continuously investing more because they are penetrating more in the market.They have set the standard of volume they can sale through the medium.They are not going for the loss figure they are posting in each quarter.In this case CVP analysis does not bother about profit it only assess the criticality of cost and volume.They are relying on these figures that if more and more volume of product they will sale, in the long term they will have profit on this.