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Transcription of this question: 2.Duranjaya PackagingFor 20 years, Nirav Duranjaya has operated a cardboard manufacturing facility on the outskirtsOf Mumbai specializing in selling mass-produced, low-cost cardboard boxes for industrial users.Price is the most important factor in determining the demand for the boxes. Gross profit and net profitmargins in the business are low, and the workers are unskilled and low paid. Duranjaya Packagingadvertises in specialized publications for the industries in which it sells.In recent years, with the economy rapidly growing, the market for higher-margin, distinctive andcreative packaging solutions has boomed in India. TO enter this lucrative higher-margin marketand satisfy growing demand, Duranjaya Packaging would have to hire three highly qualifiedpackaging designers and create a more flexible workforce. The decision to move into this newmarket may require a restructuring Of the business and a new more democratic management style,with employees taking more responsibility for their work. Duranjaya Packaging is currentlyorganized as a tall hierarchical structure with a low span Of control. Nirav supervises his employeesclosely and all decisions have to be passed through him.Nirav estimates that fixed costs for producing the new creative packaging solutions would beas follows:• rent: $36000• utilities: s6000• packaging designer’s salary: $30 000Nirav’s salary: $16 000.Variable costs for the new creative packaging solutions will be SO. 12 per box and the sales pricewill be Sl per box. In the first year Nirav estimates that Duranjaya Packaging will produce140 OOO boxes.(a)(b)(c)(d)Define the following terms:(i) fixed costs(ii) variablePrepare a fully labelled break-even chart for Duranjaya Packaging.Comment on two factors that will determine whether Nirav adopts a newmanagement style.Examine two elements in the marketing mix, other than price, thatDuranjaya Packaging will need to adapt in order to move into the creativepackaging solutions market.[2 marks][2 marks][6 marks][4 marks][6 marks]

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