A company is buying a product with cost Rs. 5000 and sell it at Rs. 4500 and makes profit of Rs. 1000. How does it do so ? (Read details)
There is a Orange juice shop (say shop 1) in a city which used to do very good as it does not have competition. Later, a new shop (shop 2) was opened beside this shop which used to sell it for MRP of the product.
Realizing that shop 1 is losing business, the owner started selling the goods at MRP just like shop 2. Now, the shop 2 started selling the goods for less than MRP and making a good business and a marginal profit.
Eventually shop 1 was closed down and after closing he approached the shop 2 owner and asked him how was he able to make profit even after selling it for less than MRP.
The shop 2 owner replied : ” We get our orange juice bottles in cardboard boxes. I started selling the cardboard boxes to the near by packers and movers shop and make money from it.”
This is a classic example of right utilization of resource with minimum waste.