Mall's Revenues Identify What Seem to Be Essay

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Mall's Revenues

Identify what seem to be the important trends in TechMall's financial statements. Are these trends consistent with TechMall's strategy and the economics of a growing company?

The trends that seem to be occurring are that Tech Mall is seeing slower levels of growth. This is taking place with less merchants signing up for the service (which is resulting in lower revenues for this segment). Evidence of this can be seen by looking at the below table which is showing the total number of merchants in comparison with revenues from the setup fee. (Swain, 2012)

Merchants vs. Revenues from the Set Up Fee

Merchant Set Up Fee Revenues

Merchants

$1.948 million

$3.088 million

4,751

4

$2.831 million

4,883

(Swain, 2012)

These numbers are illustrating how the amount of new merchants signing up is decreasing from 46.6% growth (in year 3) to 2.71% (in year 4). This is consistent with growing companies that will realize slowing sales after several years.

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They are also consistent with the growth strategy of the firm by focusing on a continuous stream of revenues from transactions and the statement fees merchants are paying. (Swain, 2012)

Prepare a diagram for the next executive meeting that illustrates what factors determine or drive TechMall's revenue. Use the monthly revenue data and performance metrics in Exhibit 5 to assess important trends in these revenue drivers. What does or should TechMall do to manage these drivers. For example, the number of merchants set up each month, combined with the average setup fee, drives TechMall's setup fee revenue each month. What then can TechMall realistically do to effectively manage these two revenue drivers (i.e., the volume of merchant setups or the size of the setup fee)?

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