Business Analysis Report

Question: Would you support Jose is his decision to set up a provision for warranty costs on the mobile phones? How would you justify your decision? Answer: The statutory obligations for the purpose to grant warranties are really negligible. The main aspect of consumer protection act is to help the buyers to take steps against any defective product. Provision is mainly created for the purpose to meet with any uncertain event of the future that might result into financial loss. Therefore, from this angle it is desirable for Jose to create a provision for cost of the warranty for mobile phones. As per the statutory requirement and obligation attached with the warrant in case of any defect of the sold item within the warranty period, the company or the person issued the warrant is liable to provide the replace the mobile phone sold, or provide the spare part or repair the item without charging any additional cost to the buyer ((Etzion and Pe'er, 2013). However, aspect of meeting with the warranty requirement is based on the estimation purpose. On the event of purchasing a product the ownership is transferred to the purchaser and in case of certain goods such as mobile phones the warranty is also transferred to the purchaser and it remained valid till the date provided in the warranty card of the product purchased. Therefore, for the business of Jose and Rosy it is desired for them to create a provision for the warranty cost of the products. moreover, in case of the new product of 3G Video phones which is a new product line for the business and this was never sold by the business before, thus, on this ground it is desirable for Jose to create provision for the warranty cost on the new line of mobile phones. This would help the business to meet with the uncertain warranty cost of the mobile phones during the future, any case of any complaints from the side of the customers. It is by the way of creating a provision on warranty cost; the future profit would not be affected in the adverse manner in case of any disputes. The warranty acts as the legal liability by the business firms or the manufacturer who issues a warranty towards the customers or the purchaser for the purpose to provide service for any substantial defect of the item sold to the customers within the set period of warranty period of the product. For the purpose to sell the electronic goods which are subject to mechanical defects the warranty is provided, as this is considered as an ethical consideration of the business to provide the after sale services to their customers and thus, create a good image of the business ((Xie and Liao, 2013). Therefore, in case of the this business also it is highly preferable to create a provision for the warranty cost on the 3G video mobile phones as this would not only help the business to meet with the future expenses of the product but at the same time this would also help in developing a good image of the business brand in the market. Reference: Etzion, D. and Pe'er, A. (2013). Mixed signals: A dynamic analysis of warranty provision in the automotive industry, 1960-2008.Strat. Mgmt. J., 35(11), pp.1605-1625. Xie, W. and Liao, H. (2013). Some aspects in estimating warranty and post-warranty repair demands.Naval Research Logistics, 60(6), pp.499-511.