Description
Assume that the low-calorie frozen, microwavable food company from Assignments 1 and 2 wants to expand and has to make some long-term capital budgeting decisions. The company is currently facing increases in the costs of major ingredients.
Write a six to eight (6-8) page paper in which you:
- Outline a plan that managers in the low-calorie, frozen microwaveable food company could follow in anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic. Provide a rationale for your response.
- Examine the major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.
- Determine whether or not government regulation to ensure fairness in the low-calorie, frozen microwavable food industry is needed. Cite the major reasons for government involvement in a market economy. Provide two (2) examples of government involvement in a similar market economy to support your response.
- Examine the major complexities that would arise under expansion via capital projects. Propose key actions that the company could take in order to prevent or address these complexities.
- Suggest the substantive manner in which the company could create a convergence between the interests of stockholders and managers. Indicate the most likely impact to profitability of such a convergence. Provide two (2) examples of instances that support your response.
- Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
Explanation & Answer
Here is the final copy if the questions are not supposed to be in the paper.
Running Head: Long-Term Investment Decisions
Long-Term Investment Decisions
Name
Institutional Affiliations
1
Long-Term Investment Decisions
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Long-Term Investment Decisions
The key factor for a successful price management plan is to understand the extent to
which the price can stretch. Increasing the price leads to a fall in the demand curve. However,
some elements distort this factor, which includes: product quality, customer loyalty, great brand
values and week competition. To actually raise the prices and balance the product response to
change in price elasticity, the following strategy has to be employed according to (Noble, &
Gruca, 1999).
Innovation:
Innovation is a technique of adding value and sustaining the segregated benefit of the
product. Although implementation may take time, it is a long-term policy. Innovation could
either be product based (e.g. Making a low-fat version of the existing line) or packaging based.
Brand building:
This is a proven technique to moderate cost sensitivity is to strengthen the significance of
the brand in the market. A high-quality product and brand image build a strong customer base
making the product immune to falling demand regardless of the price. Innovation is a long-term
policy that requires careful planning and consistency in investment and strategy.
Segmentation:
Segmentation gives the food company an opportunity to increase the price by focusing on
less price sensitive markets. The strength of the brand can position the food product in a highquality segment where the company can justify an increase in price. Also, introducing new
products into other market segments can lead to an overall higher price across the stretch.
Margin enhancement:
Long-Term Investment Decisions
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The company may increase the price they get from their customers without making
changes to the end customer's price. This may be done through: contracts, increasing the price to
the distributor and reducing distributor margins.
Understanding the effects of government policies to a business is very important to a
manag...
