What is the operations decision?, economics assignment help

User Generated

Unccl5

Economics

Description

Using the regression results and the other computations from Assignment 1, determine the market structure in which the low-calorie frozen, microwavable food company operates.

Use the Internet to research two (2) of the leading competitors in the low-calorie frozen, microwavable food industry, and take note of their pricing strategies, profitability, and their relationships within the industry (worldwide).

Write a six (6) page paper in which you:

  1. Outline a plan that will assess the effectiveness of the market structure for the company’s operations. Note: In Assignment 1, the assumption was that the market structure [or selling environment] was perfectly competitive and that the equilibrium price was to be determined by setting QD equal to QS. You are now aware of recent changes in the selling environment that suggest an imperfectly competitive market where your firm now has substantial market power in setting its own “optimal” price.
  2. Given that business operations have changed from the market structure specified in the original scenario in Assignment 1, determine two (2) likely factors that might have caused the change. Predict the primary manner in which this change would likely impact business operations in the new market environment.
  3. Analyze the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions below. Suggest substantive ways in which the low-calorie food company may use this information in order to make decisions in both the short-run and the long-run.

TC = 160,000,000 + 100Q + 0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= 100 + 0.0126424Q

  1. Determine the possible circumstances under which the company should discontinue operations. Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response. (Hint: Your firm’s price must cover average variable costs in the short run and average total costs in the long run to continue operations.)
  2. Suggest one (1) pricing policy that will enable your low-calorie, frozen microwavable food company to maximize profits. Provide a rationale for your suggestion.

(Hints:

  • In Assignment 1, you determined your firm’s market demand equation. Now you need to find the inverse demand equation. Having found that, find the Total Revenue function for your firm (TR is P x Q). From your firm’s Total Revenue function, then find your Marginal Revenue (MR) function.
  • Use the profit maximization rule MR = MC to determine your optimal price and optimal output level now that you have market power. Compare these values with the values you generated in Assignment 1. Determine whether your price higher is or lower.)
  1. Outline a plan, based on the information provided in the scenario, which the company could use in order to evaluate its financial performance. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term, and the fundamental manner in which each factor influences managerial decisions.

(Hints:

  • Calculate profit in the short run by using the price and output levels you generated in part 5. Optional: You may want to compare this to what profit would have been in Assignment 1 using the cost function provided here.
  • Calculate profit in the long run by using the output level you generated in part 5 and cost data in part 3 and assuming that the selling environment will likely be very competitive. Determine why this would be a valid assumption.)
  1. Recommend two (2) actions that the company could take in order to improve its profitability and deliver more value to its stakeholders. Outline, in brief, a plan to implement your recommendations.
  2. 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.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running head: LOW-CALORIE FROZEN MICROWAVABLE FOOD INDUSTRY

Low-Calorie Frozen Microwavable Food Industry
Name
Institution
Date

1

LOW-CALORIE FROZEN MICROWAVABLE FOOD INDUSTRY

2

In the previous years, the low-calorie frozen microwavable food industry has been
expanding drastically. The expansion is due to the fact that many people have been working hard
hence increasing the salary level in a family. Due to the increase in salary and lack of enough
time, many people ought to go for the microwavable foods because they only require little time
to get them ready hence leading to expansion of the industry. The food alternatives are widely
used by almost each person within the society today thus making microwavable food to be the
main food in many kitchens. In addition, many of the microwavable foods have great sources of
the supplements nourishment as well as fewer calories. Two of the main competitors in the
microwavable food industry are General Mills, Inc. and Kellogg Company.

General Mills, Inc. is a multinational manufacturer of the branded consumer foods which
is based in Golden Valley, America and it was founded in 1866. The company deals with
products such as Betty Crocker, Annie’s Homegrown, Lucky Charms and Cocoa Puffs. The
General Mills, Inc. used the double-edged sword pricing strategy in the third quarter which helps
the profits be more than the estimates by the analysts and contributed to declining in the
quarterly sales. In addition, General Mills have been limiting discounting so as to boost the
margins.

Kellogg Company was founded in 1906 and is among the largest producers of snacks,
cereals as well as frozen foods in the world. The Kellogg Company boasts a famously branded
consumer product portfolio which includes Corn Pops, Frosted Flakes, Corn Flakes, Eggo
waffles, Nutri-Grain and Rice Krispies. This company operates production facilities in more than
35 nations and it markets its products in over 180 nations globally. Kellogg Company has been

LOW-CALORIE FROZEN MICROWAVABLE FOOD INDUSTRY

3

expanding its market share by having production innovation as well as acquisitions for the past
years. This strategy includes the newly completed acquisition of Pringles business.

From assignment 1, the regression was run so as to estimate the demand function for the
low-calorie microwavable food. The regression equation was derived as;
QD  5200  42 P  20 PX  5.2 I  0.20 A  0.25M . This model explains the demand very well

b...


Anonymous
Goes above and beyond expectations!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags