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.
Use the Internet and Strayer databases to research government policies and regulation.
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
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Running head: LONG TERM INVESTMENT DECISIONS
Long Term Investment Decisions
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LONG TERM INVESTMENT DECISIONS
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Long Term Investment Decisions
Introductions
Recently, low calories food choices gained a lot of interest in modern people. In previous
papers, we accessed the nature of food market and restaurants consumption behaviors. In this
particular paper, will explore the long term capital budgeting decisions in which a company is a
low calorie frozen, microwavable food business required to make.
Plan in Selecting Pricing Strategies
The major goal of any company in any business is to an inelastic product demand as
much as possible. That is, the company ensures that any pricing decision makes a minimum
effect on the request of the product as well as consumer perception. Therefore, this approaches of
low responsiveness to product price change is commonly observed, in circumstances where
services of product provided are essential or rather fundamental that consumers cannot live
without them. However, this is not the case for the low-calorie microwavable food company.
Therefore, the product demand, as outlined in our first paper, is exceedingly dependent on their
price, consumer’s income range, and substitute product price as well as advertisement level. In
the following paper, we evaluated that this product suits a monopolistic competitive market
(Marburger, 2015). Additional, this product market differentiate from another market type since
its combines distinctive of both perfectly and monopoly market competitive. For instance,
monopoly players enjoy a reasonable market power, that is, they can establish their preferred
product price above the margin cost. Therefore, this is the same case since the product exhibits
high differentiation level in the market. Conversely, like the perfect market, this product has
LONG TERM INVESTMENT DECISIONS
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multiple buyers and sellers. Therefore, creating a free company entry and exit into the product
market.
However, when a company in this market proposes to increase product price in future,
then the firms should engage in market policies which make their product highly differential and
heighten its market power. For instance, for a business to adjust the market price, they should be
able to control a significant market share. Likewise, the price adjustment should not significantly
affect the amount of product demand in the market. Therefore, the company should thrive to
build customers...
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