ECO 550 Assignment 3.doc - Running Head LONG-TERM...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Running Head: LONG-TERM INVESTMENT DECISIONS 1 Long-Term Investment Decisions Donald Young ECO 550 Dr. Diana Bonina March 19th, 2017
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
LONG-TERM INVESTMENT DECISIONS 2 Long-Term Investment Decisions Assuming a low-calorie frozen, microwavable food 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. In this report, we will outline a plan that could be followed when selecting price strategies for making products inelastic as possible. We will talk about major effects of government policies could have on a company. Do government regulations ensure fairness in the frozen food industry; what are the reasons for government involvement? What are major complexities that could arise under expansions via capital project? What key actions could a company could take in order to avoid these complexities? Finally, we will suggest manners at which a company could create a convergence between interest of stockholder and managers. By indicating the most likely impact to profitability of such convergence will conclude this report. 1. Outline a plan that managers in the low-calorie microwaveable food company could follow when selecting pricing strategies for making their products as inelastic as possible. Provide a rationale for your response. To be profitable and competitive on the market, changes in pricing is necessary in most cases for businesses. Being in a business of low-calorie microwaveable meals, there is no clear cut leader of the pact. Therefore, making the true demand elastic, there are many other options for substitution. So, unless other corporations are raising their prices, the company’s best option is to come up with a solid plan to make the demand inelastic. When the demand does not change as prices rise, this is known as product elasticity. Making the demand inelastic, there are many ways a corporation could make as such. Such option could be creating a market environment that is brand loyalty. Brand loyalty is described as consumer preference for a particular brand.
Image of page 2
LONG-TERM INVESTMENT DECISIONS 3 The American Marketing Association defines brand loyalty as “the situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category” MBN (2016) (para 2). Corporations create brand loyalty by creating superior products over its competitors or numerous choices that are un-worthy with competitors, creating monopolistic competition. Overlooking price increases to the consumer, the quality of a product would drown out other competition. Additionally, the corporation would need to market the brand of superiority that is easy to identify and unique which cannot be mistaken as a similar product. A corporation could keep customers apprised of different products or developments by; periodically distributing coupons or rebates is an excellent market plan that could be developed all while achieving brand equitable consumers.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern