Long-Term Investment Decisions (Essay Sample)

Long-term Investment Decisions
Student’s Name
Instructor’s Name
Course Title
Date
Long-term Investment Decisions
1) A plan that Managers could follow when selecting pricing strategies for making their products inelastic
When the products are inelastic, it means that increase in price does not have a great impact on the quantity of products demanded. In this case, managers can increase the price of the product and never worry about the reduction in sales volume. In order to achieve the managers need to observe and follow the following:
Careful determination of the market segment; as a manager it is important to understand the market, in which the company operates. This will facilitate in market segmenting. The information about the identified segments will enable the manager to adjust the product price accordingly (Smith, 2012). The pricing strategy should be performed in a way not to have any negative impacts on the sales.
Assessing the closest substitutes; all the available information about the closest substitutes must be gathered. By considering this information, a manager must try to make the product be unique by ensuring it has a variety of features. These features will make the product be solely different and appear not substitutable. Consumers will become addicted to the product; hence, there will be no change in sales even when the prices are increased (Smith, 2012).
Determination of the customers’ perception about the company’s products; if the manager understands customers’ perception about the company’s products, he/she will be able to set the prices accordingly. If the consumers view higher prices as an indication of higher quality, then the manager should always maintain higher prices for these products.
Put greater consideration on the competitors’ pricing strategy; managers should consider the way the competitors are pricing similar products. By considering all these, the company will be able to determine specific pricing strategies for the product to be inelastic (Smith, 2012).
Constant monitoring of market dynamics; there may be various changes in the market with time. These changes may include introduction of the new substitutes and changes in pricing strategies by competitors. Managers need to consider all these factors in an effort of determining the best pricing strategies that will make the products inelastic.
Undertaking visual pricing of the products; this is where the company plays with the mind of customers by not using a price index ending with 0 and 5. For instance, 99 instead of 100, and 59 instead of 60. This will make the product remain inelastic all the time (Smith, 2012).
2a.) Effects of the government policies on production and employment
The government may come up with the various policies, which may have negative or positive impacts on the company’s operations, such as production and employment. Some of these policies are either aimed at supporting the industry or discouraging the consumption of specific products. Regarding the issue of the employment, the government aims at ensuring that there are equal opportunities for everyone. These policies also aim at ensuring that the workers are not exploited, and their safety and health are maintained in a working environment. Some of these policies are:
Production standards; the government through various bodies may set production standard to be followed by different companies in the different industries. These standards ensure that the products manufactured, especially food items, are fit for consumption. Sometimes following all these standards may be very expensive, causing high production costs. This will reduce the company’s revenue leading to low profits.
Price control policies; the government can control the price of commodities through economic regulations. Such policies are aimed at ensuring that consumers are not overcharged. They may also be aimed at discouraging monopoly and unhealthy competition among the firms (Andersen, 2011). All these will have an impact on production activities of various firms.
Attainment of social goals; it is the duty of the government to ensure that its citizens are living in a healthy and clean environment. Hence, the government will have to come up with the policies, which will ensure that no company will cause environmental pollution. The companies, which may cause pollution, may be heavily punished. This will have an effect on the production activities of the company (England, 2007).
Policies on workers' welfare; through some labor unions the government may come up with the policies, which will be ensuring that the employees are working in a healthy and safe working environment. This may even force companies to have insurance covers for their workers. This increases the cost of running the business (England, 2007).
Retirement age; the government determines the retirement age in every profession. It may increase or decrease the retirement age of people. In case the retirement age is lowered, the companies may lose experienced manpower, which becomes hard to replace (England, 2007).
b.) Potential effects that government policies could have on the low calorie Food Company
The government policies may have various effects on the low calorie food company, which may translate to higher costs. Constant inspection of food processing and set production standards may have financial effects on the company. Labor regulation acts by the government may also have some impacts on the company, since the government may dictate the way the workers should be treated in a working environment. The pricing strategies of the company may also be affected by these policies. In a way, the government may influence them.
3a.) Government regulation to ensure fairness in the low-calorie Microwavable food industry
Government involvement in the food industry through its regulations may be aimed at ensuring fairness among the competitors. If competition in the food industry will not be regulated, then there may be the behaviors, which will not be favorable to the sellers. Government involvement ensures fairness in the following ways:
Prohibiting unfair competition; when the government is involved in the market, it ensures that the competition among the companies is fair, and no company is practicing unfair competition. This ensures that those companies, which are not well developed, also compete with the already existing ones. It also ensures that there is no restrictions on the entry into the market (Andersen, 2011).
Protecting consumers against fraud; there are so many companies, which are involved in this industry. If the government is not involved in the market, then the consumers can be exploited through overpricing, misleading adverts, and poor quality products.
Guarding public well-being and protection; government will ensure that the products available to the consumers are well inspected and have met all the safety measures (Andersen, 2011).
The following will make the producers be keen when producing the products:
Licensing; the government ensures that the firms, which are operating in such industries, are licensed before they start any operations in that industry. This is of a great importance not only to the other competitors, but also to the public in general (Andersen, 2011).
Ensure production of healthy food; companies are supposed to manufacture the products, which are healthy to both adults and children. The food produced should have low calories amount in order to avoid obesity among the people. It is the duty of the government to oversee this.
a.) Reasons for government involvement in a Market economy
Government involvement in the market economy may be due to the various reasons. The government will be aimed at protecting the consumers, sellers, and policies. Some of these reasons include:
To control entry and exit of the firms in the market; the government may involve itself in a market in order to control the way the firms are entering and leaving the market. Before any firm enters in the market, it must have all the necessary documentation.
To determine levies and taxes; the government may enter into a market economy to determine the amount of taxes to be paid by various firms in a given industry. The government will also ensure that no firm evades the tax and in case no tax is paid the necessary actions are taken against the firm.
To control the structure of the market; the government may want to discourage the emergence of monopoly in a given market. This means that the government has to be involved in the activities of the market in question.
Ensuring that products are accessible to consumers; the government ensures that products are available to the consumers and can be access easily without any problem. This ensures no hoarding of products (Andersen, 2011).
Examples of government involvement in such a market economy:
The US federal government; the food processing sector is regulated by the state and federal agencies. These agencies are extensively involved in the regulatory oversight. The meat and poultry processing are regulated by USDAFSIS, while other food processing is regulated by FDA.
Tanzania government; this government has enacted laws and regulators who are entrusted with responsibilities of regulating the food sector in the country. They are aimed at ensuring public health and safety, protecting the environment, and promoting a rational competition.
4a.) Examine the major complexities that would arise under expansion via capital projects
When there is expanding through capital projects, various complexities may arise, which may cause problems to the business. Some of these complexities include:
Controlling difficulties; it may become difficult to control business activities in th...