RESEARCH PROPOSAL ON LONG-TERM CAPITAL DECISION MAKING
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Although leading food regulators confirmed that the issue posed ‘very little’ risk to human health, this is in relation to the low calorie frozen, microwavable food and companies undertaking this procedures where the impact on perceptions of the category is harder to measure. However, the analysis for this report has been carried out with a long term view in mind. Hence, the opportunities outlined represent significant new sources of growth for the low calorie frozen, microwavable food companies and industries this is according to (Bord, 2013 p.74)
The low calorie frozen microwavable food industries operate under the Monopolistic market structures. According to Chamberline (1933 p. 54) this kind of market structure is that which maximizes its profits and produces a quantity where the firms or industries Marginal Revenue (MR) are equal to the Marginal Cost (MC). It is also based on the price that it accrues which is from the average revenue (AR)curve, and the difference from the firms average revenue and average cost is then multiplied by the Quantity sold (Qs) of which then give a result of the total profit gained by the Low calorie frozen, microwavable companies. According to Bord (2013) this is because the low calorie frozen, microwavable companies have a degree of control over price and they also have few barriers to entry and exit apart from the controls of small proportion of the market shares.
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 include the following:
According to Hardwick et al (1999 p.98) the best plan that would make the low calorie frozen, microwavable food industries more effective is first by embracing the perfect competition selling environment and market structure. This is because the firm would sell their goods and services under different market conditions. The market will also have no significant share of total output and, therefore, they will not have the ability to affect the product’s price, this will maximize the low calorie frozen, microwavable food companies profits since various firms or industries would act independently, rather than coordinating decisions collectively.
Major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.
According to Myers (1962) policies and regulations that directly or indirectly affect the supply or prices of food products and more so the frozen microwavable food, their safety and nutritional composition, or the information consumers receive about food all influence the food choices consumers make and, ultimately, the nutritional quality of their diets. The effect of policies and regulations on ultimate dietary choices depends on how the policy affects the cost of producing commodities, how those costs relate to final retail prices, how responsive consumers are to price changes, and how the policy directly influences the consumer’s preference for the product.
These polices include the following:
Farm Assistance Programs
According to Myers (1962) Federal and State price support programs for frozen microwavable food products, wheat, rice, feed grains, oil seeds, milk, peanuts, amongst many others of which they are intended to stabilize and/or support prices and, in some cases, producer incomes for these commodities. In addition, the frozen microwavable products are permitted to organize marketing that facilitate orderly marketing. Finally, several commodities are also covered by federally authorized research and promotion agreements that help in the maintenance and improvement of the frozen microwavable food companies
The Federal Price and Income Support Programs
According to Myers (1962) this is a policy that was Introduced with the Agricultural Adjustment Act of 1938, partly in response to the Great Depression, price and income support programs have been modified several times. Programs have combined several forms of assistance, including deficiency payments to cover the gap between target prices and market prices, (nonrecourse) loans to farmers that could be defaulted if prices fell below a specified level, government purchases of surplus production to support prices, short- and long-term programs paying farmers to idle certain land from production at a targeted level and limiting acreage planted to certain crops (the Acreage Reduction Programs and the Conservation Reserve Program), export subsidies, and import restrictions. Many of these provisions were eliminated or suspended with the 1996 Farm Bill. While some of the programs increased farm commodity prices, consumer dietary choices were affected very little. Farm prices are a fraction of final retail prices, and consumer responsiveness to price changes for most foods is low.
Marketing Orders for low-calorie, frozen microwaveable food company
According to Myers (1962) the marketing orders low-calorie, frozen microwaveable food are self-help commodity programs proposed, governed, and financed by commodity industries and authorized by Federal legislation. In contrast to Federal marketing orders for low-calorie, frozen microwaveable food company operate with no direct price controls and limited quantity control. Low-calorie, frozen microwaveable food marketing orders may limit the total marketed quantity, the flow among market segments, or the flow over time to stabilize or increase prices. The other effect is that they may set quality standards and container/pack standards to increase demand through quality assurance and/or to restrict supply.
Food Safety Technology Approval
According to Myers (1962) the Federal Government also approves technologies for use in food safety assurance. The regulation of these approvals and certifications provides assurance to both food suppliers using the technology and end-use consumers that the technology is safe and effective.
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
According to Baron (2000) the regulations ensure fairness in the low calorie frozen microwavable food industry since it has created the Standards of identity that cover hundreds of foods, including low calorie frozen microwavable food, milk, specific cheese types, processed meat products, juices, and baked goods. The minimum and maximum compositional requirements prevent economic deception by protecting against the addition of water or other fillers that could dilute the value of the nutrients in the food. The standards enable consumers to try new brands with some assurance about the nature of the product. Without this assurance, manufacturers would be vulnerable to unfair competition from inferior products and consumers would lose confidence in the food supply. With rising consumer concern about nutrition, however, standards of identity have been criticized for restricting access to more healthful alternatives. Because many standards include minimum requirements for fat content or other fat-containing ingredients, lower fat versions that did not meet the food standard were required to carry labels identifying them as “alternative,”“replacement,” or substitute“which were seen as pejorative or had to be given a different product name. For example, under standards adopted in 1938, a product labelled “ice cream” had to have a minimum of 10 percent milk fat (8 percent if the ice cream included bulky flavours) or it was deemed to be misbranded. Frozen dairy products containing only 5 percent milk fat were called ice milk. Standards for frankfurters, bologna, and sausages, on the other hand, limit the amount of fat and added water, but also restrict the addition of binding and emulsifying ingredients that could substitute for fat, such as starch vegetable flour and lecithin.
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
According to Mukras (2011 p.45) the rise in competition in the low calorie frozen, microwavable food companies is due to the Shifts in global economic, social and demographic trends which will continue to put pressure on food supplies creating new challenges for food manufacturers and consumers. These changes will significantly reshape the context for frozen food and consumer perceptions of the category going forward.
As global population grow and income increase in emerging markets, demand for food and other resources will reach unprecedented levels and significantly affect availability and price. In rapidly developing markets such as China and India, diets will change to include more meat and dairy products, foods that are resource and land-intensive to produce. Climate change is likely to exacerbate these challenges, as extreme weather and water shortages affect crop patterns and production. In the longer term, consumption patterns may need to change radically.
Therefore, the leading competitors have brought about an option of which these competitors in the market include the Nestlé’s Lean Cuisine and ConAgra foods though facing various challenges in the market. For instance the Nestlé’s Lean Cuisine low calorie frozen meals brand lost more than a quarter of its sales over the past five years according to the (The Wall Street Journal in June). In addition, the ConAgra foods has discontinued several of its Healthy Choice dinners altogether because of poor sales even though what weighs the industry down has nothing to do with the cost and all its content.
Their relationship in the market are based on how often the products are bought and at what rate are they being consumed by the customers who have a different lifestyle and that which determines how they tend to consume or use the Low calories frozen, microwavable food products and the industries being affected by the healthy eating trends pick up in the era of TV which has been a boon to frozen microwavable product. In addition, the relationship of the industries in the market has a mission and vision for growth amongst themselves. These are all analysed by either the companies have targeted the local markets or even the global market.
Suggest the substantive manner in which the company could create a convergence between the interests of stockholders and managers
According to Baron (2000), the company create a convergence between the interest of stakeholders and managers through having the knowledge of market conditions of which if the buyer and seller have perfect knowledge about the market condition then a uniform price prevails in the market. However, in the case of imperfect knowledge, sellers are in a position to charge different prices which, brings up difference and lack of convergence between the stakeholders and the managers
Indicate the most likely impact to profitability of such a convergencemobility of goods and factors of production
According to Baron (2000) when the factors of production can move freely from one place to another, then a uniform price prevails in the market. However, in case of immobility of goods and factors different prices may prevail in the market. What will also likely affect the business operations in the new market would be the Knowledge of the Market condition. This is because it will help the buyers and sellers know what is happening in the market and what is to be done in the essence that they will get to analyze the market trends of which will give the Low calorie frozen, microwavable food companies the competitive advantage over the other markets and industries
Two instances are:
The cost function for both Short run and long run
The cost of production is the cost that are incurred in development or manufacturing the products. Production cost is that which include the raw materials as well as the labor costs
according to (Baron, 2000 p.67)
Propose how differences in demand and elasticity lead managers to develop various
Pricing strategies. This is because
The price elasticity of demand or the elasticity of demand. We define elasticity of demand as the ratio of the percentage change in quantity demanded to the associated percentage change in price. Demand is called elastic if, say, a 10 percent rise in price reduces quantity demanded by more than 10 percent. Demand is called inelastic if such a rise in price reduces quantity demanded by less than 10 percent.
Analyse the economic impact of contracting, governance and organizational form within organizations
According to Mukras (2011) this brings about the global Competition. In a global marketplace, an industry’s collective interest can be defined by competition with foreign markets. If foreign markets are not equally burdened with regulation, then aggressive self-regulation could put domestic firms at a serious disadvantage, providing yet another reason to question whether self- regulators will make socially optimal decisions. It also enhances self-regulatory bodies to have a better ability to secure needed resources. In addition, when regulatory funding is self-directed, the legislature cannot cut it off or use it as a leverage point over the self- regulatory body.