Market Structure of Low calorie, frozen foods companies and Industries
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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. The companies undertaking these procedures as well as the impact on perceptions of the category are 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 according to Bord (2013 p.74)
The low calorie frozen microwavable food industries operate under the Monopolistic market structures. According to Chamberline (1933 p. 5), 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 in by the Low calorie frozen, microwavable companies. This is because this low calorie frozen, microwavable companies have a degree of control over price. In addition they have few barriers to entry and exit apart from the controls of small proportion of the market shares.
The Leading Competitors and Their Relationship with the Industry (World Wide)
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 populations grow and incomes 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 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. Hence 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). The ConAgra foods has discontinued several of it Healthy Choice dinners because of poor sales even though what brings 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 in the market and at what rate are they being consumed by the customers who have a different lifestyle and 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. The relationship of the industries in the market has a mission and vision for growth amongst themselves. This are all analysed by either the companies have targeted the local markets or even the global market.
Plan that will assess the effectiveness of the market structure for the companies operations
According to Hardwick & et al (1999 p.18) 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.
The Market Price and Demand for the Perfectly Competitive Firm
Therefore, apart from the price maximization that has been shown in the above diagram we would also achieve the following equation QD = Q.SThis is because the price pressure at the perfect competition market will be at 0 as opposed to the monopolistic market structures.
Factors That Might Have Caused the Change
There are various factors that might have led to the change in the business operations of which would actually predict its likely impact on the new market environment. These factors include: Consumer income, Prices of substitutes and complements, Tastes, Number of buyers and sellers, Consumer expectations, Technology, price of input, mobility of goods and factors of production, Knowledge of market conditions amongst many others. For instance
- Number OF Buyers and Sellers
Number of buyers and sellers of a commodity in the market indicates the influence exercised by them on the price of the commodity. In case of large number of buyers and sellers, an individual buyer or seller is not in the position to influence the price of the commodity. However, if there is a single seller of a commodity then such a seller exercises great control over the price
- Mobility of goods and factors of production
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
- Knowledge of Market Condition
If 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
Primary factor that likely influence 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 assist the Low calorie frozen, microwavable food companies to have the competitive advantage over the other markets and industries.
Analysis of the Major short run and long run cost function for the low calorie frozen, microwavable food industries
The cost function for both Short run and long run
Cost of the 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.30), inputs are variable in the long run. Existing firms in an industry can react to profit opportunities by building larger or smaller plants, buying or selling land and equipment, or varying other inputs that are fixed in the short run. Profits also attract new firms to an industry, while losses cause some existing firms to leave the industry. As you will now see, the free entry and exit characteristic of perfect competition is a crucial determinant of the shape of the long-run supply curve of which applies to the low calorie froze, microwavable food industries. Below is the Long-Run Supply in a Constant-Cost Industry, a graph that shows the profitability in both long runs a short run.
Long-Run Supply in a Constant-Cost Industry
The short run graph for maximum profitability in a perfect competitive Equilibrium
Circumstances in Which the Company Should Discontinue Operations
According to Mukras, (2011 p.111), some of the circumstances that would make a company be discontinued is if it does not perform to its expected level in a way that the company does not get enough demand or even if it is not in its full capacity to supply goods and services. This is especially the low calorie frozen, microwavable food products to the market and its consumers then it should be discontinued. To solve this kind of problem is to have a proper company policy and vision or objectives by the company to meet its corporate goal
The lack of proper inventory management of a company of that cannot keep proper records of workers on how they perform their duties in the industry, and then it should be discontinued. The action that can be taken to solve this kind of challenge is to have a proper Human Resource Management that is advanced and up to date with its inventories and records of all those in the low calorie frozen, microwavable food companies. Due to incompetence and disturbed equilibrium, which would make the company shut down, would also lead to the discontinued operations of a company. Actions to take is to learn of the current market trends or rather have knowledge of what is happening in the market to help in knowing what is to be done and at what particular time.
Corruption and various government policies would lead to the discontinuation of a company. This is because it would compromise the integrity of the company. Action to be taken to solve this kind of problem is always keep the company registered with the authority and harsh disciplinary action be taken to those who are found with cases of corruption to be a lesson to the rest who might have thought of involving themselves in behaviors that are unethical. This would be help in improving the Average Variable Cost (AVC) and the Marginal Cost (MC)
Pricing Policies to Maximize Profits
According to Hardwick et al (1999 p.156) some of the pricing policies that should be taken to maximize the profits include an optimum pricing that will make it possible for the customers to purchase their product. The competitive pricing would be done by keeping in view of analyzing the prices of other organizations that are involved in the same business or in the market. This is because the demand for the low-calorie microwavable food is inelastic in nature; we can derive a conclusion that an increase in the price of the food leads to the fall of the quantity demanded by less than proportionate amount.
Plan to outline it financial performance in both profit and loss for both long run and short run
The use of financial according to Myers (1962) would be the best way to evaluate the financial performance of which they should be evaluated and analyzed by the professional accountants. This would keep a proper financial health for the company in both long run and short run