Long-Term Investment Decisions, Rationale for the Response

Long-Term Investment Decisions
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Long-Term Investment Decisions
Government policies impacts on business operations, that is why low- calorie, frozen microwave business organization needs to determine the pricing strategies to minimize its elasticity. This paper presents a research that analyzes policies that government use to control employment and production within the food industry. The research also highlights the impact of such policies on business, evaluating challenges related to capital during the expansion process.
With the increased cost of production, mostly associated with ingredients, firms dealing with frozen food with low calories are forced to increase prices of the final products to earn reasonable profits. Its pricing strategy should be inelastic, even if the price increases (Aldermane et al, 2013). The manager needs to consider the following steps when determining the price
1 Evaluate the entire available customer segment and consider if the company product is a necessity or a luxury (Aldermane et al, 2013).
2 The managers need to analyze if there is any substitute, review the actual cost and the period of changes in the price of the product (Aldermane et al, 2013).
3 There should be some difference in the food products
4 They should also boost the brand to enhance the brand loyalty among the target market by conducting promotion activities like engaging in aggressive advertising (Aldermane et al, 2013).
5 The company can use other tactics like introducing exclusive dealings as some of the best strategies (Aldermane et al, 2013).
Rationale for the Response
The initial process to understand the food market by collecting relevant data from the consumers to understand their needs. If the product is a necessity, it will be inelastic than if it was to be a luxurious product (Danthine & Donaldson, 2014). A necessity product means the consumer cannot do without it even if the price increases. The other reason is that the prices of substitute products can only go up with a minimal margin; therefore, most food products become inelastic within a short period (Danthine & Donaldson, 2014). Therefore, determining the period of the price change is very important because if the product can be elastic for long, the company will enjoy more profits for long (Danthine & Donaldson, 2014).
After conducting the above two steps, the other important step is to reduce the product elasticity of food product to show its difference. Product differentiation means coming up with unique features as compared to the substitute products the market to make the product stand out (Kleindl, 2007). In addition, advertising can also help the company enhance its brand loyalty among its customer in a way that the price increase will not greatly affect the level of demand for the product (Kleindl, 2007).
The firm needs to ensure that it can edge out substitutes in the market or reduce competition by engaging in exclusive dealings. The firm can sell their products through wholesale and enter into agreements with various retail outlets who will sell their food products only (Kleindl, 2007). These are some of the tactics that will help the company successfully penetrate the market...