Assume That The Low-Calorie Frozen Microwavable Food 385995
Assume That The Low Calorie Frozen Microwavable Food Company From Ass
Assume that the low-calorie frozen, microwavable food company from Assignments 1 and 2 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. Use the Internet and Strayer databases to research government policies and regulation. Write a six to eight (6-8) page paper in which you:
1. Outline 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. Provide a rationale for your response.
2. Examine the major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.
3. 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. Provide two (2) examples of government involvement in a similar market economy to support your response.
4. Examine the 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.
5. Suggest the substantive manner in which the company could create a convergence between the interests of stockholders and managers. Indicate the most likely impact to profitability of such a convergence. Provide two (2) examples of instances that support your response.
6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.
Paper For Above instruction
The expansion of a company specializing in low-calorie, frozen, microwavable foods requires strategic planning, adaptation to government policies, effective capital investment management, and alignment of management and shareholder interests. This paper explores comprehensive strategies and considerations necessary for successfully navigating these aspects.
Pricing Strategies in Response to Price Inelasticity
To effectively respond to rising raw material costs, management should consider adopting pricing strategies that influence the price elasticity of demand. When customers perceive fewer substitutes or view the product as a necessity, demand tends to be less elastic. The company can implement value-based pricing, emphasizing the health benefits and convenience of their products to justify price increases. Additionally, employing a price skimming approach in new product launches allows the company to maximize margins before demand softens. Segmenting markets and targeting premium segments with differentiated products also helps in price setting, as these customers are often less sensitive to price changes (Nagle, Hogan, & Zale, 2016).
Furthermore, communicating quality improvements or added features can reinforce customers' willingness to pay higher prices. Building brand loyalty through marketing campaigns focusing on health and wellness benefits can also decrease demand elasticity, enabling the company to raise prices with minimal loss in sales volume.
Government Policies Impact on Production and Employment
Government policies significantly influence manufacturing sectors through regulations, taxation, and labor laws. Policies promoting environmental standards may increase operational costs but lead to sustainable practices that benefit long-term employment and production stability (Bozic & Milenkovic, 2018). Conversely, restrictive policies can constrain production growth, impacting employment negatively. For our low-calorie food company, policies such as food safety regulations, labeling requirements, and tariffs on imported ingredients can affect costs and supply chains.
Anticipating these effects, the company should monitor policy developments and engage with policymakers to adapt proactively. For instance, stricter food labeling laws may require investments in marketing and compliance, but they can also build consumer trust, potentially increasing demand and employment in marketing and compliance teams.
Government Regulation for Fair Markets
Government regulation to ensure fairness in the industry is often justified to prevent monopolistic behavior, protect consumers, and ensure competitive pricing. In the food industry, regulations such as antitrust laws prevent unfair practices, while consumer protection laws ensure product safety and truthful marketing (Mankiw, 2019). The necessity of regulation depends on market power concentration and the potential for exploitation.
For example, the regulation of the organic food segment by government agencies ensures consumer trust and fair competition. Similarly, the regulation of pharmaceutical advertising aims to prevent misinformation. These measures maintain market integrity and protect consumers, suggesting that some level of regulation in the frozen food industry could foster fair competition and innovation.
Expansion via Capital Projects and Associated Complexities
Expanding through capital projects involves complexities, including financing risks, project delays, and integration challenges. Managing these requires strategic planning, risk assessment, and robust project management frameworks (King & Roberts, 2019). Securing financing at favorable terms is critical; thus, maintaining strong relationships with financial institutions and ensuring transparent project evaluation processes is essential.
The company should also develop contingency plans to mitigate delays and cost overruns. Incorporating modular construction techniques or phased investments allows for flexibility and reduces exposure to risks. Ensuring alignment with overall strategic objectives and rigorous oversight can further prevent project failures.
Aligning Stockholder and Manager Interests
To reconcile the interests of shareholders and management, incentive alignment mechanisms such as performance-based compensation, stock options, and long-term incentive plans are vital. These align management's objectives with shareholder wealth maximization, motivating managers to prioritize profitability and sustainable growth (Jensen & Meckling, 1976).
For example, implementing stock option plans allows managers to benefit directly from stock price increases, fostering a focus on strategic initiatives that boost long-term value. Similarly, tying bonuses to performance metrics like revenue growth or profitability ensures managerial actions align with shareholder interests.
This convergence typically enhances profitability by incentivizing efficient operations and innovation, leading to improved competitive positioning and shareholder returns. However, overly aggressive incentive schemes could lead to risk-taking behaviors, underscoring the need for balanced performance measures.
Conclusion
Successfully navigating expansion, pricing, regulatory environment, and corporate governance entails a comprehensive approach that considers external policies, internal strategies, and stakeholder alignment. By proactively managing these factors, the low-calorie frozen microwaveable food company can position itself for sustainable growth and enhanced shareholder value.
References
- Bozic, J., & Milenkovic, M. (2018). Impact of environmental policies on manufacturing industries. Journal of Business Economics and Management, 19(3), 374-391.
- Jensen, M.C., & Meckling, W.H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305-360.
- King, R., & Roberts, J. (2019). Project management in capital expansion: Strategies and risk considerations. International Journal of Project Management, 37(5), 644-656.
- Mankiw, N.G. (2019). Principles of Economics (8th ed.). Cengage Learning.
- Nagle, T.T., Hogan, J.E., & Zale, J. (2016). The Strategy and Tactics of Pricing: A Guide to Growing More Profitably (5th ed.). Routledge.