LONG-TERM INVESTMENT DECISIONS 2 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. Price elasticity is the measurement of how quantity demanded of a good will be affected by changes in its price (Guo, 2012). In order to raise prices, managers in the low-calorie frozen microwavable food company need to make their product as inelastic as possible. Managers should have the mind set that they want their customers to feel like they cannot live without their product (Guo, 2012). Since there are many leading brands of healthy microwavable foods, managers will have to carefully raise their prices because raising prices can drive customers away. If managers of the low-calorie frozen food market wish to increase market share and increase its sales then price elastic means that cuts in price will be beneficial in increasing sales (Pettinger, 2008). Also, “If a firm is producing a good with economies of scale. Cutting prices will enable lower average costs because output can increase, [which] could even increase profitability” (Pettinger, 2008). Managers should also take advantage of their current prices by also pricing their items as small, medium, and high levels. For frozen healthy microwavable foods, the demand fluctuates and it is mainly due to the price, which also give competitors an advantage if a certain brand's prices decrease. Also, the taste of the consumer can change, which can impact the flow of demand. For example, currently, in 2015: Consumer demand for natural and organic products are driving growth in the frozen food sector after several years of challenges and declining sales. Sales of the collective frozen food categories dinners/entrees, pizzas, side dishes, and appetizers/snacks will reach $23 billion in 2019, according to a new report from Packaged Facts (Bizzozero, 2015). “Also, frozen products identified as natural or organic are having a more positive experience than frozen foods in general. These organic and natural frozen foods appeal to the consumer who is
Assignment 3: Long-Term Investment DecisionsDue Week 9 and worth 300 pointsAssume 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 ofraising 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 eFects that government policies have on production and employment. Predict the potential eFectsthat 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.