MICROWAVE FOODS 1

Frozen Microwave Foods

Economics 550
Professor Curtis Youngblood
Strayer University
May 13, 2014

MICROWAVE FOODS 2
1-Outline a plan that managers in the low-calorie, microwaveable food company could follow when selecting pricing strategies for making their products as inelastic as possible. Provide a rationale for your response. After researching, Mark Laceky Has a good plan that managers can follow in anticipation of raising prices when selecting pricing strategies for making their products respond to a change in price less elastic. He has six (6) price planning strategies:
1-Plan Pricing from Two Starting Points The two points he considers are supply and demand. The supply side would take into account raw material, labor and packaging cost. The demand is where you would consider the elasticity. When prices are less elastic, managers should concentrate on a marketing mix for their low-calorie frozen microwaveable foods. When the manager is considering aspects of their product, they should consider customer loyalty. When customer loyalty is a factor, you are able to charge more because customer loyalty makes market demand less elastic.
2-Put in Place an Ongoing and Flexible Process Managers must review and monitor competitive pricing and the changing of consumer shopping behavior for microwaveable foods.
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3-Take a Portfolio Approach The portfolio approach would be having the manager understand and be able to relate the pricing strategy with the broader strategic goals for the low-calorie microwaveable foods. Understanding the portfolio approach plays an important role in determining the pricing strategy.
4-Hard Metrics Must Drive the Planning Process A successful pricing strategy cannot be based on intuition or unreliable information. Hard metrics are necessary for a portfolio approach or planning process. It must drive the process from beginning to end.
5-Establish Key Performance Indicators and Milestones Any ongoing and pricing plan must have milestones set for the microwaveable foods to evaluate the performance on a regular basis and make adjustments when necessary. The manager could use a scorecard to monitor and review the pricing plan and help the pricing strategy as needed.
6-Endorse and Enforce In order to be effective, the pricing strategy should get the approval of upper management. This is probably the most important process.
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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. Government policies ensure that companies do not act in a way that places unnecessary costs on consumers. With government policies and regulations, companies are to reduce pollutants and to incorporate into their production processes the costs of disposing of waste. This has been beneficial to the public and to the companies because it allows the company the opportunity to show the public that they are trying to be environmentally safe. John Irons and
Isaac Shapiro states that economists would say that much of the externality of air pollutions has been overcome with regulations designed to correct this market failure (Irons & Shapiro, 2011). According to the Baker Hostetler Shale Team, in March 2011, the (EPA) Environmental Protection Agency released a congressionally mandated report on the costs and benefits of the Clean Air Act Amendments of 1990. In this review, the study found the economic costs to be significant because it was amounting to $53 billion in 2010. The estimated value of the benefits was $1.3 trillion which is 25 times the cost. In 2010 alone, an estimated 160,000 lives were saved by the Clean Air Act Amendments of 1990. The direct cost of complying with regulations translates into increased employment. That means, an environmental regulation will mean more
MICROWAVEABLE FOODS 5 jobs for those engaged in pollution abatement. It is possible that regulations may produce more labor-intensive production processes (Hostetler, 2014). For some companies government policies could temp companies to consider the outsourcing of energy-intensive manufacturing to countries with policies or standards that are more relaxed that may result in job loss. One effect would be that government policies sometimes cause technological innovations that can boost productivity.
I think that implementing government policies could lead to so much technological innovation that it completely offsets the costs of compliance. Another effect would be that government policies could improve the health of workers and children which could result in lower health care costs, decrease sick day callouts (employees not coming to work because they are sick) and more productive workers.
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.
Government regulations can be both fair and not fair. According to the Federal Reserve Board, only 79.2% of productive capacity is currently being utilized. Companies do not typically MICROWAVEABLE FOODS 6 begin to feel capacity-constrained until that ratio climbs above 80% (Fridson, 2014). Corporations understandably dislike regulation because it adds to their costs. Regulation also eliminates some lucrative business opportunities. Some of the major reasons for regulations would be to help compose price control in areas like telecommunications, electricity, gas and rail transport. Government regulation may be used to introduce fresh competition into a market.
The healthcare and cell phone markets are two industries with government regulations. Healthcare markets are quite unlike regular consumer markets because people can debate whether we should regulate the prices of surgical procedures and pharmaceutical products. We consider regulating these prices because the people who pay for these medical treatments aren’t simply the consumers or the patients who receive these services. With healthcare you have to consider the healthcare insurance and the insurance company. For this reason, people working in medical markets must be careful about profiting too greatly (Ubel, 2014).
The FDA (Food Drug Administration) shares regulatory responsibilities for cell phones with the FCC (Federal Communications Commission) certify the wireless devices. All phones that are being sold in the United States must comply with the FCC guidelines. The FCC does rely on the FDA and other health agencies on safety related questions about all phones.

MICROWAVEABLE FOODS 7 4-Examine the major complexities that would arise under expansion via capital projects. Prose key actions that the company could take in order to prevent or address these complexities. Major complexities stem from multiple stakeholders, regulatory agencies, financial institutions, suppliers (like equipment and fuel). Major complexities can become a challenge when dealing with product developments. Assumptions about dependencies and the need for information exchange between people to solve problems and manufacture the final product is another major complexity. When dealing with major complexities, Girmscheid and Brockman have identified five types of complexity with projects: namely task complexity, social complexity, cultural complexity, operative complexity and cognitive complexity (Girmscheid and Brockman, 2008). A key action that the company could take in order to prevent or address these complexities would be to have a model. One of the key advantages of modelling is that it helps to simplify the elements of reality and provide us with the information we need. Many political leaders and government officials know that doing things the old ways no longer meet the demands of a complex economy.
5-Suggest the substantive manner in which the company could create a convergence between the interest of stockholders and managers. Indicate the most likely impact to profitability of such a
MICROWAVEABLE FOODS 8 convergence. Provide two (2) examples of instances that support your response. The biggest conflict between managers and shareholders is going to be money. Managers would want this money as a financial bonus and the shareholders would want the money as a stock dividend. Managers believe that without their leadership and managerial ability, the corporation would not have been as profitable. The shareholders will argue that without their money, the corporation would not have been able to invest in its growth and would not have reached that level of prosperity. The most likely impact to profitability is the shareholder and stakeholder theory. The shareholder theory means that managers primarily have a duty to maximize shareholder returns. The stakeholder’s theory is a manager’s duty to balance the shareholders financial interest against the interest of other stakeholder (Smith, 2003). Two examples of convergence would be mobility, cloud, digital and social network. Convergence is a threat to the unprepared but a great growth opportunity for companies that can out-innovate and out execute their competitors under the marketplace rules. With convergence, lines are crossed as companies diversify outside the original market. Mobile services are increasingly an important part of the automobile.
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References
Laceky, Mark (2009), Six Keys for Successful Price Planning in a Shaken Economy
Retrieved June 6, 2014 http://www.nielsen.com/content/dam/corporate/us/en/newswire/uploads/2009/07/six-keys-to_price-planning_whitepaper.pdf Irons, John and Shapiro, Isaac (2011) , Economic Policy Institute, Regulations, Employment and the Economy Retrieved June 7, 2014 http://www.epi.org/publication/regulation_employment_and_the_economy_fears_of_job_loss_are_overblown/ Baker Hostetler Shale Team. (2014) North America Shade Blog, US EPA Retrieved June 10, 2014 http://www.northamericashaleblog.com/category/u-s-epa/ Fridson, Martin, (2014), Forbes, Don’t Blame Regulation For Capital Spending Drought Retrieved June 10, 2014 http://www.forbes.com/sites/investor/2014/02/07/dont-blame-regulation-for-capital-spending-drought/ Ubel, Peter (2013) Forbes, What’s Fair About Price Discrimination In Pharmaceutical Markets Retrieved June 11, 2014 http://www.forbes.com/sites/peterubel/2013/12/12/whats-fair-about-price-discrimination-in-pharmaceutical-markets/ Girmscheid, G.,&Brockman,C.(2008).Project Perspectives, The Inherent Complexity of Large Scale Engineering Projects. Retrieved June 15, 2014 http://umu.diva-portal.org/smash/get/diva2:158819/FULLTEXT01.pdf Smith Jeff H. (2003) MIT Sloan Management Review, The Shareholders vs Stakeholders Debate Retrieved June 15, 2014 http://sloanreview.mit.edu/article/the-shareholders-vs-stakeholders-debate/ Richardson, Leigh, 2014, Chron Small Business, Economic Factors Affecting Marketing Retrieved May 20, 2014 http://smallbusiness.chron.com/economic-factors-affecting-marketing-1699.html McGuigan, Moyer, Harris (2014) (pg. 35) Managerial Economics, Applications, Strategies and Tactics Retrieved May 14, 2014

French, Simon (2003), The Journal of Nutrition, Pricing Effects on Food Choices Retrieved May 13, 2014 http://jn.nutrition.org/content/133/3/841S.full G.E. Ibrahim, A.H. El-Ghorab, K.F. El-Massry and F. Osman (2012) The Development and Application of Microwave Heating, Effet of Microwave Heating on Flavor Generation and Food Processing Retrieved May 20, 2014 http://www.intechopen.com/books/the-development-and-application-of-microwave-heating/effect-of-microwave-heating-on-flavour-generation-and-food-processing Campbell, Harvey, (2012) The Free Dictionary, Discontinued Operations Retrieved June 5, 2014 http://financial-dictionary.thefreedictionary.com/Discontinued+Operations Kent, Jessica, 2014 Chron Small Business, How To Maximize Your Profits Retrieved June 5, 2014
http://smallbusiness.chron.com/maximize-profits-16368.html