Outline a plan that managers in the low-calorie, frozen microwaveable food compa

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Question

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.

Examine the major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.

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.

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.

Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.

Explanation / Answer

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 both cost conscious and health conscious” (Guo, 2015). This example showcases that consumers are gearing towards a healthy diet, so healthy microwavable foods now have an increase in demand.

Examine the major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.

According to Frank Williams (2015), “Government economic policy and market regulations have an influence on the competitiveness and profitability of businesses. Business owners must comply with regulations established by federal, state and local governments”. When it comes to food:

Policies and regulations that directly or indirectly affect the supply or prices of food products, their safety and nutritional composition, or the information consumers receive about food all influence the food choices consumers make and, ultimately, the nutritional quality of their diets. The effect of policies and regulations on ultimate dietary choices depends on how the policy affects the cost of producing commodities, how those costs relate to final retail prices, how responsive consumers are to price changes, and how the policy directly influences the consumers preference for the product (Ralston, N.D).

The government also regulates food safety, which includes inspections of processing plants and food products, approval of food additives, and restrictions on pesticide use and animal drugs (Ralston, N.D).

These regulations can affect food prices or availability, and their implied assurance of safety is information that can also affect demand for the food. Other regulations include labeling requirements and advertising restrictions, standards of identity, and product grades. These directly influence the kind of information consumers receive about foods, and therefore affect their demand for foods (Ralston, N.D.).

When regulating employees, “agricultural producers are also subject to worker safety restrictions, which influence the cost of production and influence food prices and food choices” (Ralston, N.D.). “Producers are subject to safe labor requirements enforced by the Occupational Safety and Health Administration of the U.S. Department of Labor. In practice, employers of ten or fewer employees have often been exempted by annual congressional action (Ralston, N.D.).

In order to achieve the practices necessary to meet federal regulations, it is imperative that employees fully understand their responsibilities. “Accordingly, management should recognize its responsibility in providing adequate training for new employees and regular review sessions to reinforce necessary practices and implement new practices as appropriate” (Ralston, N.D). Katherine Ralston (N.D.), also stated that “Despite the cost, employee training and retraining are critical if the business is to succeed in meeting its legal requirements”.

If I were to own a company in the future, there is a possibility that government would continue to regulate businesses, but the future of government regulation in the United States is not quite clear. Due to the shift in government from pro-business to pro-consumer, I can only make an assumption that government regulations on businesses will remain. “[Also, government authorities] will play a huge role in defining marketplace ethics and monitoring businesses activities in the foreseeable future (Ingram, 2015).

Government regulation is needed in the healthy frozen-food industry in order to prevent monopolization. For example, Heinz and Kraft are planning a merger, which can have a major impact in the frozen food industry. For example:

The alliance of these two giant companies means even further consolidation in a market that is already dominated by a small number of corporate players. We commonly associate these brands with their anchor sectors, over which they have impressive market power: Kraft alone controls 80% of packaged macaroni and cheese sales, and Heinz controls 60% of ketchup sales. But according to a report from Food & Water Watch, these companies’ influence is felt in many other supermarket aisles. Kraft is among the top 4 companies producing mayonnaise, salad dressing, pickles, cottage cheese, sour cream, “natural cheese,” bacon, and lunch meat. Heinz is among the top 4 companies producing meat sauces, pasta sauces, frozen appetizers, and “frozen hand-held food.” United, the Kraft Heinz Company would bring in $22.2 billion annually in sales (Douglas, 2015).

This merger clearly is a monopoly, so unless the FTC steps in, United, which consists of Heinz and Kraft, will own majority of the food industry, which will include the frozen food industry.

Government should continue to regulate the market economy. “Competition can't work effectively without a well-structured and well-managed marketplace. And government is the only entity that can maintain the marketplace in good condition” (Brodwin, 2012). Government regulation can provide a solid legal foundation, which provides patents, contracts, and property rights. Also, government regulations provide a stable currency and national security. National security prevents businesses from getting disrupted by foreign threats (Brodwin, 2012).

“In our economy, individual companies are considered teams on a field, but government controls the context in which play occurs. Government maintains the marketplace, and no other entity has the power to do this” (Brodwin).

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.

When a company is expanding, they would most likely face major challenges. For example, according to Reference for Business the challenges are:

Growing too fast, This is a common malady that strikes ambitious and talented entrepreneurs who have built a thriving business that meets a strong demand for a specific set of goods and/or services. Success is wonderful, of course, but rapid growth can sometimes overwhelm the ill- prepared business owner. "Companies growing at hyper-speed sometimes pay a steep price for their success (2015).

According to management experts, controlling fast-track growth and the problems that come with it can be one of the most daunting tasks an entrepreneur will face. This problem most often strikes on the operational end of a business. Demand for a product will outpace production capacity, for example. In such instances, the business often finds that its physical needs have outgrown its present facilities but that its lease agreement or other unanticipated factors hinder its ability to address the problem (2015).

Record keeping is another challenge:

It is essential for small businesses that are undergoing expansion to establish or update systems for monitoring cash flow, tracking inventories and deliveries, managing finances, tracking human resources information, and myriad other aspects of the rapidly expanding business operation. As one business owner told Nation's Business, if you double the size of the company, the number of bills you have goes up by a factor of six (2015)

There are also personnel issues, which occurs when the company has to hire new personnel to meet the demands associated with new production, new marketing campaigns, new record-keeping, and administrative requirements (Reference for Business, 2012).

In order to defeat these challenges, it is best for the owner to change their normal routine.

Moreover, as businesses grow in size, they often encounter problems that increasingly require the experience and knowledge of outside people. Entrepreneurs guiding growing businesses have to be willing to solicit the expertise of accounting and legal experts where necessary (Reference for Business, 2015).

Businesses should also recognize their shortcomings in other areas that assume increased importance with business expansion to face their challenges (Reference for Business, 2012).

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
Agency conflicts, or conflicts of interest between managers and shareholders have implications for corporate governance and business ethics (Wijesekera, 2012). “It also has agency costs which are cost incurred in order to maintain an effective agency relationship such as management performance bonuses to persuade managers to act in the shareholders' interests” (Wijesekera, 2012). At times, “Managers may be encouraged to behave in ways that are not most favorable to the shareholders of the company”(Wijesekera, 2012). Due to that fact, shareholders spread their risk by investing in a number of firms.

It is also imperative, in a profit-making organization, for all management team and shareholders to work together and achieve the strategic objectives of the organization. One way to develop a convergence is to compensate managers on the basis of the value of the corporation. Managers should also be compensated for their performance. For example:

Large companies employ performance shares schemes where shares of the company are offered to managers on the basis of financial performance such as earnings per share, return on assets, return on equity, and share price. These compensation schemes are designed to ensure managers take actions that will enhance shareholder wealth and to facilitate companies attract and retain the best managers (Wijesekera, 2012).

With that being said, in order to maintain an orderly convergence, both managers and shareholders should continue to work hard with self-interest and also the interest of the other, by providing incentives and by maximizing the corporations profits.

Works Cited

(2015,). BUSINESS EXPANSION. Reference for Business Retrieved Aug. 3, 2015, from http://www.referenceforbusiness.com/small/Bo-Co/Bu.

Bizzozero, J.. (Year, Month. Day ). In Natural, Organic Strengthen Frozen Food Sector. Retrieved Month. Day, Year, from http://www.foodproductdesign.com/blogs/trending-fo

Brodwin, D.. (2012, Dec. 21). Why We Need the Government in the Marketplace. US News Retrieved Aug. 30, 2015, from http://www.usnews.com/opinion/blogs/economic-intel.

Douglass, Leah. (2015, Apr 3 ). Why You Should Pay Attention t. TIME pp. From-To.

Guo, V.. (2012, Aug. 21 ). In Price Intelligently. Retrieved Aug. 30, 2015, from http://www.priceintelligently.com/blog/bid/154374/

Ingram, D.. (2015, Month. Day ). In Government Regulation Factors in Business. Retrieved Aug. 30, 2015, from http://smallbusiness.chron.com/government-regulati

Pettinger, T.. (2008, Mar. 20 ). In Economics Help. Retrieved Aug. 30, 2015, from http://www.economicshelp.org/blog/364/business/pri

Ralston, K.. (Year, Month. Day ). Retrieved Aug. 30, 2015, from http://www.ers.usda.gov/media/91084/aib750q_1_.pdf

Wijesekera, L.. (2012, Aug. 3). Agency relationship and conflicts between business managers and shareholders. Hub Pages Retrieved Aug. 31, 2015, from http://lasanthaw.hubpages.com/hub/Agency-relations.

, F.. (2015,). The Effects of Government Policies on Businesses. Small Business Retrieved Aug. 30, 2015, from http://smallbusiness.chron.com/effects-government-.

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