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Introduction
The main idea behind the mind of every investor is to achieve long- term growth of his or her business by serving a wider market to increase profitability. However, the existence of various factors such as competition and government regulations tends to impede the successful accomplishment of most investors’ goal. Besides, the efficiency of the strategies implemented by different investors constitutes fundamental hindrances to the realization of their long-term objectives. Therefore, efficient management is crucial to realize business expansion. Additionally, the consideration of other factors with a significant influence on the business environment is essential when formulating the growth strategies. Thus, a thorough analysis of the implications of the implementation of various strategies such as pricing and marketing for the future performance of the business needs to be done. This essay will develop an approach to business expansion by focusing on various aspects of significant influence on business expansion, paying particular attention to the low-calorie frozen microwavable food company.
A plan that managers in the company would follow in an anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic
The process of selecting the pricing strategies requires the management to consider various factors and the implications of such strategies for the business. Some pricing strategies tend to contribute to the failure of business due to improper analyses of the investors (Saito, 2011). As such, it is essential to formulate a pricing strategy that promotes business growth.
The market behavior in relation to the products of the company is a major factor that the managers must put in mind. Most companies operate in markets with vibrant competitions. As such, the pricing strategy implemented by the management of a particular company must consider the strategies of the rival companies. The company that we are focusing on faces competition from various companies such as Healthy Choice and Lean Cousin. Therefore, the managers should analyze the competitive position of the company before deciding the extent to which to increase prices.
Customer loyalty is of central importance to an organization operating in a competitive environment (Daly, 2002). Companies with a stable customer base tend to be highly competitive and their confidence in business is high. Price elasticity entails the extent to which the market factors such as demand respond to changes in price. In competitive markets, products tend to be highly responsive to prices since customers can easily switch to companies with lower prices (Daly, 2002). Since the managers wish to increase price while making the products less responsive to price changes, they should build a strong customer loyalty. This can be achieved through vibrant advertisement of the products as well as promotion to uplift the confidence level in the customers for company’s products. As a result, customers will continue to buy the products even after raising the price, making the products less sensitive to price changes.
The opinions of the customers on a particular product in the market are fundamental to the company’s decision- making process. Customers constitute a central pillar to the business. Thus, collecting their views is crucial to facilitate the formulation of strategies for the companies. Therefore, managers should contemplate conducting a market survey to collect customers’ opinions on the effect of raising products’ prices. This will help to evaluate the expected response to a price increase and facilitate the decision making. Additionally, the managers should analyze the information on the current consumption pattern for their products to determine whether or not the market will be more responsive to the price increase. If the consumption style has an increasing trend, the company can consider an increase in the prices as this will have less impact on the demand.
Consumers tend to have greater confidence in products of high quality. As such, they continue to consume the same product even at high prices because they are satisfied with the quality. This implies that the tendency of the market to respond to changes in prices of high- quality products is low. Therefore, managers should develop a plan to improve products’ quality since it does not involve high cost and will allow them to raise the price confidently.
Effects of government policies on production and employment
Government tends to adopt various policies which have notable impacts on the production activities. The level of production has a direct relationship with employment level because companies hire more labor at higher production levels and vice versa. Taxation is one of the major government policies with significant influence on the production activities of most companies (Fung, Michael, Wai-Ming, and Lijing, 1999). High taxation affects the prices of raw material and the overall production cost. Reduced level of production due to high taxation results in low demand for labor leading to low employment level.
The subsidization of prices particularly the cost of raw materials tends to lower the production cost. The low cost of production produces high returns which attract investors. Additionally, high profits allow companies to produce many varieties of products which require a diversity of human capital (Fung, Michael, Wai-Ming, and Lijing, 1999). As a result, the level of employment increases. The provision of government incentives tends to have the same effects as subsidies since it induces production resulting in high employment. If high taxes are imposed on products in my company, the level of production will reduce drastically due to low demand as a result of increased prices. Consequently, the company may not have alternative other than to lay off some labor to reduce the cost. On the other hand, if the government offers incentives to the company, it will engage in more production and therefore, the demand for labor will go high leading to increased employment.
The government may decide to invest in the production of the same products. Such a policy will result in increased government expenditure (Adelman, 1961). Similarly, the government may promote the consumption of the products from my company by encouraging their consumption in its institutions such as schools. If the government invests in the manufacture of similar products with a company, competition becomes more vigorous because public goods tend to be relatively cheap (Ralston, 1999). As a result, production and employment reduce. However, if the government promotes the consumption of the products, the level of production and employment will increase.
Determination of whether or not government regulation to ensure fairness is needed in the company
Government interventions entail policies that the governments adopt to control markets when there are imperfections. The reduction of monopoly power is one of the reasons for the involvement of the government in a particular business (Van den Bosch & De Man, 1994). Additionally, the government may intervene in the markets to ensure fairness in terms of product prices, quality, and the welfare of the employees. Since the business environment is friendlier in the absence of state controls in the US, government regulation is not needed in the company (Dahlgaard et al., 2013). After all, no market imperfections exist to demand such regulations. However, if irregularities exist the government will be required to intervene to control them. For example, the business community in America has opposed some government regulations citing that they not only undermine the profitability but also hinder the operations of businesses. Some companies like WorldCom embrace some regulations like Sarbanes-Oxley laws to protect their businesses claiming that complying with government regulations has many complexities and does not produce the desired effects (Monica, 2016).
Major complexities that would arise under expansion through capital projects
The company may consider the expansion its facility through capital projects which involve the construction of new structures, facility renovation, or through replacement of some worn out facility. These expansions require resources which may not be available in the company. For example, the construction of new facilities or adoption of new technology will require new skilled labor which the company may not have at the initial stages. Therefore, the company should make adequate preparation for the expansion. If the capital is not available, managers may think of going in the stock market to borrow money. Additionally, the company should prepare its employees for the expansion by training them to acquire the skills needed for the new developments. Such actions would help to prevent the occurrence of complications during the business expansion.
The suggestions of the substantive manner in which the company could create a convergence between the interests of stakeholders and the managers
A strong relationship between a company and its stakeholders is essential for the performance and efficiency of the management of the company. Company stakeholders are the pillars of the business without whom the company will cease to exist (Dahlgaard et al., 2003). Disagreements between the managers and the stakeholders such as the community will deprive the company of valuable supporters. The suppliers ensure the continuity of the business by ensuring an efficient supply of raw material to the company. Customers constitute the market for the company’s products.
Different stakeholders have varying interests in the business. For example, the community that provides labor to the company is concerned with its welfare and the quality of products and services. The company can create a convergence of interests with its stakeholders through collaborations with them. Such collaborations involve incorporating them in the major decision making, consulting them before making adjustments in the management of the company, and protecting their welfare. Exercising efficient corporate governance to ensure the balance the interests of various stakeholders is another way to converge the interests of managers and the stakeholders. Such a convergence promotes the effectiveness of business management and the profitability of the company.
Effective governance as a result of the convergence of interest ensures great confidence in the company by investors which is crucial for the capacity of the company to access more capital. For example, the success of various famous multinational companies like CEMEX has resulted from the establishment of strong relationship with their global stakeholders. CEMEX, which is one of the leading companies in the supply of constructions materials, ensures that the interests of its global stakeholders converge with those of its management to promote the efficiency of its business (Lessard, 2009). In addition, the corporate governance in CEMEX ensures that the interests of all stakeholders are balanced and their welfare is protected (Lessard, 2009). Good cooperation with stakeholders is one of the major factors that promote the growth of McDonalds. The company ensures that its stakeholders along its chain of supply are satisfied with its services and management (Mujtaba, Bahaudin and Patel, 2011). The profitability and growth rate of these companies are high as a result of the convergence of the interests of the business and those of stakeholders. Therefore, it can be concluded that companies should ensure that their goals agree with those of their stakeholders to achieve success.
References
Adelman, I. (1961). Theories of economic growth and development (1st ed.). Stanford, Calif. Stanford University Press.
Dahlgaard, J., et al. (2013). Business excellence models: Limitations, reflections and further development. Total Quality Management & Business Excellence, 24(5-6), 519-538.
Daly, J. (2002). Pricing for profitability: Activity-based pricing for competitive advantage. New York, NY: Wiley, John & Sons
Fung, M. K., Ho, W. M., & Zhu, L. (1999). Effects of government policy changes on the private sector development in a transitional economy: A long-run analysis. Journal of Economic Development, 24(2), 19-41.
Lessard, D.R. and Reavis, C., (2009). CEMEX: Globalization “The CEMEX Way”.
Monica, V. (2016). FTC reports on fighting fraud in African American and Latino communities. (2016, June). Retrieved from https://www.ftc.gov/news-events/press-releases/2016/06/ftc-reports-fighting-fraud-african-american-latino-communities
Mujtaba, B. G., and Bina, P. (2011). McDonald’s success strategy and global expansion through customer and brand loyalty. Journal of Business Case Studies (JBCS), 3(3), 55-66.
Ralston, K. (1999). How government policies and regulations can affect dietary choices." America’s Eating Habits: Changes and Consequences. Agriculture Information Bull 750, 331-370.
Saito, Y. (2011). Managerial decisions to discontinue operations and future firm performance. SSRN Electronic Journal. doi:10.2139/ssrn.1906125
Van den Bosch, F., & De Man, A. P. (1994). Government's impact on the business environment and strategic management. Journal of General Management, 19(3), 50-59.
