Plans that managers will follow in a low-calorie microwavable company
The meals from microwavable frozen and Lean Cuisine are the better options for busy people. Therefore, they are the leading competitive companies in the sector of low-calorie microwavable food companies. Despite the fact that they possess common factors in terms of product type, the value of nutrition, and price, low-calorie microwavable companies such as Lean Cuisine, they have experienced a drop in sales revenue because the category of single- serving the meals is in a continuous contract. Consequently, most low-calorie microwavable firms that are producing healthy meals has an objective of driving additional purchase of profits from other baby boomers that are representing over 60% of the category volume. This is because they are for a more marketing approach that is effective regarding competitive pricing so that they can focus on the retail strategy (McGuigan, Moyer & Harris, 2014). As a result, Nestle, which is the producer of Lean Cuisine, has recorded a loss from contracting a low- calorie frozen, microwavable food industry.
The managers of low- calorie microwavable companies are seeking to provide other products to their line of production. As a result most microwavable companies have started to produce their products and sell them as per the new line extension manufactured will all natural ingredients and preservative free. Since the managers of these companies muted the growth of organic substances, this reflects low pricing of the products in the market. They also leveraged the cost of inputs to meet the expectation of the value conscious consumers.
When this strategy is combined with increased investment in their brands, the momentum of strong growth in sales will be delivered. At the same time, the operating margin of the company will be improved.
The low- calorie microwavable food firms exhibit a monopolistic structure of markets since they provide goods that have unique qualities. Therefore, they are capable of charging different prices. The companies in this industry should in a position to remain competitive by improving their strategic planning and production processes because they fall under contracting industries.
Moreover, the low-calorie microwavable companies such as Nestle should remain competitive in the market through adoption of product differentiation strategy to compete on the available capabilities of the company. Additionally, the manager of this company apply the following strategies:
Proper price planning based on supply and demands.
Based on supply, the manager will consider raw materials, the cost of packaging, and labor while demand will factor in the elasticity. The manager should focus on the market mix for the low-calorie microwavable products. While considering the aspects of the company's products, the manager should factor in the loyalty of their customers because when customers are loyal, the products should be charged more because the demand for the products will be less elastic.
Flexible Organizational Processes
The manager has to make a review on the competitive pricing strategies and the behavior of the customers as they purchase the products from the Low- calorie company.
Considering the portfolio approach
This will enable the manager to understand and be in a position of relating the strategies of pricing with comprehensive strategic objectives for the company.
Effects of government policies on production and employment
Government policies include regulation of public utility companies and provision of licenses to businesses. Similarly, regulation can be enforced in a non-discriminatory manner, and this can interfere with the operating costs, sales revenues, and cost of capital (Buultjens, 2000). Therefore, when the cost of Low-calorie microwavable company increases as a result of government policies, the production rate will be reduced, and this will lead to laying off some employees while concentrating on hiring fewer workers. Hence, affecting the minimum wages of the Low-calorie microwavable company (Rothbard & Stringham, 2006).
According to the FDA, any substitute food should be similar, and if the company violates this policy, the company will be affected in terms of production (Moreno-Dodson & Wodon, 2008).
Government regulation in a low- calorie frozen food company
Because Low- calorie microwavable operates as a monopolistic competitive company, the sale of its products will circulate on few hands. Therefore, the behavior of this company will not be competitive in nature. Similarly, there will be a violation of equity and fairness, and the government should intervene. On the other hand, fairness can also be violated when the practice of the company is based on discrimination; hence, government intervention is needed.
Reasons for government involvement in a market economy
The interference of the market by the government is based on social and economic reasons. Therefore, when a company is failing to provide the efficient market results, then there is a need for the imposition of government regulations. The government should regulate firms to ensure that the decision-making process is fair and equitable. So the government regulation will favor the poor despite the change of trading off the equity with efficiency.
A market that is not regulated can lead to market failures. For instance, Calorie, Frozen Microwavable is a monopolistic market. It might offer services in an efficient manner, but it will create a lot of power with unregulated business proceeds. Examples may include public service vehicles and power that can provide efficient services under natural monopoly but creates market power with unregulated profits
Complexities: Risk and Decision-Making
Nearly all companies would wish to expand their business operations. Therefore, it is vital for managers of such companies to about the long-run investment decisions and distribute the available resources to boost the production capacity. Similarly, the managers should create some business mechanisms aimed at improving operation costs for diversifying the asset base of firms. However, managerial decisions involve many risks, and this could affect not only the cash flows but future costs and benefits.
Since capital budgeting involves the process of long-term planning, it needs adequate mechanisms when evaluating its expenditures. This will essentially require a lot of research and developments, employee training, good level of education, lease vs. buy decisions, and decisions concerning mergers and acquisitions. Therefore, the complexities that are involved in capital expansion and budgeting require keen observation besides concentrated efforts. The steps of capital expansion and budgeting should be looked into while addressing these complexities.
Actions
Managers should provide for the alternative proposals for capital investments, and these proposals should be democratized to allow room for generation of new capital investment ideas.
For instance, all shareholders should be included in the process of creating business ideas, and this should include all workers from subordinates all the way to the company directors. This will help in reducing complexities of the capital budgeting.
Substantive manner for creating a convergence between the interest of shareholders and managers
The existence conflicting interests especially between the company managers and the shareholders in any organization is normal (Freeman, Harrison, Wicks & Parmar, 2010). The conflict of interest is important to the manager as they will be able to identify potential conflicts and give solutions to the convergence.
The main issue arises from the profit distribution especially among the managers and shareholder where shareholders would like the profits to be distributed inform of dividends while the mangers would want it inform of bonuses. When it is issued as a bonus, then the company will be less profitable. On the other hand, the company will be more profitable when the profits are issued inform of dividends since there will continuous flow of cash for investments in the company.
References
Buuitjens, J. (2000). Excel Preliminary Economics. New York: Pascal Press.
Freeman, E., Harrison, J., Wicks, A., & Parmar, B. (2010). Stakeholder Theory: The State of the Art. United Kingdom: Cambridge University Press.
McGuigan, J., Moyer, C., & Harris, F. (2014). Managerial Economics: Applications, Strategies and Tactics (13th ed.). Stanford: Cengage Learning.
Moreno-Dodson, B., & Wodon, Q. (2008). Public Finance for Poverty Reduction: Concepts and Case Studies from Africa and Latin America. World Bank Publications.
Rothbard, M., & Stringham, E. (2006). Power & Market: Government and the Economy. Create Space Independent Publishing Platform.
