Plan
The concept of fresh and healthy low calorie food is gaining a lot of attention of the restaurants. Today people want to live a healthier life so healthy food is now being served in schools, restaurants and even in prisons. The paper is intended to plan an outline for the managers forestalling the increase in prices, to examine the impact of the government on employment and manufacture, conclude if the regulations are rational, analyze the major complications under extension through capital projects and finally to suggest how an organization could generate conjunction between managers and stock holders’ benefits.
It is in the best interest of the company to keep the inflexible prices of products for as long as possible. It depicts that buyers or consumers discernment regarding the product and decision to buy it or not is not reliant on the pricing strategy. In general such a demand for the product only occurs when the product is a basic necessity for a buyer who has no choice other than to buy it. But the situation is different for microwaveable food. The demand and sale of the calorie conscious microwavable food product is reliant on a number of factors, such as price of the supply, alternates of the product, expenditures of the advertisement, with the major factor being the level of income or revenue of a consumer.
Due to the help of elasticity and the function of demand it is evitable that the low calorie microwaveable food will fit best into the competitive type of monopoly. A rational quantity of sellers and consumers extricate the monopolistic competitive advantage. The deviation and switching from this product to other brands can happen as a result of the mounting prices. However, the monopolistic competitive sellers carry out product distinction and thus appeal to customers.
It has been concluded from the previous discussion that the demand for low calorie microwavable food is inelastic. Proceeding further with the aim to maintain the position in the market with inelastic demand nature, the company will put effort into making a competitive edge in the product and distinguishing it from other products considered as alternative or substitutes. If the product is having a competitive edge then the consumer will stay loyal to the product and will not search for the substitutes. As a result the demand of the alternate product will become inelastic automatically.
We are acquainted with the statistic; the more the product is differentiated from others, the larger market place and power it will enjoy. Therefore, it is ideal to make dynamic alterations in products with inelastic nature since it will distinguish them and ensure optimum profits. (Charlton, Kähkönen, Sacks, & Cameron, 2015)
Major effects of government policies
It is believed that the regulation of the market should be in hands of the government. Structured or regulated markets can only be substituted with non-structured markets. It is believed that the government should regulate the market. Often the government is irrespective of the region or demographics and is criticized as being useless and pointless; however, most people do not realize that some tasks can only be done by the government.
There is a number of arguments concerning the boundaries of the government interventions in the market and a long history of discussion regarding which services and actions should be part of the government’s regulations and activities. The arguments regarding the government intervention include the following points: a) whether or not the markets can be successfully regulated without the government; b) whether or not it is appropriate to talk about the government’s intervention considering that the economic activity should be supervised by the government. It should be noted that sticking to the government interventions only is not an ideal scenario. The major reasoning favor of the government intervention is its ability to establish rules for an exchange activity in the market and to reinforce their implementation. A large number of economic theories have supported the importance of government interventions. In addition, these theories have argued in favor of government intervention and concluded that it helps to create equality of income and wealth, prohibits the illegal business activities, etc. In aggregate there are always new opportunities provided to the people by the market economy but risks associated with it are also very high. (Malena & Marcusb, 2017)
Government regulation to ensure fairness
The government intervention is beneficial for individuals, private entities, and public entities. The government collects information that is imperfect and rectifies it for the benefit of the overall economy. The individuals that are mostly from the private sector are not good at judging the benefits and interests of the overall economy. The US government should give funding to the services and products that are considered beneficial to the economy of the country and are in the best interest of the American people. It is mostly deliberated that if there is little or no intervention from the government than the overall market will become inefficient without the use of economic and managerial strategies. It is most likely to be the best opportunities for the private companies to exploit customers with the help of mergers and by acquiring the other companies. This strategy helps to create the monopoly, which in turn provides standard products and services at a higher price. In this scenario it is the responsibility of the government to prevent this from happening by discouraging monopolies creation and securing customers’ rights. As apposed to monopolists, the government attempts to provide an optimal production capacity in the market. In the absence of government regulations it is impossible to keep prices stable due to the high competition. In most of the markets where the government intervention is not noticed the low standard products are supplied into the market to compensate the lower prices for the products. (Rodgers, 2016).
The first example for the government intervention is the extreme and big production of the externalities by the companies and factories. To make it more understandable, the externalities here mean the negative impact on the surroundings. The production plants contribution in producing smog is the externality and it is causing harm to the environment. The impact of the externalities will increase if there is no negative consequence for the producers as there will be no risk. The same thing is depicted in China where there is extreme smog due to manufacturing and the people are advised to put on masks and make least outdoor visits for any purchase and services. The mainstream of the production is exported to the US where the consequences for such acts are strict as compared to Japan.
The second example is the merger of Kraft and Heinz. Both the US companies have the big market share and are considered market leaders. The merger of both of the companies is a monopoly that has significant influence on the businesses. The government intervention to regulate the market is necessary as well-structured market enhances productivity and profitability of production. The third example is the government intervention in the banking sector for regulation as the rights of an average individual are secured like the prosecution of Dennsi Kozloski after loot of $600 million. (Berg, 2016)
Major complexities
Before getting into merger or expansion it is worth to remember that the risk of the investment, cost and the benefits are worth taking the risk. The source of capital is used to collect capital for the expansion. This can create a defensive argument situation among the two parties of mangers and the shareholders. The shareholder reserves are the convenient mode of the raising the capital for the managers. The capital raising is a complex task in a corporation. There is also a possibility that in condition of self-expansion by the company it won’t offer the same or less perks and benefits to the stakeholders as it could be in the scenario of the merger.
The self-expansion scenario is not encouraged as it requires high risks, cost and more vulnerability of the corporation in case of merger the company will be able to share the latest technology, resources and the profits with the other company. This will result in the higher profits. The merger is more preferred option than the self-expansion. The merger will also contribute in the distribution of the loss and the burden won’t have to be bared by the sole company keeping it a little burden free and also as a group player. (Griffis, Autry, Payne, & Moore, 2016)
Convergence between the interests of stockholders and managers
The main directors of the company are the stock holders. Their motive is to increase the value of the share price. At the same point the manager of the company has the same objective. That is why conflict is always there in between these two parties for the sake of interest. The convergence of these two parties is the vital task for the company. This can be done with the help of few strategies. The convergence between the shareholders and managers can be assured by paying the managers in accordance with the performance level of the respective managers. The motivation level of the mangers will boost up if they are rewarded with the stocks of the company in the honor of their performance for the company. This will make them work hard to increase the value of the shares. As a result the stockholder gets benefit from the increase in the share value. So the unity among the managers and shareholders will be done and the conflict of interest will be resolved. The ultimate profit of the convergence can result in the conversion of the managers into the stockholders of the company at some time. Henceforth the benefits of the mangers and the stockholder get united. This will create the enhancement in the performance of the managers and also the devotion towards the benefits of the stockholders. The market value and shares of the company will experience boost and the increase in the number of the shareholder will also be added as a benefit to the company. This whole scenario will increase the benefit and profitability of the complete organization. The low calorie frozen microwaveable food will enjoy profits in full manner. (Neesham & Freeman, 2016)
References
Berg, M. V. (2016). Public policy and promoting the Health At Every Size Philosophy. Fat Studies, 6(2), 223-231.
Charlton, E., Kähkönen, L., Sacks, G., & Cameron, A. (2015). Supermarkets and unhealthy food marketing: An international comparison of the content of supermarket catalogues/circulars. Preventive Medicine, 81, 168–173.
Griffis, S. E., Autry, C. W., Payne, G. T., & Moore, C. B. (2016). Project Complexity and Bonding Social Capital in Network Organizations. Group & Organization Management, 1-35. Web.
Malena, J., & Marcusb, A. A. (2017). Promoting clean energy technology entrepreneurship: The role of external context. Energy Policy, 102, 7-15.
Neesham , C., & Freeman, S. (2016). Value Creation as Business Commitment to Responsible Consumption. Emerald Group Publishing Limited.
Rodgers, S. (2016). Minimally Processed Functional Foods: Technological and Operational Pathways. Food Science, 81(10), 2309–2319.