Long-Term Investment Decisions





Long-Term Investment Decisions

Question 1

Managers of the low-calorie, frozen microwaveable food company should adopt a high-low pricing model in which the prices of the products are regularly higher. This can be through advertisements and promotions with only specific foodstuffs being offered at low prices. This approach ensures that the reduction in cost serves to attract customers to purchase the items. In addition, it acts as an introduction of the goods to potential clients who may be unaware of their existence. Furthermore, this facilitates the acquisition of merchandise by buyers with minimal disposable incomes thereby allowing them to enjoy quality and nutritious food at affordable costs. Thus, they are able to develop a following owing to the benefits they receive from the valuable food items. Likewise, the firm will gain from an increase in sales.

            Similarly, the executives should then embark on an aggressive marketing campaign in both print and electronic media to build brand visibility on certain expensive merchandise (Browne 59). By pricing some things higher, the organization will cushion itself from unpredictable market trends that may threaten its financial opposition. Moreover, the promotional activities would be appropriate in reaching a wider audience as well as building brand loyalty among its clientele. As such, it would present the company with an opportunity to interact with its customer base periodically thereby equipping it with the experience to anticipate the modifications that they desire. Hence, this strategy would grant consumers the option of enjoying delicious meals at variable prices depending on their income levels. Therefore, it enhances customer satisfaction while increasing the ability of forecasting within businesses. In particular, the use of social media networks needs to be adopted due to the speed of communication and the ability to reach millions of customers in real time. It is also a convenient method due to its availability as well as the low cost of its usage. Follow-ups are easy to conduct while the client data generated can be used to predict future consumer behavior too. Customer feedback can also be provided instantaneously thereby enhancing their retention.

Question 2

The government has numerous food safety policies and programs, which are aimed at curbing the production of items that pose a health risk to consumers (Flanagan and Gould 91). For example, its insistence on the use of modern research methods to test the suitability of various ingredients could lead to an increase in the cost of production in the above company due to a large investment in technology. Thus, detailed studies would be conducted on the additives to verify their low calorie potential to avoid the use of misleading information on the packages. Consequently, the retail price would also increase. Likewise, inspections by the Food and Drug Administration could change the dietary habits of most people arising from the implementation of specific sanitation rates nationwide. For instance, as the only body mandated to approve technologies that measure food safety, it could prohibit the use of certain foodstuffs thereby leading to a decline in sales. Additionally, the outbreak of any disease could signal a shift in the production of complementary items that in turn leads to a dwindling of their availability in the market. Such a scenario would result in negative cash flows due to the decline of demand. Similarly, the government has set minimum wage requirements across the nation, which tends to subject organizations to the payment of basic salaries to their workers. These specifications would force the firm to make contractual commitments to its employees assuring them of disbursement of these funds during their tenure.

Moreover, the recognition of an individual’s right to join a union would influence the type of contract to be signed between the parties because the managers would have to deal with the union officials directly. Hence, any default on the agreed terms could subject it to cases of industrial action in which members of staff would be obliged to heed the advice of other members and join strikes. Such circumstances are likely to derail the company operations and cause an imbalance in market activity to the detriment of sales generation. Additionally, the labor laws as presently constituted are stringent on the procedure to be followed before layoffs can be done. They advocate for the issuance of an advance notice to the workforce in order to prepare them for the impending dismissals. Such measures are bound to stifle knee jerk reactions from the managers regardless of the urgency of the exercise. Despite an immediate need to reduce the labor force, the executives have to wait for the recommended time to elapse before letting them go. The need to gain approval of food additives is another issue that needs consideration too. Their prohibition or approval could influence nutritional outcomes and food choices due to their effect on palatability, shelf life and appearance. While the process is expensive and lengthy, it is necessary in boosting confidence in the products, with a positive outcome yielding higher sales revenue. Similarly, the government’s directive for non-discriminatory hiring of people as well as salary payments has a direct impact on the composition of the firm’s workforce. The human resource department would have to employ individuals from different multicultural backgrounds from both genders and pay them equal wages depending on one’s position.  This creates diversity in the workplace that is integral in integrating a global outlook of the company inn order to increase its appeal to more clients. The workplace environment is enriched as well and the cultural exchange that takes place becomes invaluable to all stakeholders involved.

Question 3

Regulation to ensure fairness in the low-calorie, frozen microwavable food industry is needed to avoid the proliferation of monotony in the sector. The entry of different businesses into this market segment has led to some of them using unethical practices to penetrate the niche while others have resorted to wrongful characterization of their produce as fitting this description. Thus, standards have to be set to bring sanity while preventing the dominance of a few organizations over others. This would make the firms equal thereby allowing buyers to choose from a wide range of products. Consequently, an administration can intervene in a market economy to correct a fiscal or monetary blunder such as a depression. This action would be necessary to avoid the collapse of the entire economy through equal wealth distribution. Furthermore, it could do so to maintain the flow of information by directing corporations to put specific details in their labels. Likewise, this intervention may be aimed at conserving the environment through reduction of pollution.

Moreover, this could be a chance to enhance competition in the market place to ensure that no hoarding takes place for the benefit of customers (Carroll 140). For example, a decrease in income taxation would be effective in attracting more investment in a particular sector in a manner that improves trade. This would be an incentive for businesses to begin operations in the sector. International trade agreements act as facilitators of the movement of raw materials, which are integral in the production of the various ingredients as well. The signing of such accords removes any barriers that might have existed and this liberalizes commerce among nations. Furthermore, it helps to reduce taxation expenses such as import duty that significantly minimizes the cost of production. Moreover, these interventions facilitate the building of alliances among strategic businesses leading to a rise in transactional activities. The partnerships may include suppliers as well as intermediaries who are vital in quick service delivery especially when dealing with large orders at short notice. This network is activated for the timely transportation of goods to various destinations to avoid damages to perishable goods such as those being handled by the above company.

Question 4

Expansion using capital-intensive projects would be costly to the company due to the need to source funds for construction as well as the purchase of infrastructure. In fact, the current peak period in real estate would increase the value of raw materials. Moreover, logistical complications may arise for the delivery of these goods to the sites. Due to the possibility of incorporating modern architectural designs, moiré funds would be required to pay casual laborers too. Hence, the stakeholders can decide to make the firm public in order to raise extra resources to fund growth. The equity generated could also be used to pay outstanding debts to improve its financial health.  

Similarly, the addition of more employees would threaten the organizational culture of the low-calorie, frozen microwaveable food establishment since new recruits would be hired. However, these people can be made to sign a code of conduct as well as attend orientation workshops to instill in them the beliefs and habits that are envisioned by the institution (Stanford 42). At these forums, the individuals would learn to integrate the physical, emotional and psychological attachments to the organization like their colleagues. Furthermore, the hierarchical structure would change to accommodate the new divisions. Therefore, a restructuring needs to be done to categorize the units according to their sizes and functions in order to simplify reporting procedures and decision-making efforts. As such, some level of autonomy has to be guaranteed to encourage healthy competition among teams while seeking to stir creativity, which would be beneficial to the overall performance of the entity. Redundancies may also occur due to the replication of responsibilities in different facilities. This duplication of roles is a wastage of time and resources that needs to be eliminated from early on. As such, a review of the job descriptions of all workers needs to be carried out to expose any overlapping functions for immediate transfer to other officials. It would improve the productivity of individual staffers while limiting unnecessary expenditure. 

Question 5

To balance the interests of managers with those of stockholders, the company can peg the former’s compensation to the overall performance of the corporation. Such a move would increase the level of commitment of these executives since they would like to earn higher bonuses through an increase in productivity. Additionally, it would be an incentive for the individuals to be loyal to the organization thereby ensuring that they set and achieve realistic goals, which are in line with the vision of the institution (Browne 35). Furthermore, it guarantees continuity of operations because the management dedicates itself to the service of the firm for a set period. By so doing, the business experiences stability in the management of affairs and this helps to boost investor confidence. Thus, the same perception is replicated on consumers who view this establishment as a safe brand to shop from, leading to more sales.

Similarly, it acts as prudent method of avoiding double taxation especially during the distribution of dividends. The surplus cash reserves can then be ploughed back to facilitate developmental projects in other departments. For example, once a manager has agreed to the above terms, resignation or poaching by rivals is not that easy. The person will be under obligation to complete his/her tenure before exiting or remaining at the establishment where the pay would still be hinged on the performance attained. Likewise, he/she would be motivated to rally junior members of staff towards meeting their targets as that would raise his/her profile. By so doing, stockholders are able to gain higher yields while executives qualify for better pay. Hence, both entities benefit mutually. It also promotes accountability because scrutiny has to be done to ascertain their contribution to the success or failure of the institution. This ensures that the employees use ethically sound tactics in the course of their duties. Such a principle is bound to attract other stakeholders who would like to be affiliated with the company resulting in a positive reputation and increase in sales.

Works Cited

Browne, Christopher. The Little Book of Value Investing. Hoboken, N.J: Wiley, 2007. Print.

Carroll, Archie . Business Ethics: Brief Readings on Vital Topics. New York: Routledge, 2009. Print.

Flanagan, Robert, and William Gould. International Labor Standards: Globalization, Trade, and Public Policy. Stanford, Calif: Stanford Law and Politics, 2003. Print.

Stanford, Naomi. Corporate Culture: Getting It Right. Hoboken, N.J: John Wiley & Sons, Inc, 2011. Print.

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