Managerial Economics class dicussion wk7 Essay Example | Topics and Well Written Essays - 250 words

Managerial Economics class dicussion wk7 - Essay Example Substitute goods such as barter and margarine derive the same satisfaction to a consumer and they have a high elasticity of demand in that when the price of one increases consumers will purchase the substitute hence reducing its demand. Before changing the price of such substitutes a manager should ensure that he adds value to the product in order to increase the good’s utility as compared to the substitutes. You can also consider increasing the products awareness through advertising. Cross elasticity of demand is the proportionate change in the demand of a commodity as a result of the change in the price of another commodity. Substitute goods such as cereals offer the same satisfaction to a consumer and they have a high cross elasticity of demand because when the price of one increases the demand for the other substitute product increases due to a relatively low price Krugman et al, 2010. Such substitute cereals include maize and rice. If a manager wants to reduce the cross elasticity of demand of his products he can still consider adding value to the product so that its competitive advantage is increased. High quality products should also be offered so that the customer loyalty is increased. A good will have a high income elasticity of demand if a change in its price affects the consumer’s purchasing power. A luxurious good such as a car will have a high income elasticity of demand if there is a change in the income of a consumer. If the consumer’s income reduces he will no longer be able to purchase the product hence reducing its demand by a unit. A manager can consider coming up with purchasing plans such as purchasing the goods in instalments so that they can still remain affordable to the

Trading bloc member Case Study Example | Topics and Well Written Essays - 2500 words

Trading bloc member - Case Study Example With the advantages gained through NAFTA, Quaker Fabrics products can now be resold to customers at a lower cost than it would have been had there been tariffs and licenses fees to honor. They are now able to freely access the Mexican Market and present a much more favorable deal to their partners in that country. It is now cheaper for both partners to conduct business. Quaker would also receive Preferential treatment as opposed to an outsider. Quaker now have an advantage over producers from Asia who export fabric to the United States but do not use US fabrics. (281) This results in an even bigger market for the company but serves as an disadvantage for the Asian producers who may now have a bigger challenge on their hands. They may now have to cut staff and production as there is not enough market to support them as before. In this case Quakers is now able to market their business to other businesses as being cheaper, better quality by customer preference which makes its fabrics more marketable. This may lead to business expansion and the ability to employ more persons for all the partners involved. Greed is essential for competition and survival purposes within the Business to Business marketplace. Business to Business will from hereon be referred to as B2B. ... They may now have to cut staff and production as there is not enough market to support them as before. In this case Quakers is now able to market their business to other businesses as being cheaper, better quality by customer preference which makes its fabrics more marketable. This may lead to business expansion and the ability to employ more persons for all the partners involved. 4 Business to Business Competition Greed is essential for competition and survival purposes within the Business to Business marketplace. Business to Business will from hereon be referred to as B2B. Survival of the fittest is a crucial principle within this arrangement. If an organization is to emerge as the fittest by creating and maintaining a competitive edge there are several factors that come into play. The first rule of the game is knowing your competitors and understanding the marketplace of which you are a part. Organizations have to employ strategic management tactics to arrive at the best analysis of the marketplace and use this to charter the way forward. Jain cites that, "A strategic plan specifies the sequence and timing of steps that will alter competitive relationships." (10). An organisation may have a brilliant strategy in its plans but the untimely implementation of this strategy will render it useless. In strategic planning, companies need to identify and clearly state their goals and "develop rational plans to implement them." (11). The core of strategic planning is based on the relationship of an organization to its environs.It is important that viable plans be put made based on existing and projected environmental changes. To cover all related areas of strategic planning and to execute a successful implementation