Managerial decision making: Market Structures
I need help answering the following questions:
1) Creat a solution using strategic variables available to you to sustain the economic profits a business can earn.
2) What are some of the pricing strategies that you would recommend?
3) What are some of the non-pricing strategies that you would recommend?
4) What kind of innovations would you propose to sustain the organization's uniqueness?
...mpany enjoys a monopoly, it can charge higher than market prices, however anti-trust law can be violated and the government may challenge your company in court. Further the Clayton Act does not permit price discrimination or exclusive deals among a few customers.
For a new product your company should adopt a penetration pricing strategy that will build market share quickly and get profits from repeated sales. The purpose of the penetration strategy is to establish a market share for your producing.
Alternately, if your product has a high demand and is innovative a price-skimming strategy is recommended. This strategy should be adopted to make profits in general but in particular to recoup the R&D costs that your company has incurred.
Again if your product is in direct competition with other producers, the competitor may react to the introduction of your product. In other words, there is a need for a competitive pricing strategy. You need to keep your prices a little lower than that of your competitor and try attract customers to your product. After the share has been achieved, your company can continue to keep prices slightly lower than that of your competitors and maintain the market share.
3) What are some of the non-pricing ...