Assignment 3 - Long Term Investment Decisions
Outline of plan for pricing strategies to reduce products price elasticity
Low calorie Microwavable Food Company should consider the following pricing strategies to reduce price elasticity to achieve maximum profits.
1. Branding: This strategy involves creating a unique product identity, which customers can easily relate with and attach high quality. Branding is the process of creating an image or idea of a product or service in the market arena, which increases the demand for such product. It may include changing the packaging, creating brand names and improving …show more content…
Decreased demand results to lower employment rates as organizations strive to cut costs and remain competitive (Abel and Bernanke, 2001). If the government increases taxes on Low Calorie Microwavable Food Company, it will adversely affect the company’s rate of production due to decreased demand, which will result to layoff of employees to cut costs.
2. Fiscal Policy and Employment: Although there is little evidence to support the notion that taxes have significant impact on intensity, efficiency, and productivity, it is true that different fiscal policies have different consequences on employment. Some fiscal policies lead to increased productivity, which results to increased employments (Samuel and Nordhause, 2010).
3. Taxation and investment decisions: Different rates of taxation have different stimuli to the economy. For instance, favorable taxes may result to inflows of foreign direct investments, which result to increased demand and supply, which may result to increased employment due to increased production. Further, government may use tax allowances to boost research and development, which may increase business start-ups, which increase employment (Braun, 2003).
4. Fiscal policies affecting government spending: the governments have used fiscal policies, which either increase or reduce government spending. When a government reduces its spending, it constraints