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Question

Assignment 2: Operations Decision
Due Week 6 and worth 300 points

Using the regression results and the other computations from Assignment 1, determine the market structure in which the low-calorie frozen, microwavable food company operates.

Use the Internet to research two (2) of the leading competitors in the low-calorie frozen, microwavable food industry, and take note of their pricing strategies, profitability, and their relationships within the industry (worldwide).

Write a six to eight (6-8) page paper in which you:

1. Outline a plan that will assess the effectiveness of the market structure for the company’s operations.Note: In Assignment 1, the assumption was that the market structure [or selling environment] was perfectly competitive and that the equilibrium price was to be determined by setting QD equal to QS. You are now aware of recent changes in the selling environment that suggest an imperfectly competitive market where your firm now has substantial market power in setting its own “optimal” price.

2. Given that business operations have changed from the market structure specified in the original scenario in Assignment 1, determine two (2) likely factors that might have caused the change. Predict the primary manner in which this change would likely impact business operations in the new market environment.

3. Analyze the major short run and long cost functions for the low-calorie, frozen microwaveable food company given the cost functions below. Suggest substantive ways in which the low-calorie food company may use this information in order to make decisions in both the short-run and the long-run.

TC = 160,000,000 + 100Q + 0.0063212Q2
VC = 100Q + 0.0063212Q2
MC= XXXXXXXXXX0126424Q

4. Determine the possible circumstances under which the company should discontinue operations. Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response.(Hint: Your firm’s price must cover average variable costs in the short run and average total costs in the long run to continue operations.)

5. Suggest one (1) pricing policy that will enable your low-calorie, frozen microwavable food company to maximize profits. Provide a rationale for your suggestion.

(Hints:

· In Assignment 1, you determined your firm’s market demand equation. Now you need to find the inverse demand equation. Having found that, find the Total Revenue function for your firm (TR is P x Q). From your firm’s Total Revenue function, then find your Marginal Revenue (MR) function.

· Use the profit maximization rule MR = MC to determine your optimal price and optimal output level now that you have market power. Compare these values with the values you generated in Assignment 1. Determine whether your price higher is or lower.)

6. Outline a plan, based on the information provided in the scenario, which the company could use in order to evaluate its financial performance. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term, and the fundamental manner in which each factor influences managerial decisions.

(Hints:

· Calculate profit in the short run by using the price and output levels you generated in part 5. Optional: You may want to compare this to what profit would have been in Assignment 1 using the cost function provided here.

· Calculate profit in the long run by using the output level you generated in part 5 and cost data in part 3 and assuming that the selling environment will likely be very competitive. Determine why this would be a valid assumption.)

7. Recommend two (2) actions that the company could take in order to improve its profitability and deliver more value to its stakeholders. Outline, in brief, a plan to implement your recommendations.

8. Use at least five (5) quality academic resources in this assignment.Note: Wikipedia does not qualify as an academic resource.

Your assignment must follow these formatting requirements:

· Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

· Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

· Analyze short-run and long-run production and cost functions.

· Apply macroeconomic concepts to changes in global and national economies and how they affect economic growth, inflation, interest rates, and wage rates.

· Evaluate the profit-maximizing price and output level for given operating costs for monopolies and firms in competitive industries.

· Use technology and information resources to research issues in managerial economics and globalization.

· Write clearly and concisely about managerial economics and globalization using proper writing mechanics.

Clickhere to view the grading rubric.

David · Accepted Answer

Running Head: Assignment 2: Operations Decision    
1
Assignment 2: Operations Decision 
Author’s Name 
Affiliation
Assignment 2: Operations Decision  2 
 
Introduction 
 Fast food industry is a highly competitive in nature mainly due to the existence of many 
players in the market who drives equilibrium prices up and down depending on the demand and 
supply trend. There has been rising demand of low calorie frozen, microwavable food products 
in the market as people have been changing their lifestyles to improve their health. They look 
forward for such healthy diet and instant foods to manage their personal health concerns and 
professional life simultaneously. Even if people consider frozen food meals to be less healthy, 
there are ample choices available in the market which makes use of good ingredients along with 
low sodium content. Such items represent combination of nutrition and convenience having low 
preservatives and no artificial ingredients. Two companies manufacturing such kind of low 
calorie microwavable food items are Lean Cuisine and Healthy choice.  
 The company Lean Cuisine was established in 1981 under the brand of Nestle selling 
more than 100 healthy frozen food products across the globe. The word ‘Lean’ used in the name 
of the company represents meeting the low fat criteria of less than 10 gram in a specific quantity 
of food along with lower cholesterol level of 95 mg. Hence, it contains very low calorie and it 
can be cooked in microwave as it is a frozen product. The profitability of the company is high 
enough as it has few close competitors in the market such as Healthy Choice under the 
manufacturer named as ConAgra Foods. Major portion of market share has been captured by 
these two companies which mean they face downward sloping demand curve as marginal 
revenue falls by selling one more unit of output. Both the companies charge prices higher than 
the marginal cost of production representing mark-up pricing strategy due to control over market 
forces of frozen food industry. Intensive completion is faced by these two industries mainly from 
H.J. Heinz Company and Kraft Foods. Hence, there is constant pressure over these companies to 
Assignment 2: Operations Decision  3 
 
innovate their products in numerous ways so that their competitors do not wipe them out of the 
existing market of U.S, Australia and Canada (Singhal, Gupta & Kulkarni, 1991). There are few 
threats and opportunities to the existing industry such as people always prefer fresh food 
products rather than using frozen foods containing preservatives. So companies need to indulge 
into innovations by minimizing the usage of sodium and other such preservatives for increasing 
the life of the items in the freeze. It also limits the demand of frozen microwavable foods into the 
markets like Japan and Mexico as better healthful alternatives are highly available in the 
markets.
Plan for assessing the effectiveness of the market structure for the company’s operations 
 The operations of the company are affected by the information available about the 
demand pattern, target market and supply of inputs conditions. The costs of the organizations are 
usually controlled by the number of firms existing in the industry making it either Oligopolistic 
form or Monopolistic form of market structure. The difference between these two forms is that 
Oligopolistic firm has very few sellers in the market which is not the case in the frozen food low 
calorie microwavable industry. They are interdependent on the basis of their reaction curves 
because when one firm revise prices of its products, it will prompt other firms as well to make 
changes in its price of similar products. Hence, there is close inter-connection between these 
firms representing more rivalrous business environment (Wolke & Zakin, 1992). 
It is quite important for the business firms representing this industry to differentiate their 
products on the basis of taste, colour, calorie content, and other nutrition content to reformulate 
food items according to consumer demands. They develop a strong ability to adapt to the 
changes like rise in health consciousness of the consumers which makes them to shift over 
Assignment 2: Operations Decision  4 
 
vegetarian diet rather than consuming more of non-vegetarian frozen food products. Firms 
should quickly go through such transformations and change their supply patterns. Also,

Students, please view the "Submit a Clickable Rubric Assignment" in the Student Center. Instructors, training on how to grade is within the Instructor Center. Assignment 2: Operations Decision Due...

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