If you order your research paper from our custom writing service you will receive a perfectly written assignment on Fighting the Price War. What we need from you is to provide us with your detailed paper instructions for our experienced writers to follow all of your specific writing requirements. Specify your order details, state the exact number of pages required and our custom writing professionals will deliver the best quality Fighting the Price War paper right on time.
Our staff of freelance writers includes over 120 experts proficient in Fighting the Price War, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your Fighting the Price War paper at affordable prices!
As I travel around everyday, from home to school to work I see the variation in prices with the same exact products. One example is gasoline. There are two gas stations on the corners of Rosemead and Whittier Blvd. On the southeast corner one is a Chevron station and the other on the northwest corner is a Union 76 station. Ninety percent of the time gas is nine cents cheaper in the Union 76 gas station. This cheaper gas price draws many customers and me to the Union 76 gas station. I have always wondered why is gas cheaper there? Why doesn't the Chevron station lower gas prices so they can attract more customers? In the reading and analysis of "How to Fight a Price War," by Aksahy R. Rao, I have come to comprehend that lowering prices is not always the solution. Figuring out what the solution should be is the role of a manager or management team. Managers are also an important element to the fighting and the decision making in a price war, if it were to occur.As companies in an industry are competing with each other to attract more customers to their business, they might result to lowering prices. In "How to Fight a Price War" they examine and suggest that one should first, analyze and implement other choices than lowering prices to compete with their competitors. The person(s) analyzing, implementing, and making the final decisions are the managers. In Managerial Economics & Business Strategy by Michael R. Baye a manager is defined as "a person who directs resources to achieve a stated goal." In order achieve the companies goals a manager directs efforts to others, purchase inputs for the production process, and in charge of making decisions, such as product price and quality. One important fact that is stated in the article is to first analyze and diagnose every situation. For example, if a large mattress company is cutting prices so it could drive out a smaller company out of the market, the smaller company should first analyze and not directly result to lowering prices. The manager of the small company should see if the lowered price would be below the company's marginal cost, if so it will suffer losses. The company should then result to a different alternative that has been analyzed and diagnosed, so they can compete more effectively. A good diagnosis includes customer issues, company issues, competitor issues, and contributor issues. By using these four issues in their diagnosis one could determine whether to fight, retreat or use other alternatives. After a manager has diagnosed a situation they should use another tool to help them make a better decision, "The Economics of Effective Management," is where a manager must (1) identify goals and constraints; () recognize the nature and importance of profits () understand incentives; (4) understand markets; (5) recognize the time value of money; and (6) use marginal analysis. An example of the use of this tool is, the Chevron gas station located on the southeast corner decided to give a free oil change with every 10 gallon fill up to compete with the Union 76 gas station, will this free service meet the goals identified, increase profits, increase workers incentives, and will the marginal benefits of the decision be more than the marginal costs.
Essay service for your Fighting the Price War paper
But before a company engaging in a price war, how can one prevent a price war before it starts? (1) Reveal your strategic intentions () compete on quality () co-opt contributors. In revealing a strategic intention one could advertise that it is willing to match any price, everyday low price, and other statements for customers. A company could also reveal their low total costs for a product, which warns other competitors about the potential consequences of a price war. A total cost is the sum of the fixed (bills for rent, heat, interest, etc) and variable (cost that change with changes in output) costs for any given level of production. For example, the Chevron gas station has sixteen gas pumps, a convenience store, a car wash, and an auto shop, so their total costs are high because they must maintain and buy inputs for their services. The Union 76 gas station only has ten gas pumps and has no other services to offer so their total costs are low. So the Chevron gas station will not be able to engage in a price war as effectively as Union 76 is able to.The Chevron gas station could compete with quality and service, which is number two on how to prevent a price war. The gas station has higher total costs but that is because of the products and services that they offer to potential customers. They could focus on quality and advertise it. Chevron has a product that they mix in with their gasoline, which they call "Techron." "Chevron with Techron" is advertised to produce a better gas with a higher quality, it burns cleaner and produces better gas mileage. But Chevron must pay for this advertisement and must input this information in both Linear Demand & Supply Functions to see if the price charged for "Chevron with Techron" advertisement is at higher equilibrium price and demand; compared to with out the advertisement of higher quality. Chevron can also co-opt with Pennzoil to offer a free oil change with every fifty-gallon fill up so they can both share the costs. This offer can be both a form of advertisement and a form of frequent customer bonuses. In the "How to Fight a Price War" article, it also suggests to use "Selective Pricing Actions." An example of selective pricing used in the article was M. M produces diskettes and a new competitor named Kao Corporation were entering the market with a low-priced diskette. M did not lower its prices as a counterattack but launched a new brand called Highland, which will offer a low-priced diskette. They developed a new brand because they knew they had loyal customers and they did not want M's quality image to be diluted by prices being lowered. M took actions that were analyzed and diagnosed by many different economical tools. One of the tools that they could have used was the "Economics of Effective Management." M identified goals and knew that they wanted to capture the price sensitive customers. Also acknowledging constraints one being that if they lowered prices the m quality might have been diluted resulting to losses. They recognize the nature and importance of the losses that the competitor would have caused and the profits of the new brand Highland. Overall they understood the market and its customers. They understood that not only did they have some customers that were price sensitive but that also considered the good a substitute. A substitute good is defined in Managerial Economics and Business Strategy as goods for which an increase (decrease) in the price of one good leads to an increase (decrease) in the demand for the other good. Once Kao Corporation introduced its lower price diskette, M's "price and substitute sensitive" customers will purchase from Kao.Another tool is the Linear Demand and Supply Functions, M must have used these functions in order to analyze the impact of changes in prices, income, competitors, other products, inferior or normal goods, substitutes to complements. The management team could have used the elasticities of demand to quantify the impact of changing market conditions on the company's sales.The article urges one to find an alternative that will not lead to a price war. Finding an alternative that has been well analyzed and diagnosed. In analyzing a situation and diagnosing possible alternatives are done by using many different tools, like economical and financial principles. The one thing that all companies should have in common is that they have a team, which will implement many economical and financial principles in order to make their decisions. Article states that "…sometimes simply impossible to avoid a price war," if all else fails then one must engage in the war. But even the war should be analyzed and diagnosed. Please note that this sample paper on Fighting the Price War is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. In case you experience difficulties with writing a well structured and accurately composed paper on Fighting the Price War, we are here to assist you. Your persuasive essay on Fighting the Price War will be written from scratch, so you do not have to worry about its originality.
Order your authentic assignment and you will be amazed at how easy it is to complete a quality custom paper within the shortest time possible!
