Dr. Bernadette West
Managerial Economics and Globalization
May 18, 2014
When it comes to low-calorie frozen microwavable foods the top two companies are Healthy Choice and Lean Cuisine. In this paper I will discuss one of their competitors. First outline a plan that will assess the effectiveness of market structure for the company’s operations. Then I will determine two factors that likely factors that caused the change in market structure. Next I will analyze the major short run and long run cost functions for this company given certain cost functions. In this analysis I will suggest substantive ways in which the company can use that information to make decisions in the short and long run. Then I
…show more content…
“As customer requirements change, an organization that stays in alignment with its markets will form new business units or alter the market charters of existing business units” (Houston, Walker, Hutt, & Reingen, 2001 p19). If a company wants to stay in business then it has to make sure that it keeps up with what its customers’ needs. When customers decided that they wanted to have healthier choices for their frozen dinners companies had to change what they were offering. This changes allowed for greater product differentiation which meant that all of the different products were not perfect substitutes for each other. Since all of the different brands were not perfect substitutes for each other it meant the companies were no longer operating in a perfect competition (Mcguigan, Moyer, & Harris, 2014). The entry of so many other companies also changed the structure because it took away business from some of the other companies. When the new companies took away business from some companies it enabled some companies to become dominant and hold a good portion of the market share. This change in market structure would cause each company to push for more and more product differentiation so they can not only stand out but use that differentiation to build up customer loyalty.
Cost Functions In order to figure out what the short and long run cost functions we will be using the following information: TC= 160,000,000 + 100Q +