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Assignment 3: Long-Term Investment Decisions

Assume that the low-calorie frozen, microwavable food company from Assignments 1 and 2 wants to expand and has to make some long-term capital budgeting decisions. The company is currently facing increases in the costs of major ingredients.

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

1. Outline a plan that managers in the low-calorie, frozen microwaveable food company could follow in anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic. Provide a rationale for your response.
2. Examine the major effects that government policies have on production and employment. Predict the potential effects that government policies could have on your company.
3. Determine whether or not government regulation to ensure fairness in the low-calorie, frozen microwavable food industry is needed. Cite the major reasons for government involvement in a market economy. Provide two (2) examples of government involvement in a similar market economy to support your response.
4. Examine the major complexities that would arise under expansion via capital projects. Propose key actions that the company could take in order to prevent or address these complexities.
5. Suggest the substantive manner in which the company could create a convergence between the interests of stockholders and managers. Indicate the most likely impact to profitability of such a convergence. Provide two (2) examples of instances that support your response.
6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia does not qualify as an academic resource.

The specific course learning outcomes associated with this assignment are:

• Propose how differences in demand and elasticity lead managers to develop various pricing strategies.
• Analyze the economic impact of contracting, governance and organizational form within organizations.
• 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.