Bussiness Proposal Eco561
Business Proposal ECO/561 August 1, 2012
Business Proposal Kmart and Sears, have been using a product used in many retail industries, a shopper loyalty card; this is a concept that has been in the industry for decades however it is new to this organization. This proposal will present the market structure for this program, price elasticity demand for the product, profit-maximizing quantity, price and non-price strategies, and production costs. Define the current global economic conditions and their effect on the local macroeconomic indicators. Define the local economies current stage in the business cycle. Describe how the current market conditions will affect the planning or operating decisions involving the product. Market Structure The market structure in this instance could fall into one of two types, oligopoly or monopoly (McConnell, Brue, & Flynn, 2009). The rationale behind oligopoly is that several large retailers currently provide this service and control the availability, use, and other aspects of the programs (McConnell, Brue, & Flynn, 2009). The rationale behind monopoly is that the program is limited to each organization (McConnell, Brue, & Flynn, 2009). For example the program used at my organization is call the Shop Your Way Rewards program, it is only available at Kmart and Sears, it cannot be used at other retailers and is exclusively controlled by Sears Holding Inc. Ultimately The market structure is a combination of a monopoly and oligopoly. Price Elasticity of Demand Price elasticity of demand has little effect on this product as the product is a free program provided by the organization. Despite this fact price elasticity does have an effect on the use of the program in that the customers can earn points on purchases and in turn spend those points on other merchandise. In this instance,
Business Proposal Kmart and Sears, have been using a product used in many retail industries, a shopper loyalty card; this is a concept that has been in the industry for decades however it is new to this organization. This proposal will present the market structure for this program, price elasticity demand for the product, profit-maximizing quantity, price and non-price strategies, and production costs. Define the current global economic conditions and their effect on the local macroeconomic indicators. Define the local economies current stage in the business cycle. Describe how the current market conditions will affect the planning or operating decisions involving the product. Market Structure The market structure in this instance could fall into one of two types, oligopoly or monopoly (McConnell, Brue, & Flynn, 2009). The rationale behind oligopoly is that several large retailers currently provide this service and control the availability, use, and other aspects of the programs (McConnell, Brue, & Flynn, 2009). The rationale behind monopoly is that the program is limited to each organization (McConnell, Brue, & Flynn, 2009). For example the program used at my organization is call the Shop Your Way Rewards program, it is only available at Kmart and Sears, it cannot be used at other retailers and is exclusively controlled by Sears Holding Inc. Ultimately The market structure is a combination of a monopoly and oligopoly. Price Elasticity of Demand Price elasticity of demand has little effect on this product as the product is a free program provided by the organization. Despite this fact price elasticity does have an effect on the use of the program in that the customers can earn points on purchases and in turn spend those points on other merchandise. In this instance,