Long Term Investment Decision by a Company

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Long Term Investment Decision By A CompanyDiscuss the factors that a company producing low-calorie microwavable food should considerwhen making long-term investment decisions, with a focus on pricing strategy, market elasticity,government regulations, and capital budgeting. Analyze how these factors influence profitabilityand strategic growth. Your answer should be 1000-1200 words.

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The producers of low calorie microwavable food have been expecting a change in price and theywant to choose the price strategy which would make their product less elastic and responsive tochanges in the prices, then the company should make careful analysis of the entire marketsituation. The company should look for the substitute goods in the market and their pricingstrategy. Higher the number of substitutes are available, higherwill be the chance of rise inelasticity of our low calorie microwavable food. The buyers should not have many optionsto buyfrom the market.However, if there areonly few substitutes available, then the producers maykeep the price high in the market of their product. It is also determined by the market power ofthe producer. Market power isdetermined by the elasticity of demand of the product.The firmcan set higher mark-up over their marginal cost if they know that customers will not shift toanother product in case of price increase. Hence, the firm or the producer shouldconsider thecross price elasticity of demand of their product.Another factor to be considered while setting upprices of their product in the market is that of government policies in the economy. Fiscal policywould determine the taxes and other components of aggregate demand. If the firms have sethigher taxes, then people would have less disposable income available with them and they wouldlike to spend less on such less calorie microwavable food items becausesuch items are not thenecessity for theirsurvival. Thein that case, prices should be low in the market so that morepeople could buy our product andwe would be able to earn good amount of total revenue.Moreover, higher sales tax would also reduce the demand of our product in the market. Anotherfactor to be considered by producers to set the prices in the market is related to themonetarypolicy set by the Fed. It is the policy related to the money supply and the interest rate in themarket. Higher the money supply in the market, higher would be the chance thatpeople would

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