Greener Grass Company (GGC) competes with its main rival, Better Lawns and Gardens (BLG), in the supply and installation of in-ground lawn watering systems in the wealthy western suburbs of a major east-coast city. Last year, GGC’s price for the typical lawn system was $1,900 compared with BLG’s price of $2,100. GGC installed 9,960 systems, or about 60% of total sales and BLG installed the rest. (No doubt many additional systems were installed by do-it-yourself homeowners because the parts are readily available at hardware stores.)
GGC has substantial excess capacity–it could easily install 25,000 systems annually, as it has all the necessary equipment and can easily hire and train installers. Accordingly, GGC is considering expansion into the eastern suburbs, where the homeowners are less wealthy. In past years, both GGC and BLG have installed several hundred systems in the eastern suburbs but generally their sales efforts are met with the response that the systems are too expensive. GGC has hired you to recommend a pricing strategy for both the western and eastern suburb markets for this coming season. You have estimated two distinct demand functions, as follows:
Qw =2100 – 6.25Pgw + 3Pbw + 2100Ag – 1500Ab + 0.2Yw
for the western market and
Qe = 36620 – 25Pge + 7Pbe + 1180Ag – 950Ab + 0.085Ye
for the eastern market, where Q refers to the number of units sold; P refers to price level; A refers to advertising budgets of the firms (in millions); Y refers to average disposable income levels of the potential customers; the subscripts w and e refer to the western and eastern markets, respectively; and the subscripts g and b refer to GGC and BLG, respectively. GGC expects to spend $1.5 million (use Ag = 1.5) on advertising this coming year and expects BLG to spend $1.2 million (use Ab = 1.2) on advertising. The average household disposable income is $60,000 in the western suburbs and $30,000 in the eastern suburbs. GGC does not expect BLG to change its price from last year because it has already distributed its glossy brochures (with the $2,100 price stated) in both suburbs, and its TV commercial has already been produced. GGC’s cost structure has been estimated as TVC = 750Q + 0.005Q2, where Q represents single lawn watering systems.
Show all of your calculations and processes. Describe your answer for each item below in complete sentences, whenever it is necessary.
Derive the demand curves for GGC’s product in each market.
Derive GGC’s marginal revenue (MR) and marginal cost (MC) curves in each market. Show graphically GGC’s demand, MR, and MC curves for each market.
Derive algebraically the quantities that should be produced and sold, and the prices that should be charged, in each market.
Calculate the price elasticities of demand in each market and discuss these in relation to the prices to be charged in each market.
Add a short note to GGC management outlining any reservations and qualifications you may have concerning your price recommendations.
1. Presentation The Fleece Countryside Inn is an enormous occasion and café scene situated in Halifax. It endeavors on giving help greatness to all clients while keeping up a nostalgic bar climate with current elucidations. As a little to medium-sized business, it as of now works with 42 representatives. In any case, as a business with high shopper traffic, it uses an EPOS requesting framework instead of the customary utilization of pen and paper. The business is principally centered around its crucial give administration greatness and keep up its notoriety for being one of the world class diners in the neighborhood. The entrepreneurs settle on all significant level vital business choices, in any case, lower level operational choices, for example, staff levels, stock control and menu turn is taken care of by supervisors. This report will talk about the present importance of vital arrangement inside a business and draw direct connections between The Fleece Inn's present data framework system contrasted with its business methodology. From these discoveries, I will layout and legitimize suggestions to improve their present data framework technique with an end goal to guarantee that The Fleece supports its business strategic keeps up a focused edge in a jam-packed market. The EPOS framework takes into account an increasingly computerized requesting procedure empowering workers to take arranges and enter them straightforwardly into the framework for the request to be imprinted in the kitchen for the gourmet specialists to get ready. All the more critically, the framework figures the entireties of client bills taking into account productive and precise financial computations while lessening the factor of human mistake. Moreover, it permits overseeing staff to have an ongoing outline of the eatery. Issues with the present innovation exist in the absence of EPOS framework usefulness and current business specialized techniques. The Fleece's EPOS framework right now being used has no usefulness to record and accomplish client data. Furthermore, business specialized strategies for email, telephone and informal exchange are arduous and obsolete. Thus, this forces real effects on business methodology and income as staff are regularly too occupied to even think about answering the telephone or messages bringing about loss of business and client disappointment. 2. Hierarchical investigation Johnson characterizes the three fundamental auxiliary sorts, the multidivisional structure, the practical structure and the network structure (2012). The Fleece works a practical hierarchical structure (allude to index 1), as the structure separates duties dependent on a worker's job inside the business (Pearlson and Saunders, 2009). Johnson contends the utilitarian hierarchical structure to be all the more noticeably utilized in little and medium associations with a restricted degree, which supports why it is utilized The Fleece (2012). This improves worker correspondence and job learning as staff are assembled inside a similar activity work. In this manner, they become acclimated with working with each other and progressively experienced staff can help more current staff inside their job without the necessity of a supervisor present. The practical structure guarantees clear division of the board levels all through the basic leadership process when creating vital business choices. Procedure is usually separated into three particular levels; utilitarian methodology, business technique and corporate system (allude to supplement 2). The three degrees of methodology each identify with various levels inside The Fleece's authoritative structure, as exhibited in reference section 3 (Johnson, et al., 2014). The Fleece's significant level vital basic leadership procedure includes the thoughts and assessments of directors, in any case, last business developments are at last chosen by the entrepreneur. Watchman guesses that there are two principle kinds of business technique; cost authority and item separation (Miles, 2003). The Fleece uses item separation as its primary key driver, intending to convey on its business strategic be the tip top restaurant in the neighborhood. It could likewise be contended that The Fleece persists a cost separation procedure contrasting from contender costs being one of the more costly restaurants. A 2017 BBC report into the 'brain research behind spending huge' found that clients not just appraised a similar item more exceptionally when they were told it was progressively costly, mind sweeps taken proposed they delighted in the experience increasingly in general (Wen, 2017). 3. Current Technology set up As a medium-sized effectively fruitful business, the proprietors are hesitant to put vigorously into IT without obvious advantages. Thusly, The Fleece's just Information framework (IS) speculation has experienced the acquisition of its EPOS framework. The EPOS framework computerizes the activity elements of staff and gather deals information for the business. Information investigation has turned into a colossal part of business strategizing a 2017 report by DOMO found 2.5 quintillion bytes of information is all inclusive produced every day (Forbes, 2018). Accordingly, Big Data holds huge incentive to associations through the capacity to create inventive bits of knowledge and improve comprehension of issues (Dietrich, et al., 2015). In this way, to grow this innovation further The Fleece could use information examination and knowledge instruments to give further understanding into deals information and help manufacture client profiles which will further adjust the IS and business technique. In addition, the business to client (B2C) specialized strategies right now utilized; email, telephone and informal exchange are profoundly wasteful. The Fleece doesn't have any workers whose immediate job is it keep up client interchanges, along these lines, the reaction time to clients isn't adequate bringing about client disappointment and loss of income. To neutralize this issue, the business could join table booking usefulness to the previously existing site. This would enable clients to book web based, diminishing staff outstanding burden and empowering the business to catch and gather client data such an email address and from this send financially savvy focused on publicizing and showcasing. Johnson clarifies that item separation done effectively makes an upper hand, as customers see the item as being one of a kind or prevalent (2012). Along these lines, for The Fleece to keep up its upper hand and accomplish its business crucial must give an assistance better than that of nearby challenge. An ongoing report by EPSILON found that 90% of clients discovered personalization engaging, while 80% said they were bound to work with an organization that offers customized approaches (Patel, 2017). The utilization of information investigation inside the business would enable The Fleece to set up and manufacture client connections through the obtaining of their buy information. Current B2C associations with standard clients are manufactured and kept up through informal exchange and easygoing discussions. Notwithstanding, as staff pivots are very high inside the business when an individual from staff leaves the business as too does the relationship that they have worked with the client. The documentation of this information would help manufacture and make an exact purchaser profile. Additionally, the information could be utilized to fortify business connections by compensating returning clients with offers and improve client maintenance by sending offers to clients that have not come back to the business in some time. Dietrich, et al. depicts information obtaining as an inestimable knowledge into precisely understanding customer personal conduct standards. As the main information gathered presently inside The Fleece is day by day figures improving this innovation further could furnish The Fleece with vital business learning, for example, most well known items, prominent items by day, client consistency standard, normal client spends ext. From this, the business can see what items are selling most adequately and utilize the information to precisely foresee and contrast income with reason when offers would be best (2015). 4. Vital arrangement The term vital arrangement is alluded to in writing by Henderson and Venkatraman as 'linkage', by Luftman as 'amicability' and by Porter as 'Fit' (Avison, 2004). Independent of the term, the definition alludes to the exercises that administration performs to accomplish firm objectives through the arrangement of its innovative asset and key desire (Luftman, 2000). There is much exchange about what is implied by arrangement, why it is required and how associations can turn out to be progressively adjusted, albeit many reason that arrangement is constantly attractive (Sabherwal, 2001; Luftman, 2000; Avison, 2004). Sabherwal (2001) composes strong arrangement between associations IT assets and key objectives are compensated in three different ways; by giving vision and course to respond to new chances, by acquiring and keep up upper hands through Information Systems (IS), and by expanding return on hierarchical IT speculations. The Strategic Alignment Model (SAM) was first presented by Henderson and Venkatraman in 1989 (allude to informative supplement 4). The model is utilized as a device to envision and survey an associations arrangement between their business and innovative methodologies (Henderson and Venkatraman, 1989). It demonstrates significant for an associations official administration intending to accomplish a degree of arrangement. The key hypothesis of the SAM is, to turn into a progressively capable association, the business methodology ought to be completely lined up with the four vital spaces: business technique, IT system, hierarchical framework and IT foundation (Rothchilde, 2006). Avison states that despite the fact that the SAM model has reasonable and down to earth qualities, its structure has frail pragmatic application in deciding current arrangement levels (2004). The Strategic Alignment Maturity Model (SAMM) created by Luftman is developed of six criteria which can be perceived in the model of Henderson an>GET ANSWER