Verizon Wireless recently ran a pricing trial to estimate the elasticity of demand for its services. The manager selected three states that were representative of its entir
Question 1: (1 Page ; include 3-4 APA references) Verizon Wireless recently ran a pricing trial to estimate the elasticity of demand for its services. The manager selected three states that were representative of its entire service area and increased prices by 5% to customers in those areas. One week later, the number of customers enrolled in Verizons cellular plans declined 4% in those states, while enrollments in states where prices were not increased remained flat. The manager used this information to estimate the price elasticity of demand for Verizon and, based on her findings, immediately increased prices in all market areas by 5% in an attempt to boost the companys 2020 annual revenues. One year later, the manager was perplexed because Verizons 2020 annual revenues were 10% lower than those in 2019: the price increase apparently led to a reduction in the companys revenues.
Did the manager make an error? Explain.
Discussion Question Information: Answer all questions thoroughly, and be sure to provide one (1) direct response to the discussion question prompt and one (1) peer response. When posting peer responses, elevate your peers by asking probing questions that encourage your peers to engage in a more meaningful and deeper manner or by presenting additional ideas from research.
Question 2: (1 Page ; include 3-4 APA references) The Boeing Commercial Airline Group (BCAG) recently recorded orders for more than 15,000 jetliners and delivered more than 13,000 airplanes. To maintain its output volume, this Boeing division combined efforts of capital and more than 90,000 workers. Suppose the European company Airbus enjoys a similar production technology and produces a similar number of aircraft but that labor costs (including fringe benefits) are higher in Europe than in the United States. Would you expect workers at Airbus to have the same marginal product as workers at Boeing? Explain carefully. Complete your discussion response and respond to one other classmates response.
Question 3: (1 Page ; include 3-4 APA references) Business-process outsourcing (BPO) is a type of outsourcing that consists of contracting operations and responsibilities of a specific business process (e.g., human resources) to a thirdparty service provider. Such outsourcing generally began with manufacturing firms outsourcing their supply chain but has grown into a much wider range of processes, including marketing, finance, sales, and accounting. Competition among firms in the BPO market is strong. Companies based in the United States include HP Enterprise Services, Affiliated Computer Services, and Automated Data Processing (ADP). A number of Indian companies, however, also provide worldwide BPO services, such as Infosys, Wipro, and Genpact. An article in Business Wire suggested that BPO can save end users anywhere from 30-50% . International BPO service providers are particularly attractive since offshore labor offers an additional 25-30% cost savings. Furthermore, approximately 25% of the cost savings results from BPO firms proprietary products. The remaining 10-30% in cost reduction accrues from consolidated operations. Suppose you are the manager of a company and must decide whether to outsource your Human Resources department.
Based on the information above, please outline arguments supporting and opposing a decision to outsource this function of your business. Use the IRAC method to outline your argument: o Identify the issue. o Relevant examples or similar cases – Here you need to explain the relevant examples or similar cases, not just list them. This could include sections of other corporate examples, cases, or laws.
o Application to the facts – the examples are applied to the facts of the issue identified.
o Conclusion.
Please explain, from a purely business standpoint, any issues that might arise from contracting with an international-based versus U.S.-based BPO service firm?
Question 4: (1 Page ; include 3-4 APA references) Firms like Papa Johns, Dominos, and Pizza Hut sell pizza and other products that are differentiated in nature. While numerous pizza chains exist in most locations, the differentiated nature of these firms products permits them to charge prices above marginal cost.
Given these observations, is the pizza industry most likely a monopoly, perfectly competitive, monopolistically competitive, or an oligopoly? Use the causal view of structure, conduct, and performance to explain the role of differentiation in the market for pizza. Next, apply the feedback critique to the role of differentiation in the industry.
Question 5: (1 Page ; include 3-4 APA references) Analyze the following scenario by incorporating what you learned in Chapters 9 & 10 of your textbook and answer the following question:
Coca-Cola and PepsiCo are the leading competitors in the market for cola products. In 1960 Coca-Cola introduced Sprite, which today is among the worldwide leaders in the lemon-lime soft drink market and ranks in the top 10 among all soft drinks worldwide. Prior to 1999, PepsiCo did not have a product that competed directly against Sprite and had to decide whether to introduce such a soft drink. By not introducing a lemon-lime soft drink, PepsiCo would continue to earn a $200 million profit, less than Coca-Colas profit of $300 million.
Suppose that by introducing a new lemon-lime soft drink, one of two possible strategies could be pursued: o PepsiCo could trigger a price war with Coca-Cola in both the lemon-lime and cola markets.
Coca-Cola could acquiesce and each firm would maintain its current 50/50 split of the cola market,while splitting the lemon-lime market 30/70 (PepsiCo/Coca-Cola).
If PepsiCo introduced a lemon-lime soft drink and a price war resulted, both companies would earn profits of $100 million. Alternatively, Coca-Cola and PepsiCo would earn $275 million and $227 million, respectively.
If PepsiCo introduced a lemon-lime soft drink and Coca-Cola acquiesced, they could split the markets.
Imagine you are a manager at PepsiCo and explain your answer to the following question: Would you try to convince your colleagues that introducing the new soft drink is the most profitable strategy by explaining the reasoning and theoretical analysis? Why or why not?
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