Economics Government Regulation and Effects of Corporate Restructuring

Poor planning leads to loss of resources and in extreme levels to the collapse of the enterprise. Therefore, it is very crucial for organizations to make clear plans that would act as the blueprint for the business (Baker &amp. English, 2011. Singh, 2012).
The price that a food processing company should charge for its commodities should range between the lowest price at which the company may not make a profit at all, to the highest price that is likely to reduce the demand of the products if charged. In such a case, a company should consider both the internal and the external factors in order to get the most appropriate price between these two extremes. Introduction of new products calls for the adoption of a proper pricing strategy that would completely discourage competition from the newcomers (other firms) and most importantly create the desired impact in the market (Kurtz, 2012). Penetration and skimming pricing strategies are some of the basic strategies that may be adapted to determine the right price of the commodity.
Skimming pricing encompasses launching a product at a relatively high price and later on reducing it if necessary (Kurtz, 2012). This strategy spends a lot of money in product promotion and is recommended mostly when the demand for the product is not predictable. The strategy is common especially if the company had spent large sums of money on research, when the promotion is likely to expend a lot of money due to the competition, and when the commodity is very innovative in a way that the market is likely to mature gradually.
The skimming strategy has numerous advantages such as ensuring that the elasticity of the products price is low as well as ensuring that minimal cross elasticity of demand exists in case there exist products that are close substitutes.