Business Proposal: Will Bury’s Price Elasticity
Beginning a new business, entrepreneurs have to make sacrifices such as time with the family as well as issues with money. As an up-and-coming entrepreneur Will Bury has made many of these sacrifices, specifically missing his daughters’ soccer games. Will “is convinced that people will be primarily reading and listening to everything by means of a digital format in the very near future” (UOPX, 2011, p. 1). He has developed and patented a proprietary technology that transfers printed word into audio by creating a file that offers the option of reading the material digitally or listening to it. Will currently has a full-time job at High Tech Digital Industries that pays him $200,000 per year salary plus a benefits package. He makes a good living and can support his family with his earnings. With his families needs in the forefront of his mind, an important decision regarding whether or not to leave his employer to pursue his dream full time is to be decided. The market structure Will faces is a pure competition because this market “involves a very large number of firms producing a standardized product and new firms can enter or exit the industry very easily” (McConnell, Brue, & Flynn, 2009, p. 177). The elasticity of demand can vary between the income levels, individual preferences, number of buyers, and the amount of substitutes that are available. The purpose of this business proposal is to analyze Will Bury’s situation and make recommendations to increase revenue and achieve ideal production levels, recommend appropriate pricing and non-pricing strategies based on the economic stage in the business cycle and macroeconomic factors, determine how marginal cost and revenue should be used to maximize profit, determine how the credit market will affect the business, determine whether to create or increase barriers to entry, determine how to increase product differentiation and identify methods to reduce costs for the product, and determine how the international economy will affect the business decisions and planning. Recommendations
Increasing Revenue & Ideal Production Levels
Regardless of the economic state, the continual goal of any organization is to increase revenue. To increase revenue strategically thinking, planning, and researching as well as development is the key for the future success. It is crucial that Will establishes a marketing and sales teams that can identify the customers' needs and create innovative solutions to benefit their customers. “Will has set up a website to sell his small catalog of digitized books” (UOPX, 2011, p. 2). He has access to free books out of copyright and charges consumers $10 for those books. In addition, the books still in copyright are offered for downloading for $15, which includes a $5 royalty fee. During the first six moths, he sold 1,000 books out of copyright and 2,000 books still in copyright. This data emphasizes that consumers are two times more interested in the current titles than the older ones. In addition, to pricing the books at an attractive price Will needs to invest in a website designer such as Intuit. To achieve the ideal production levels that will help increase revenue is to hire on others to help him digitalize each book because it is not difficult to train and takes about an hour per 500 pages to complete. This will allow his rather small collection of books to increase reaching an ideal level of production. By increasing the value of the services and products that Will Bury Enterprises provides, the organization will strategically grow resulting in increased revenue and market share. Economic Stage in Business Cycle & Macroeconomic Factors
“It’s coming in 2012: Another, bigger meltdown of Wall Street’s ‘too-greedy-to-fail’ banks” (Farrell, 2009, p. 1) The projected the United States economic stage in the business cycle 2012 will be the recession...