Week 6 Individual Business Proposal

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Business Proposal
ECO/561
May 7, 2015
Business Proposal
This proposal is focused on introducing a new product into an existing line of business and to discuss how to create a good to raise the organization's revenue. Mentioned will be the concepts of the elasticity of demand, market structure and profit maximization techniques which would be helpful to further this good and also the barriers to entry. Pricing strategies and product differentiation will be the other important topics which will also be discussed. I have chosen the organization Walmart Stores, Inc. Walmart is a multinational retail store corporation in the United States that operates chains of discounted department and warehousing stores across the country. Based on Fortune Global 500 data, Walmart is the third largest corporation and employs more than 2.2 million associates and is the largest retailing company in the world. The company was founded in 1962 by Sam Walton and became incorporated and made its debut in late 1969. Walmart was first publicly traded on the New York Stock Exchange in 1972. The company is headquartered in Bentonville, Arkansas. To this day, the organization possesses the distinction of being America's largest retail store. Market Structure

Walmart first extended common stock to the public in 1970 and started trading on the New York Stock Exchange on August 25, 1972. Walmart Stores, Inc. operates with an oligopoly market structure and because of their excess of retailers to deal with. Walmart is a giant with a monopolistic competition market structure. The company's size makes it powerful enough to have driven smaller retail companies out of business and forced manufacturers to be more efficient. Walmart's effects on its competitors are when one store opens in areas; three retail competition stores will close its doors within two years. Walmart consists of higher barriers to entry into the market once it penetrates the market, and this makes the company more efficient than its competitors. Competitors fear Walmart's price wars, cost advantages, and control over supplies. Elasticity of Demand

The demand for Walmart is highly elastic for the main reason that today there are so many customers that continuously shop at a department store that keeps its sales up to contend with competitors. As the economy declined, the demand for discounted goods rise as buyers may have less money to spend, but they still have a necessity for grocery and general merchandise in their homes. Walmart offers discounted products in these areas that are affordable and useful in homes across America. So, as demand for these items rises when a weakened economy results in consumers need to spend less. This also leads to a decline in supply when the economy reduces. As the demand for discounted goods such as what Walmart offers, the supply is slowly depleted. Walmart's products are considered inelastic as well. Even if the economy is in good shape, customers will still buy inferior goods because they are a good value. Walmart products are inelastic and are not affected by price fluctuations. Pricing Relate to Product Elasticity

Price elasticity of demand is critical to business, and economic concept that refers to the relative change in quantity demanded to a change in price of a product or service. Elastic demand means that even a slight change in the price of your goods or services can significantly affect demand. Inelastic demand means not having the space to raise prices with a significant, relative drop-off in demand. Elasticity of demand displays how well the customers accept changes in pricing. If the cost to produce or acquire goods rises, then it helps to know how the customers accept you are trying to pass on the costs to them even though prices are higher. One purpose of elasticity is to establish price strategies so that it can be determined if there is space to adjust higher or lower over time or if it is necessary to have the...
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