Write a short, concise memo, 5 pages about RX-Bar (not including any exhibits; exhibits are encouraged and do not count towards the word limit). You should briefly describe your methodology and specifically address the questions asked. Supporting tables and figures are encouraged, although the “upshot” should be in the body of the memo.
* To accompany your memo, prepare several PowerPoint slides (7-10) that highlight the main points of your report.
Complete the following:
Task 1: Market Analysis Using the models from class, including those of competitive, monopolistic, and oligopolistic markets, choose a product and/or firm for the following market analysis. The product and/or firm you choose should be one for which a recent industry, product or broader market change occurred. It can be one in which either yourself or your teammates have personal interest. The change you study may, for instance, arise from a change in costs, entry/exit of firms, a change in consumer tastes, or a change in macroeconomic factors.
a) Identify and detail the competitive landscape — competitors, substitutes, complements, the value chain (suppliers, buyers, secondary markets).
b) dentify and detail your chosen firm’s or product’s cost structure (marginal cost, fixed costs, average total cost, capital charge, exit price, entry price, as applicable)
c) Attempt to identify the applicable market demand curve by estimating the elasticity of demand (similar to the aluminum case optional exercise #2) and using a price and quantity point to reverse engineer a linear demand curve (similar to the Cotton Subsidy case).
d) Consider a recent event in this market (demand shift, supply-related shock such as a change in input prices or new market entrants). Describe the event and break down its impact on demand and/or supply or cost struc- tures. Explain what happened to industry price and quantity by making specific references to your demand and supply curves. If more than one change occurred, decompose the change into smaller pieces so that your explanation has a step-by-step character to it.
e) Identify and detail the short-run and long-run consequences associated with your chosen event on equilibrium price, quantify, and profit both for the individual firm and the relevant market overall.
f) Explain how the firm/organization could profitably use the analysis.
Task 2: Game-Theoretic Analysis Consider some strategic initiative that was or could be adopted by a firm in your chosen industry. For instance, this can be a new pricing initiative a firm or an organization related to your chosen product has made.
a) Does the pricing strategy include different pricing schemes to different groups of customers?
b) What would be the competitors? response? Explain.
c) How should the firm incorporate competitors’ anticipated response?