Milestone 1 - Larson Inc.

Business Recommendations Based on Economic Projections

Learning Team B

Keith Brooks

Winny Chung

Mayra Martinez

Sandra Santos

ECO561

Dr. Rodolfo Rivas

January 25th 2011

Business Recommendations Based on Economic Projections

Team B dissected the Larson organization, and will make business recommendations based on economic projections. In their business recommendations, Team B will recommend a change in pricing strategy, examine non-price barriers to entry, and provide ideas for product differentiation for the organization. Team B will consider product differentiation, product attributes, service, location, brand names and packaging to make a successful business recommendation. The reader will find an explanation of evidence supporting the team’s recommendations.

Pricing Strategy

Larson is an oligopolistic firm and the pricing strategy must align with several conditions that are affecting the economy both in Germany and the United States. Unemployment, deficit, and depleted liquidity make finding the right pricing strategy incredibly important. In addition, competition, which under the current economies is mercenary, makes product differentiation difficult and competitive pricing is the only way to achieve the desired sales goal (p. 1, University of Phoenix, n.d.). Currently, Larson’s strategy in both markets is cost plus pricing. “However one thing is clear: market leaders are leaders because they understand how pricing relates to the economics of their business, their customers and their competitors. They do not just follow the pack” (p. 1, Lake Partners, 2004)

Cost plus pricing is not the best approach and the suggested price strategy for the current global economy is to identify cost drivers or controlling cost of production. “Oligopolistic firms can increase their profits, and influence their rivals’ profits, by changing their pricing strategies. Each firm’s profit...