Business Proposal

Business Proposal

Chandra Carey

ECO/561

December 15, 2014

David Morrison

Introduction

Little Rock, AR is well known for having some of the best barbeque in the south. In fact, Little Rock has won several awards for its amazingly delicious barbeque dishes. The product that I have chosen to develop is a homemade barbeque sauce, CeCe’s Famous BBQ Sauce, which brings a little piece of the south to everyone’s home.

Examination of Elasticity of Demand and Market Structure

Cece’s Famous BBQ Sauce is a homemade traditional sauce carefully made with the freshest ingredients. Southerners take great pride in barbequing and there is a current debate as to who has the best BBQ sauce. There are a wide variety of BBQ sauces readily available to consumers and you can find them in any grocery store in the U.S. This describes a Perfect Competition structure; no single company can influence market price or market conditions. Although there are many different BBQ sauces, there are some companies more successful than others. In a Perfect Competition market structure there are no barriers to entry into or exit out the market. The most important thing that will set my sauce apart from another is its unique taste. Since there are many other companies selling the same product the market dictates the price. According to Brue, Flynn, and McConnell, (2009) “the larger the number of substitute goods that are available, the greater the price elasticity of demand” (P. 120).

Fixed and Variable Costs Associated with Operation of the Business

The Startup cost of the business consists of two categories, fixed and variable. Fixed costs tend to remain the same regardless of output. These costs will include license fees, rent and utilities. Variable costs will include packaging, ingredients, shipping, and labor which will vary depending on production volume.

Differentiation

I believe this product has the ability to differentiate by growing into a product line which will consist...