Products and Services in a Free Market Economy

Running head: PRODUCTS, SERVICES AND PRICES IN A FREE MARKET ECONOMY

Products, Services and Prices in a Free Market Economy

Team B

University of Phoenix

2-23-2009

Products, Services and Prices in a Free Market Economy

I have chosen Smith and Wesson Holding Corporation as my objective business. Smith and Wesson Holding Corporation is, “ a producer of handguns, law enforcement products, and firearm safety and security products.”(Datamonitor, 2008)

According to Marketline Database, S&W Holding is headquartered in Springfield Massachusetts and currently employs roughly 800 people. The company recorded revenues of $160 million during the fiscal year ended April 2006, an increase of 27% over 2005. The company’s operating profit was $14.5 million during the 2006 fiscal year, which was an increase of 30.1% over 2005. S&W had a net profit of $5.2 million in fiscal year 2006, a decrease of 39.7% over 2005. (Datamonitor, 2008)

In order for S&W to be competitive in the law enforcement equipment market they must offer quality equipment which has been field-tested and that is affordable to those who are employed in the law enforcement field. One benefit that S&W has is their longstanding name and association with quality produced firearms. Most law enforcement officers are familiar with the Smith and Wesson name and therefore are more likely to purchase goods from this manufacture based on that. This would leave the major contributing factor as that of affordability of that equipment.

The company’s recent decrease in net profit has forced us to evaluate potential strategies to increase our revenues. In analyzing the price elasticity of demand, that is how consumers react to a change in price, we have decided to create a price reduction in a crucial piece equipment that is used daily by law enforcement officers, the handcuff. The Handcuff is a standard piece of equipment used by every law enforcement officer and agency worldwide. The goal...