Question

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There are many things that GM’s leadership must consider withing managerial economics and pricing and production are two f the most important. When picking a price for a vehicle, the company was look at the target market they are trying to reach. They need to pick an appealing price for the vehicle that is competitive with similarly price cars from competitors like Ford and Dodge but is also profitable enough to fund current operations and future vehicle production. With alternative fuel vehicles like the Chevy Bolt, the company must figure out what level pf premium customers are willing to pay in order to avoid fossil fuels. GM must also decide which incentive to provide to entice would be car buyers to step on a GM lot before going anywhere else. There are many major decisions that must be made through the production process as well. Using more automation comes with higher upfront costs but allows for quicker production. Determining the types of materials used and complexity of design will affect how fast the vehicles can be made and how much the cost of good sold will be. This will also play a big a play a big part in determining what the minimum price GM must charge for a given model of vehicle. Both factors when it comes to introducing a new product. Automakers are constantly trying to add new features while keeping vehicles at an attractive price. The manufacturers that lack agility and an efficient production process will be less successful than others (Prasad, 1997). We are starting to see this with Tesla vehicles. The big automakers initially thought that Tesla pricing and production would never work in this work, but since Tesla has become successful the other companies have had to rethink their businesses.

Answer 1

The discussion is about the important factors a company needs to considers to manage its economical balance. It takes General Motors as an example, and demonstrate how pricing and production are two important factors to maintain this balance. The areas to consider while fixing the price for the vehicle are the target market, competitors pricing policies, current operational cost and future vehicle production. While pricing a vehicle, the company should know how much the potential customers are willing to pay for it. They have to select the incentives they will provide with the vehicle because that is an essential element that attracts the customers. The competitors selling similar product should also be determined and the prices should be fixed accordingly.

Another factor considered in this context is the production process. Production can be done with more automated processes which will increase the costs but speed up the processes thus increasing production volume. The cost of production needs to be determined which includes the material used and design of the make of vehicles. This cost will also help in determining the minimum price that the vehicle can be sold in. Hence the article emphasis the importance of pricing and production and how both are related with each other and in making a product in the market a success.