Question

In: Economics

You are the co-founder and CEO of Fantastic PLC. The below announcement regarding one of the...

You are the co-founder and CEO of Fantastic PLC. The below announcement regarding one of the products (product X) your company produces has been brought to your attention by your partner asking you for advice on what the company should do in light of this event:

A documentary recently aired on the health channel followed a scientific research that confirmed products, like product X, contain carcinogenic chemicals in concentrations harmful to human health

Write a report to include the following answers:

  • Describe how the above event will affect the demand for product X that your company is producing.
  • In light of this change make proper business recommendations (e.g. maintain/increase revenues and/or to maintain/regain/increase customers/market share). Use examples to better explain your answer.”

Solutions

Expert Solution

Product X is one of the products the company produces and which contains carcinogenic chemicals which are harmful.

Due to this fact the demand for product X will certainly fall which would lead to revenue loss for the firm and consumers will be aware because of the documentary and also the company as a form of being conscious will be aware than demand will slow down.

In light of decrease in demand, the company will have to look for other alternatives which could be used in place of the carcinogenic product. For example Asbestos is a carcinogenic product, so the company could use cellulose fibre in place of that product and sell it to the consumers as its usage is the same. This could help maintain revenues, customers and the market share.

It could increase the overall companies revenues once it tides with the crisis by increasing the share of other products in the revenue base which are greener and thus marketing and strategising techniques could help improve the customer base for other products such as tiles or paint in the same sector and thereby increase the market share. When the company is well stabilised from the crisis of shifting the products, it can increase the new products distribution and thereby increase the revenues, customers and market share so that overall the company gains from this disruption and becomes a part of saving lives.


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