Review the business proposal submitted by other Learning Team - Essay Example

of Phoenix Material Business Proposal Feedback Checklist Important information Included? Comments Identification of market structure  Yes NoThe automobile industry has been correctly identified as an oligopolistic competitive market structure. The author though needs to correct the statement that asserts Chrysler to be among the “Big Three”. That may have been the case in the early 2000s but is certainly not true today especially with the significant rise of Japanese car makers Toyota and Nissan.

Nevertheless, the dominant sellers in this market are still few in comparison to the number of buyers.Assumptions regarding market structure and elasticity Yes NoThe paper specifies the assumption of the company being a price leader in a non-collusive industry. This statement is apparently used to remove the idea of the tacit collusion that is generally associated with price leadership in oligopolistic markets. The paper also assumes applicability of the Kinked demand curve model for this case.

To what degree do you agree or disagree with the items below?SD=Strongly DisagreeD=Disagree N=Neutral A=Agree SA=Strongly AgreeJustification included?CommentsChosen method to increase revenue    SD D N A SA Yes NoThe paper states that the Chrysler Group LLC’s revenue can be increased by escalating the efficiency of its operations and the quality of its products, services, and marketing strategies. This is a generic statement that needs to be elaborated.

Secondly, the paper assumed applicability of the Kinked demand curve which argues that where a “kink” does exist then a marginal change in cost structure or marginal change in revenue structure will not be immediately reflected in a new quantities sold or price for the given item. The paper does not use the Kinked demand curve model in its argument. The author seems not to have made up his/her mind on the method to be used to increase revenue. Chosen methods to determine profit-maximizing quantity    SD D N A SA Yes NoIt is true that in oligopolistic markets firms have mutual interdependence.

Also, a major downside of using the Kinked demand curve model is that the model does not show us what causes a new equilibrium price and quantity to be achieved, and how that happens. Nevertheless, we disagree with the paper’s analysis that because of the above two reasons, the company cannot determine the price and output level for which it can maximize its profit. The paper could have used other models such as the Cournot-Nash model that looks at firms competing on the basis of quantity. The paper therefore does not clearly state its way to establish the profit maximization quantity.

Use of concepts of marginal cost and marginal revenue to maximize profit    SD D N A SA Yes NoKinked demand curve model is mentioned but is not fully explained within the context of this organization. Suggested mix of pricing and nonpricing strategies     SD D N A SA Yes NoThe automobile industry is a typical example of a differentiated oligopolistic market. Naturally, this would mean firms have to compete on their products differentiated attributes.

The author’s example of the Pentastar V6 engine illustrates this. Selected barrier to entry    SD D N A SA Yes NoPatenting the Pentastar V6 engine is a great example of creating an entry barrier to firms seeking to enter the market. These firms will be forced to invest heavily in Research and Development in order to come up with engines that have matching or better capabilities than the Pentastar V6 engine.Chosen methods to increase product differentiation    SD D N A SA Yes NoThe car engine is a huge differentiator in the automobile industry because it affects several features that are used in marketing such as acceleration, fuel efficiency, and maximum speed and so on.

Chosen methods to minimize costs for the product    SD D N A SA Yes NoThe major costs in this industry are labor, raw materials and technology. The paper informs us of the new technology, Pentastar engine, which has reduced production parts from 189 to 32. I assume this should lower the quantity of raw materials required and thus lower production costs. The paper also suggests increasing employee productivity. This would arguably lower production time and number of employees required.