Business Decisions for Larson Ltd - Essay Example

The company is also finding it difficult to undertake product differentiation. Moreover, with the present global financial crisis, the company is also facing the problem of lower spending by the customer. Finally, due to the housing crisis, the rising unemployment rate (9.9%) and the steady depreciation of the dollar have led to a huge current account deficit for the country.

In Germany the company does not face issues of high competition but due to the small size of the market. The company also faces the problem of product differentiation and advertisement.

Larsen must conduct proper research to understand the customer. The company should continue with its marketing research programs. This would give knowledge of the customer’s needs and wants during these recessionary periods.

The company must continue with its advertising budget. This strategy follows a popular theory that states that companies who advertise during the recession are the leaders when the economy bounces back. It should prepare ads that tend to focus on family values rather than extreme fun and humor ads. To cut costs the company can resort to reducing the duration of the ads rather than scrapping them as a whole. The company can also emphasize direct marketing as a promotional tool.

Larson must also forecast its demand estimates. These estimates should be made based on actual market conditions. The demand estimates must be made based on scenario planning where different scenarios would be considered while forecasting the demand estimates.

The company can also enter into tie-ups with the suppliers. It can enter into real-time information sharing with its suppliers to reduce the chances of huge stocks of inventory.

Larson must also change its pricing strategies. Instead of a cost-plus pricing strategy, it can adopt a marginal cost pricing approach in which the company would charge only the additional amount apart from the total cost coming from labor and materials. The advantage of this strategy is that the company can set up prices of the products near the marginal costs during periods of poor sales (Weinburg College of Arts and Sciences, n.d.).

The company must also undertake suitable hedging strategies to meet the challenges of currency exchange rates, especially in the US.

Finally, the firm must look towards expanding into newer markets like Asia which offer tremendous opportunities. Lastly, it can also identify its business units that are unprofitable and downsize or divest those units to achieve its business objectives.