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Product life-cycle management (PLM) is the succession of strategies by business management as a product goes through its life-cycle. The conditions in which a product is sold (advertising, saturation) changes over time and must be managed as it moves through its succession of stages.
The management of a company will not usually have the money available to buy the company outright themselves. They would first seek to borrow from a bank, provided the bank was willing to accept the risk. Management buyouts are frequently seen as too risky for a bank to finance the purchase through a loan.
A company may have found their potential niche but are unable to market their product/ service across to the niche. This is where merging industry specialist are utilised. As one company may have the tools and skills to market to the niche and the other may have the skills to gather all the necessary information required to conduct this marketing.
An example of managerial economics using microeconomic principles is the decision of a manager to increase the price of the goods being sold. A manager should evaluate the price elasticity of the product to equate the respective demand of the product after the price change. [5]
Product concept: mainly concerned with the quality of its product. It has largely been supplanted by the marketing orientation, except for haute couture and arts marketing. [39] [40] Production concept: specializes in producing as much as possible of a given product or service in order to achieve economies of scale or economies of scope. It ...
Manager's hubris: manager's overconfidence about expected synergies from M&A which results in overpayment for the target company. [28] The effect of manager's overconfidence on M&A has been shown to hold both for CEOs [29] and board directors. [30] Empire-building: Managers have larger companies to manage and hence more power.
The product's contribution to total firm profit (i.e. to operating income) is maximized when a price is chosen that maximizes the following: (contribution margin per unit) × (number of units sold) In cost-plus pricing, a company first determines its break-even price for the product.
In Bertrand’s model, there are two firms and each firm selects a price to maximize its own profits, given the price that it believes the other firm will select. [9] Monopoly, where there is only one seller of a product or service which has no substitute. The firm is the price maker as they have control over the industry.