FIN 321 CSUM Walmart Company Profit Maximization Demand Analysis Questions

Assignment questions

(Please remember to justify clearly all your conclusions and label all graphs)

I
would like to begin the content portion of this project by providing
more background on its motivation. The term project focused on the stock
price and as we mentioned during week #1, a closely related often-cited
goal in business is profit maximization. Therefore, the goal of our
semester has been to manage the following equation:

?=?????????????-??????????

As
we discussed in class, total revenues are typically assumed to come
from demand and so question #1 is all about demand and shifters of
demand.

1. Demand analysis

Specify the demand equation
using your REDID. The intercept for this equation will be the third
digit of your REDID starting from the right. If this digit is a zero,
please pick the digit immediately to its right that is not a zero. The
coefficient will be the third digit of your REDID starting from the
left, but multiplied by -(1/2).

So, if your REDID is 123456890,
then your demand equation is: ??=8-(12)*3*???. If your REDID is
987654321, then your demand equation will be ??=3-(12)*7*???. If
any digit is a zero, please pick the digit immediately to its right that
is not a zero. If your REDID is 120456090,then your demand equation
will be ??=9-(12)*4*???.

********((MY RED IS IS: 824335467))**********

This
equation completes the specification for the demand equation for your
primary product. So, if your company was Sherwin Williams and you pick
yellow paint, this equation would specify the demand for yellow
paint.The usage of the REDID is to provide some randomization to the
demand equation selection to continue to ensure the integrity of the
project and not to make you crazy over the demand equation. If you have
any questions about the selection of your demand equation, please send
me an email.

Please determine the three most important demand
shifters for the market for your primary product. So, if your product is
yellow paint and your company is Sherwin Williams, your answer to this
question will focus on the market for yellow paint, generally, and not
just the paint produced and manufactured by Sherwin Williams. Please use
graphs of the demand equation that you constructed above to demonstrate
how the shifters you have chosen impact the demand for goods bought and
sold in your primary market. Again, in the context of the above
example, these graphs would correspond to the graphs for yellow paint.

2. Cost analysis

The
second term in the above equation is total cost. The lecture on cost
was all about Q(short for Quantity), since total revenue=Price*Quantity.
This lecture focused on where Q came from because we need to produce Q
in order to supply it to the market and subsequently sell it in the
market. A key assumption about cost, then, is that it corresponds to
manufacturing cost, i.e., the cost we incur to sell our product in the
marketplace. So, in the context of the above example, this would be the
cost to manufacture (i.e. make) yellow paint. In other words, we need to
make our product in order to sell it and so the lecture on production
taught us how to produce our product and the lecture on demand and
supply taught us how to represent the corresponding supply equation.

The
intercept for the supply equation is the fifth digit from the left and
the coefficient will be 1. So, if your REDID is 123456890, then your
supply equation will be, ??=5+???. If your REDID is 12340980, then
your supply equation will be ??=9+???. Please graph this supply
equation and remember to label all axes.

What are the three most
important shifters for the supply of your product? Please now assume
that costs of production and supply are related and recall from our
lectures in class that the two factors that drive production for any
firm are labor and capital. How is the production of your product
impacted by the shifts in the supply of your product? (Hint:if our
product is yellow paint and after doing our research we find that
technology is an important shifter in the supply of yellow paint. Then,
in addition to discussing how technology affects the supply of yellow
paint, we want to explain how technology affects the production of
yellow paint and in particular, does it affect labor, capital, both? If
it affects neither, but it does affect cost, then please state it. In
all cases, please make sure to explain your position and use graphs to
support your position).

The slides also describe economies of
scale, scope, and cost complementarities as additional tools to
represent costs. Does your firm exploit any of these in order to reduce
its costs? If so how and if not why not? (Please use graphs to support
your answer).

Finally, bringing everything together, of the
market structures described during our last two virtual lectures, in
which, if any, do you operate your business? Do you have market power,
why or why not? If so, how do you exploit it?

3. Corona Virus effects

In
a recent Wall street journal article from February 27, 2020 titled “The
Fed can’t wait to respond to the coronavirus”, the author stated,
“Today, the novel Coronavirus is a material risk to the economy. It
represents an unexpected shock…”Inevitably,in our lifetimes, we may
run into such shocks again and we, as business managers and family
members, should help other people within our business and our family.

Assuming
the CoronaVirus is tantamount to a risk factor to the economy, how does
the shock of the CoronaVirus affect your primary market? (Please be
sure to consider system wide/market shocks, industry specific,and firm
specific shocks in your response. For these types of shocks, additional
helpful considerations include the fixed costs and the variable costs
you may face. How are these costs affected by CoronaVirus? How are
revenues, profits affected? Remember_profit=revenue-total costs. It may
also be helpful to classify it as a supply shock or demand shock or as
affecting both.How does the market, your industry, your firm get
affected?).

How can you successfully navigate your business
through such shocks for the security/protection (both financially and
personally) of your employees and shareholders and both your family
members and those of your employees?

MY PROJECT WAS DONE ON THE COMPANY: WALMART!

I HAVE ATTACHED PAST WORK FROM PROJECT AND SLIDES FROM LECTURES