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Briefly explain the three major influences on pricing decisions. The three major influences on pricing decisions are customers, competitors, and costs. The customers influence pricing through their demand for product and services. Competitors, on the other hand, affect price by providing or not providing alternative product. The cost influences price through its effect on the supply. The lower the cost, the more companies are willing to supply. There are two approaches to determining pricing decisions for the firm long term. What are the two approaches, how do they differ from one another, and who might use each one? The two approached in determining price decisions are market-based and cost-based. The market-based approach focuses on looking at who the customers, competitors and the cost incurred by the company. It is used by firms in competitive market. The cost-based approach focuses on costs of making a product and then determines what price would cover costs and yield a return on the investment. It is used by firms with unique products or services. What are the opportunity costs if Company X executives decided to acquire Company Y? What are the opportunity costs if Company X executives decide not to acquire Company Y? Why do you think considering opportunity costs is such an important part of business decision making? The opportunity cost for Company X if they acquire Company Y is the investment revenue. On the other hand, the opportunity cost for Company X if they acquire Company Y is Company Y’s revenue and market share. Considering opportunity costs is important because it will help the decision maker to select which alternative will contribute more in operating income of the company.