What are the key internal factors and external factors to be Essay

What be the key internal factors and external factors to be considered in outlay decision making - Essay Examplehe equilibrium point where demand curve intersects with go forth curve is the decision making point at which footing is determined. When price is considered in terms of demand and provision, it house be said that price has inverse relationship with demand and positive relationship with supply. In different words, when price increases demand decreases and vice versa, while price increases supply also increases. This is because, when price increases, the customers would like to surmount its consumption as the product seems to be more expensive. Likewise, when price increases, the firms will be encouraged to throw or supply more, as they expect more for their products. In another words, price has the tendency to be increased by the increased demand and to be decreased by the increased supply. But in a real market, price is not solely determined by the equilibrium po sition of supply and demand, but some other factors also adjoin crucial part in deciding the price of the products. Pricing is a more a complex and complicated process than a simple tendency of demand and supply. Hence, determine policies which are deliberately taken by the firm is the most fundamental deciding factor which decides the price of a particular product. These pricing policies of the firm are influenced, in general, by ii sets of factors- internal and external. Both the internal as well as external factors influence the pricing decisions of every enterprise or firm. These factors may be psychological, economical, quantitative or qualitative. (Sawyer, 1981 and Kotler, 1997). 2. Internal Factors Pricing decisions are influenced by a number of internal factors which consist of profit margin, cost of production and other expenses, brand digit and expectations of the company, suppliers and employees efficiency and responsiveness of the product to the price changes (Kot ler, 1997). . These factors contribute broadly categorized under the following heads 2.1 corporate and merchandising objectives of the firm. Corporate and marketing objectives of the firm mainly adjudicate to recover the cost elements of all types, to solve target go downs and to maximize the profit. Coverage of the corporate cost of production as well as marketing should be an influential factor of pricing policy of the firm. Corporate objective of making specific return rates on the basis of internal cost factors is another important internal factor which play crucial role in an organizations pricing strategy. Some important examples of other market objectives are survival of the firm in a high competitive atmosphere, current profit maximization, market share leadership and product quality leadership (Munroe, 1990). 2.2. Image sought by the firm finished the price By setting a particular price or implementing a pricing policy, the firms seek a particular public image and thi s image plays a crucial role in the pricing policy. For example, premium prices are usually being charged for global brand. Likewise, a plant keep overtaking by setting a low price in the hope that in future, the plant can increase the demand. In this case, survival is more important than price or profit maximization (Forman, 1998). 2.2 The defend of the Production in its life cycle The stage of the production under which the firm goes through is an important factor in the price setting strategy. Whether the firm is going through increasing, decreasing or moribund returns of scale and where the position of its average and marginal product curves stand, are the important things which decisively play role in the pricing policy of the firm. 2.3. Capacity Utilization and Market Contribution rates Capacity enjoyment has a positive influence on cost-based pricing strategies. Organizations operating at full capacity are capable of spreading the fixed cost to various units and