Microeconomic Analysis of a Firm: Successful Term Paper

Introduction of the Firm

Successful Term Paper Goal / Objective I: Prepare a 8-to-15 page term paper concerning a firm of your choice. The main objective is to reveal how microeconomic concepts will impact the firm. You may pick a large or small firm. You may pick a for-profit or non-profit entity – it really doesn’t matter. Just make sure you have a good understanding of the firm in terms of their products, services, market share, etc... It might be best to pick a public firm that you can easily look up on the Internet. 5 Successful Term Paper Introduction Of The Firm: This part should be no more than two pages. Please briefly discuss the firm and what they do. Feel free to offer key statistics such as annual profits, sales, market share and/or some other information about their main product or service. Please mention whether or not they are currently successful or if they are facing economic problems. Don’t get carried away here – the main focus of this paper is to analyze the microeconomic variables that affect the firm.

1) Identify the sector or industry that your firm belongs to. Also identify whether it is based on the competitive market, monopoly, oligopoly, monopolistic competition or cartel model? Who are the largest competitors? Is the industry facing any ‘special situation’ issues such as onerous government regulation or intensified international competition? Look at selectusa.gov/industries and click on the various ‘industry’ icons to see if you can find some useful information about the industry you are investigating.

 

2) Please make comments about the firm’s demand curve for just one of their main products or services. Do your best to draw the demand curve and try to calculate the firm’s price elasticity using the mid-point elasticity formula. It is perfectly acceptable if you need to make an estimate if you don’t have full information about various prices or quantity combinations. If you need to guess or make an estimate, just make sure you mention it in the body of your paper or in a footnote. Plainly state if the product or service is elastic or inelastic.

 

3) Please comment on the firm’s pricing strategy. Has it been successful in increasing sales, market share and profits? Are there any recommendations you would like to offer to improve their current pricing strategy?

 

4) Please comment on the firm’s major cost categories. Please identify the two largest cost factors (e.g. labor, a fixed cost or the cost of raw materials). Can the firm do a better job in minimizing their costs or are they already doing everything possible? If you really want to impress – then try to map out all the short-run cost curves like MC, AFC, AVC and ATC. 

 

5) Please comment on the firm’s profit maximization strategy. Are they already doing everything possible or do you see room for improvement? For example, does the management have a written strategic plan? Have they been using the Internet & Social Media (i.e. YouTube) to promote themselves? Will they or are they pursuing the global marketplace? For large public firms, you might want to try to visit the firm’s website, then click on the ‘Investor Relations’ link.

 

6) Government Regulation: Is the firm subject to federal, state or local government regulation? Is the regulation effective or is it raising the cost of doing business and creating problems?

 

7) Firm’s Future Strategy: Does your firm already have a clear vision and strategy for the future? Does it have an existing plan to capture more profits, market share, and growth?

 

8) Firm’s Financial Strength: I don’t expect you to be a CPA, but briefly examine the firm’s profit & loss statement and balance sheet for both this year and last year. Are they getting stronger or weaker financially speaking? One page, please!

 

9) Sweet Spot: Pretend you are the chief consultant to senior management. What would be other recommendations to spur sales, growth, profit and client retention? 10) If you are dealing with a public company – do you feel their stock is a good investment for the long-run? If you are dealing with a private firm, would you invest your own money?

 

11) Be creative – you’re free to add anything else. If you want to do a macroeconomic analysis – go for it! If you want to do an interview directly with the firm owners – go for it!

 

12) Don’t use big pictures or graphs that take up huge space on a page. Special Note: Keep the paper simple and stick to answering the questions to ensure a good review. Of course, add your creative solutions and thoughts to the paper to earn the highest possible score.