Why are consumers so willing to rent from redbox

BMGT 1010

Assignment Example Responses

Responding to Business Challenges

1. The consumer goods industry operates in a monopolistically competitive environment because the market is composed of many sellers of slightly differentiated products. A monopolistic competitive environment is characterized by intense competition. Companies gain competitive advantages mostly through product differentiation. The competitive environment also changes rapidly. Firms like General Mills must constantly adapt their products to keep up with the changes in consumer tastes and preferences. If a firm does not change, it risks losing customers to its competitors leading to lower sales and profits.

2. General Mills is addressing the supply chain problem by helping farmers convert to organic farming by underwriting their cost. If General Mills succeeds in increasing the supply of organic crops, it will help address the imbalance between supply and demand.

3. General Mills has tried to differentiate itself by adopting GMO labels for its products. This awareness will help customers identify GMO versus non-GMO products. General Mills has also gone a step further by reformulating some of its products like Cheerios to a GMO-free recipe.

Check Your Progress

1. The fundamental goal of business is to earn profits. Nonprofit organizations do not share this fundamental goal, although they often provide goods and services.

3. The main participants in business are owners, employees, and customers. The main business activities include management, marketing, and finance. Other factors having an effect on the conduct of business are legal and regulatory forces, the economy, competition, technology, and ethical and social concerns.

5. Supply is the quantity of goods or services that businesses are willing to sell at different prices at a specific time, while demand is the quantity of products and services that consumers are willing to buy at different prices at a specific time. Equilibrium price is the price at which the quantity of products that businesses are willing to supply equals the quantity of products consumers are willing to buy at a specific point in time. Competition is the rivalry among businesses to convince customers to buy their products. These forces interact in the American economy, causing the distribution of resources and products to be determined by supply and demand. Supply and demand change in response to changes in economic conditions, availability of resources, and degree of competition.

10. The U.S. economic system operates as modified capitalism because business is regulated to a certain extent through federal, state, and local governments. Most government regulation seeks to preserve competition and to protect consumers and employees.

Solve the Dilemma

1. When Shelly Acres started selling her pies, she had to find her own customers. None of the local restaurants and supermarkets knew her products, so she had to offer an affordable product to interest restaurants and supermarkets in her products. As demand increased, Shelly started producing more pies to meet this demand. At the moment, she cannot supply all the demand. A way to decrease this demand is to increase prices. She can also increase the production level to meet the demand.

2. The first option implies that Shelly’s company is not going to grow since its current size will be maintained by keeping an artificially high price. The second solution requires Shelly to find the resources to finance the expansion of her activities. The third option leads Shelly to lose her specific know-how by providing it to the national restaurant chain. It also implies that Shelly does not own her business any longer.

3. My recommendation would be to implement option two. At some point, if a business is to grow, it needs additional capital to purchase more equipment and to hire additional staff to meet growing demand. Shelly’s company appears to be at this point and the other two options would not allow her to maintain her independence while still keeping ownership of her successful operation.

Videocase

1. Redbox has developed its kiosks and database to meet customer needs. Its videos are inexpensive compared to other rental stores. Customers can reserve movies online and pick them up at their nearest kiosk. If a kiosk happens to be out of a particular movie, customers can search the Redbox database to locate the movie at a nearby kiosk. This combination of convenience and low prices has attracted customers who desire a simplified process to renting movies.

2. Redbox overcame initial funding challenges by partnering with Coinstar, which also had established partnerships with retailers that helped Redbox get their kiosks into popular retailers. Redbox was careful to expand a little at a time to make sure the kiosks would be profitable and mitigate the risk of wide-scale loss. Its continual expansion, popularity with consumers, and partnerships with retailers has enabled the firm to become profitable. It also tries to create certain controls to obey applicable laws, such as not allowing underage children to rent R-rated movies.

3. Redbox should definitely maintain its consumer orientation and monitor trends in the competitive environment to keep track of what competitors such as Netflix are doing. The firm might want to create additional partnerships to perhaps eventually expand its offerings into more online streaming, since streaming appears to be increasing in popularity. Further partnerships with film companies and video game firms could also increase Redbox’s selection of products.