8. Skimming Price Strategy

Using this pricing strategy the organisation sets a high price initially for its product with the intention of offering the product to a select group of customers. Some see this as a pricing strategy to «skim the cream» off the top of the market. The conditions seen as important for a skimming price strategy are (1) having sufficient purchasers willing to pay a high price (demand is price inelastic); (2) where new firms are not attracted into the market in the short run by the high price; and (3) where it is profitable to produce relatively small quantities of the product.

For many products a skimming price strategy is often used in the introductory or growth phase of a product’s life cycle, then as interest in the product wanes prices are lowered. This approach may also be more appropriate where an organisation does not know the level of demand for its product. If this has been assessed to be incorrect then the organisation can lower the skimming price without harming the relationship between supplier and consumer.

9. Competition

Competition helps markets to work efficiently by allowing consumers to buy the goods they want at the lowest possible price and by providing firms with the incentive to innovate.

The aim of competition policy is to encourage and enhance the amount of competition in the UK; this may well involve taking action to prevent, reduce or remove and competitive behaviour. However, it is not assumed that uncompetitive practices are automatically wrong; each case is examined individually and only if a particular behaviour is found to be against the public interest is action taken.

UK competition policy is made up of 4 main Acts:

1. 1973 Fair Trading Act

– which deals with mergers and monopolies.

2. 1976 Restrictive Practices Act

– which is concerned with agreements between people or companies that could limit their freedom to act independently.

3. 1976 Resale Price Maintenance Act

– which covers attempts to impose minimum prices at which goods can be resold.

4. 1980 Competition Act

– which deals with anti competitive practices.

10. Changes in Вusiness

The pace of change in today's business world is faster than it has ever been at any other time in history and this means that businesses must be flexible and ready to adapt to rapidly changing circumstances. Of course, changes in the way a business operates means changes for the people that work in that business – and this is where the problems begin.

We know from behavioural studies and from experience that people resist change, and that this is a natural and normal reaction. Given that organisations can no longer avoid change, it requires careful management at the highest level to ease disruption and reduce resistance from both staff and managers. It is clear that poorly managed change leading to rumours and gossip will lead in turn to lower staff motivation, a lack of cooperation, lower productivity, and higher staff turnover.

It is also clear that firms will increasingly value staff that show themselves to be flexible, adaptable, mobile (willing to change both physical location and job role), and open to new ideas. Note that it is often middle and senior managers that are the most vocal resistors to change.