Business Proposal
TAJJ Industries Plastic Refinery is entering the economy to provide quality plastic materials to companies and individuals across the world. Plastic is a product that is in high demand in the world today. Plastic and the use of plastic may vary from the bottles that hold water, sodas, and personal hygiene products, to smart phone covers, food containers, and parts to complete the body and interior of an automobile. In this business proposal descriptions of market structure, supply and demand, fixed and variable cost, and elasticity will explain what is needed to know about the business before entering the plastic industry. Non-pricing strategies, barriers to entry, economic conditions; both global and local, will display what will make TAJJ Industries will a successful business in the plastic industry.
Market Structure
Entering the economy as a provider of plastic will be a complex objective. There are several large companies that produce massive amounts of plastic materials. Those plastic items are shipped and distributed to many countries across the world. The market structure for companies entering the plastic business is pure competitive. In this type of market structure there are many companies in the business that are competing for business (McConnell, Brue, & Flynn, 2009). Each company has a substantial portion of the market (McConnell, Brue, & Flynn, 2009). The company entering the business should be independent and use strategic business patterns (McConnell, Brue, & Flynn, 2009). TAJJ will be one of a many companies to compete in the world of plastics.
Supply and Demand
The demand for plastic does not change depending on the price of the product. Because plastic is used in the production and packaging of many different items the elasticity of demand does not vary in a major way. The law of supply states that, other things equal, producers will offer more of a product at a high price than at a low price (McConnell, Brue, & Flynn, 2009). The demand for plastic is increasing rather than decreasing because the material is used in several aspects of daily life. Not only does it serve as packaging for food items and liquids for consumption it is used to make automobile parts and furniture parts. Therefore, TAJJ will not have a major problem entering the market and surviving as a production company and provider of plastic materials. As the demand for the product increases production of the product increases and the price increases.
Variable and Fixed Cost
Variable cost will affect the price of the product in which it can be sold. The variable costs are the costs that vary depending on the production of items (McConnell, Brue, & Flynn, 2009). As productions rise the variable cost will increase also. When production is low variable cost will be low. An example of the