1. Discuss how pricing policy is adopted by managers and discuss the
major issues considered to adopt a certain pricing policy
2. Identify the pricing arrangements in contracts and discuss what bidding
strategy can be adopted by a firm from a project to maximize wealth.
3. For a strategy to be adopted one needs to know the tendering
procedures and the associated issues.
4. Determining a firm's mark-up target
5. Identify the clauses in contracts for risk allocation and their effect on
pricing
6. Discuss the major construction contracts and their risk structure to the
contracting parties



Answer :

Final answer:

Managers consider costs, demand, and profit maximization when adopting pricing policies. Pricing strategies include price discrimination, package pricing, and bidding strategies.


Explanation:

Factors Considered in Pricing Policy Adoption by Managers:

  1. Costs and Demand: Managers must consider production costs and market demand when setting prices.
  2. Profit Maximization: The goal is to maximize the firm's profit by choosing the right price or quantity to sell.
  3. Market Research: Understanding consumer price sensitivities and elasticities through research.

Examples of Pricing Strategies:

  • Third-Degree Price Discrimination: Offering discounts to different customer groups like students or quantity discounts in grocery stores.
  • Package Pricing: Bundling products together, contractual tie-in sales, and captive-product pricing for strategic pricing.
  • Bidding Strategies: Adopting strategies like penetration pricing or setting high prices for positioning in the market.

Learn more about Pricing Policies and Strategies here:

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