The owner of Best Pizza (one of two Pizzerias in a small town) learned that its

Question

The owner of Best Pizza (one of two Pizzerias in a small town) learned that its only competitor is suffering from a significant cash-flow constraint. The owner realizes that its competitor's days are numbered, but has asked whether you would recommend the carrier significantly lower its prices to "speed up the rival's exit from the market." Provide your recommendation. Please Explain in detail A number of professional associations, such as the National Association of Realtors and American Land Title Association support regulations that make it more costly for their members (for example, realtors and closers) to practice their services. While some of these regulations may stem from a genuine desire for higher-quality, self-interest may also play a role. Please Explain in detail

Explanation / Answer

The only problem your competitor is facing is Cash flow constraints i.e. Cash is not coming not time, or funds are not available when needed. In order to faster the exit of your competitor from the market, dropping prices down might be a good strategy but not the optimum one. I dont know whether you got it or not? What is optimal for you? A stratefy which gives you the Maximum profit. As far as the competitor is concerned, the speed of his exit will boost as and when you start falling your prices. Then why to fall it significantly and result in lower profits when you know with a surity that competitor will go out even if you drop prices below his prices. Be a smart marketer

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