Eco 561 - Business Proposal

Econ 561 Week Six Final Proposals

Dana Blacks

ECO/561

January 30, 2015

Dr. Bryan Aguiar

Week Six Final Proposal

The Thomas Money Services company has been in business for 74 years, since 1940 in the finance industry. This company began in the finance services by financing small loans for household needs and grown to offering real estates and commercial loans. They increased their business though a subsidiary called Future Growth Inc. (FGI). FGI gained a huge market share quickly. The business proposal will be beneficial to Thomas Money Services and FGI because of the high demand for their equipment.

Thomas Money Services Inc.’s decision to branch out into commercial equipment financing helped to move them forward into the right direction. After World War II, they saw this increase because new businesses in construction were popping up. During 1951 Thomas Money Services Inc. made a daring decision to buy a manufacturing company, which gave them an advantage over other companies in the finance industry. This has helped Thomas Money increase its profit year after year.  The propose of this proposal is to provide insight on how Thomas Money Services can potentially increase revenue, create more efficient production levels, pricing and non-pricing strategies, and determine any barriers to entry.

Increase Revenue/ Profit

For Thomas Services Inc. to achieve their optimum point, they will need to understand where their marginal cost and marginal revenue come together. Once everyone understands these two measures, they can then determine their maximum profit. “In order to determine the profit maximizing level of output, the monopolist will need to supplement its information about market demand and prices with data on its costs of production for different levels of outputs.” (Cliff’s Notes, 2013) It is an important aspect for Thomas Money Services for the growth of their business.

They have survived throughout the years in the construction industry because of their strong history. Even though the construction and forestry is currently not in high demand, the industry is a constant market. “Construction activity is picking up in most areas of the country, with the majority of states showing some growth over the past six months. In most cases however, the rate of growth is hovering very close to zero, with construction activity close to negligible. Within the U.S. and globally, the debt crises, political transitions and regional conflicts have created a level of uncertainly not seen for several years. This has created an environment where there is little prospect of stable growth in the demand for construction.” (Morris, 2012)

Buildings will still need to be constructed, equipment will still need to be purchased or leased. Thomas Money Services Inc. should create a marketing plan and put it in place in areas where there is a high demand for construction and construction equipment like new residential construction areas.

Due to the decrease in sales, Thomas Money Services must review their marginal revenue and marginal costs to determine if they will continue to return a profit by continuing to produce building and forestry equipment. Another way to increase revenue is product differentiation. This is a must for consumers; also it will determine the demand for Thomas Money Services products. Improving production efficacy. The facts are that Thomas Money Services produces its own forestry and building equipment, giving them an advantage in creating and/or increasing barriers to entry by any competition.  

Pricing and Non-Pricing Strategies

To gain a competitive advantage within the industry, Thomas Money Services, Inc. should research some pricing and non-pricing strategies that they are currently doing and then compare those to the strategies that their competitors are currently doing. Thomas Money Services Inc. can create a competitive advantage by figuring out what there common products are and lowering their price. The products in which their competitive do not currently carry, Thomas Money Services Inc., can then increase the price to offset the lowering price for those common products. Airing the Super bowl commercial should not be the only non-pricing strategy that they utilize Thomas Money Services, Inc. should also utilize the growing social media sites such as Facebook, Twitter and LinkedIn. “Investing in research and development, becoming technologically equipped, and implement a strong consumer-oriented programs to substantiate the organizations appreciation and show organizational worth of those consumers expectations, demand and wants.” (McConnell) Non pricing strategies and barriers to the financing industry are perfect ways of maintaining or increasing an economic profit.