Optical Distortion, Inc. (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Optical Distortion, Inc. (A) Case Solution

INTRODUCTION:

In 1974, Optical Distortion Inc. developed a marketing plan for contact lenses for chickens. While contact lenses are only used for the human eye, ODI for the first time in the history of contact lenses developed a contact lens for chickens that have eye cataracts.

Firstly the contact lens was developed in 1967 and was not up to the mark because it had some technical issues as it did not stay inserted and used to fall out again and similarly it caused severe irritation in the eyes of the chickens. Moreover, the issue was resolved and the lenses were made bigger and as a result they were performing well. Similarly the lens was made of hydrophilic polymer which was known as the best material for contact lenses. It required a $250,000 investment which was enough with respect to the current position of the corporation as it was a small scale organization it did not have enough money to invest but because of the opportunity it still made the investment.

In free markets how price floor and ceilings can be determined?
Price flooring's and Price Ceilings are methods of price controlling, examples of government intervention in the free market which changes the market equilibrium point. There is a reason behind using such methods;how ever there are large efficiency losses with both price floor and price ceiling.

PRICE FLOORS:

Price floors are lowest possible prices set by the government for specific products and services whichit accepts are being sold in an unfair market with low of a price and hence their producers require help. Price floors are just an issue when they are set over the equilibrium price, since they have no impact if they are set below market clearing price.

When they are set over the market price, then there is a probability that there will be an excess supply or a surplus. On the off chance if this happens, then the producers who can't predict inconvenience ahead will produce the bigger quantity where the new price meets their supply curve. Being unknown to them, consumers will not purchase that many goods at the higher price, thus those products will go unsold.

There are various techniques of the government for setting a price floor and managing its effects. They can set a straightforward price floor, use a price support, or set production quotas. Price support sets a base price simply like previous, however the government purchases any excess supply. This is considerably more inefficient and costly for the government and society in general as compared to the government specifically subsidizing the affected firms. Production quotas misleadingly raise the price by confining production utilizing either mandated quotas or giving organizations incentives to decrease their production.

This latter technique is used widely among farmers. The government pays specific farmers to keep some of their fields unutilized thus they elevate prices. Unlike price support, the policy would be more effective and efficient plus less costly to the society if the government simply subsidizes farmers rather than setting production restrictions for farmers.........................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.