Project 2: Managerial Economics
In Project 1, you confirmed that Largo GIobal Inc. (LGI) is on a downward trajectory. In Project 2 you must identify some of the root causes of the company’s financial stress so that you understand what can be done to turn things around. Reversing the trend is not going to be an easy task, but you are confident because your team has years of experience working with troubled companies.
You have seen many marketing-driven CEOs bankrupt their businesses by losing sight of their company’s bottom line. It is going to be a balancing act to find the right mix of decisions that will improve the efficiency of LGI as well as make it sustainable in the long run.
In Project 2 you are going to put on your “economist” hat. You will study how supply and demand affect LGI. You know that calculating elasticity will help you figure out how to reverse LGI’s downward trend.
You also need to explore the structure of the industry from various angles and understand how consolidation or transformation impact LGI.
To turn things around, LGI can take one of three approaches: (1) increase revenue, (2) maintain revenue at the current level, or (3) choose a different strategy based on a limited production quantity that may be below the current level.
