1,Select one company from inside and outside Ethiopia then evaluate how the company determine a price

for the product.

I choose General Motors

General Motors (GM) is an American multinational corporation that designs, manufactures,

markets, and distributes vehicles and vehicle parts. Headquartered in Detroit, Michigan, GM is
one of the largest automakers in the world, with operations in over 30 countries and brands that
include Chevrolet, Buick, GMC, and Cadillac. GM also has a presence in the electric vehicle
market with its Chevrolet Bolt EV and plans to expand its electric vehicle lineup in the coming
years. The company employs over 164,000 people globally and is a leading player in the
automotive industry.
General Motors, like many other companies, uses a variety of factors to determine the price for
its products, particularly vehicles. Some of the key considerations include:

1. Production Costs: GM takes into account the cost of materials, labor, and overhead expenses
related to manufacturing its vehicles.

2. Market Demand: The company analyzes market demand for specific vehicle models, as well as
competitive pricing in the automotive industry. This helps determine the optimal price point that
balances consumer demand with profitability.

3. Target Customer: GM considers the demographics and purchasing power of its target customer
base to ensure that pricing aligns with their willingness and ability to pay for the product.

4. Brand Positioning: The pricing strategy is influenced by the brand's image and positioning in
the market. For example, premium features and brand equity can justify higher prices for certain
vehicle models.

5. Economic Factors: GM evaluates macroeconomic factors such as inflation, currency exchange

rates, and interest rates to account for potential economic impacts on pricing.

6. Regulatory Environment: Compliance with government regulations and safety standards may
also influence pricing decisions.

7. Sales and Marketing Strategy: GM's pricing strategy is often tied to its sales and marketing
plans, including promotions, discounts, and financing options, to attract customers and drive
sales.

Overall, GM's pricing strategy is a complex process that considers a range of internal and external
factors to determine the most effective pricing for its products in the automotive market.

2,Discuss the pricing procedures

General Motors uses various pricing procedures to determine the prices of its vehicles and
services. Some of the common pricing procedures include:

1. Cost-plus pricing: General Motors may use cost-plus pricing, where a markup is added to the
production cost to determine the price of the vehicle. This ensures that the company covers its
costs and generates a profit.

2. Value-based pricing: General Motors may also use value-based pricing, which takes into
account the perceived value of the vehicle to the customer. This approach focuses on the benefits
and features of the vehicle and sets the price accordingly.

3. Competitive pricing: General Motors may consider the prices of its competitors when setting
the prices of its vehicles. This allows the company to stay competitive in the market and attract
customers with similar pricing.

4. Dynamic pricing: General Motors may use dynamic pricing, where the prices of its vehicles
fluctuate based on market demand, supply, and other external factors. This allows the company
to maximize its revenue by adjusting prices in real-time.

5. Promotional pricing: General Motors may offer promotional pricing, such as discounts, rebates,
and incentives, to attract customers and boost sales. This helps the company increase its market
share and attract customers during specific periods.

These pricing procedures are used by General Motors to effectively set the prices of its vehicles
and services, considering various factors such as production costs, competition, customer
perception, and market demand.

3,Discuss the potential factors that may influence on the pricing system
1. Demand and supply: The level of demand for General Motors' vehicles and the availability of
its products in the market can affect pricing decisions.

2. Competition: The pricing strategies of rival automotive companies can influence General
Motors' pricing decisions. If competitors offer similar products at lower prices, General Motors
may adjust its prices to remain competitive.

3. Production costs: General Motors' pricing system may be influenced by changes in the cost of
production, including raw materials, labor, and manufacturing expenses.

4. Economic conditions: Overall economic conditions, such as interest rates, inflation, and
consumer confidence, can impact consumers' purchasing power and their willingness to pay for
General Motors' products.
5. Regulatory environment: Government regulations, such as fuel economy standards, safety
regulations, and tax policies, can influence the pricing of General Motors' vehicles.

6. Currency exchange rates: Fluctuations in currency exchange rates can affect the prices of
General Motors' products in international markets.

7. Consumer preferences: Changes in consumer preferences, such as a shift towards more fuel-
efficient vehicles or a preference for certain features, can influence the pricing of General Motors'
vehicles.

8. Marketing and branding strategies: General Motors' pricing may be influenced by its marketing
and branding strategies, including efforts to position its products as premium or value-oriented.

9. Technological advancements: The introduction of new technologies and features in General

Motors' vehicles may impact pricing decisions, especially if these innovations are perceived to
add value to the products.

10. Distributor and dealer relationships: The relationships with distributors and dealers can also
play a role in General Motors' pricing decisions, as they affect distribution costs and retail pricing
strategies.