Your Company Has Developed a Drug Called Matrox That Is

question 184

Essay

Your company has developed a drug called Matrox that is an effective treatment for migraine headaches.You have just discovered that it can also be used for organ transplant patients to reduce the risk of organ rejection.The demand for migraine medications is considerably more elastic than the demand for drugs to reduce the risk of organ rejections.A study has indicated that the elasticity of demand for Matrox as a migraine medication is -4.0 but as a transplant drug it is -1.5.The current price of Matrox is $10 per dose; the marginal cost is $5 per dose.Should you use a price discrimination scheme for this product in these two markets? If so,how should you price Matrox in each market? If not,why not? Show all calculations.

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Definitions:

Exporting and Licensing

Practices in international business where goods are shipped to foreign countries (exporting) and rights are granted to use certain products, trademarks, or processes (licensing).

HR Function

The department within an organization that focuses on recruitment, management, and the direction of the people in the organization.

Polycentric Staffing Model

An international staffing strategy where host-country nationals are hired to manage subsidiaries in their own country, while parent-country nationals occupy key positions at the corporation's headquarters.

Host-Country Nationals

Employees who are citizens of the country in which a multinational company's foreign subsidiary is located, unlike expatriate employees from the company's home country.