I. Introduction

            The following report discusses antitrust laws in detail and is its primary goal. The controller of Pyramid Printing Pete Roberts is considering a proposal meant to have new clients enjoy a discounted sales program. Henry Russell who is the sales manager at the company in interested in overhauling the company’s production capacity as it is currently below average. From Pete’s analysis of Henry’s proposal, the prices will not increase the profit margin as expected. Due to this, Pete is wary of the fact that having a different cost is sufficient in sustaining the prices. The proposal requires a deeper analysis in order to have a clear picture of the consequences it might have on the company in general and consider laws and ethics that are in the risk of being abused.

            Business organizations are investing immensely in strategies meant to maintain clients; however, the consequences of these strategies require a deeper analysis. Managers ought to have a way of determining which clients deserve sale discounts based on their loyalty to the company. Fortunately for Pyramid Printing Pete has come up with customer-profitability analysis strategy that serves the above purpose. The strategy focuses on the organization’s income and the costs associated with the income and determine the different operational revenue gotten from various customers. If Pete was to implement the proposal the first step would to analyze the price discounts.

II. Price Discounts

 Horngren, Datar and Rajan (2014) argue that offering sale discounts is a combination of several aspects such as the amount of sales made and the need to provide great services to customers who will be willing to tell other people about the services. Unfortunately, there are times as a result of inefficiencies by the sales people there is bad service that has adverse effects on the company’s revenue plan. Keeping up with the discounts offered to clients as well as the quality of service offered by the sales people a company can improve customer profitability. Customer profitability is an issue that consists of other aspects apart from client income which include, cost of production, customer service, and client loyalty. Unfortunately, these are some of Pyramid Printing weaknesses.

III. Production Capacity

            As a result of below average production capacity, price discounts is not an appropriate strategy for Pyramid Printing. An organization’s production capacity is the highest level a manufacturing activity can achieve. Production capacity can be improved to serve an actual (immediate) improved client demand or anticipated (future) improved client demand. For and actual production capacity to improve, there is need of utilization of current equipment such as adding more time in the regular hours such as overtime or using foreign equipment such as outsourcing. To have improved future production capacity, organizations have to sufficiently utilize the existing equipment (improvements) or buying new equipment (spending) (Stevenson, 1999). For Pyramid Printing the best option is an actual increase which can be achieved by using the employees overtime and outsourcing and utilizing different equipment which will improve its production capacity.

IV. Antitrust Laws/Ethical Considerations and Conclusion

            The biggest worry with the discounted sales program is whether there will be unfair or poor business practices against the clients. The Federal Trade Commission Act prohibits such results and going against the Act, Pyramid Printing Company can have legal issues under the Supreme Court that might lead to $100 million in fines (Federal Trade Commission, n.d.). With regards to ethics, Pyramid Printing Company has the ability of cementing its clients’ loyalty if it implements the discount program. The company can consider other strategies such as employee benefits, customer incentive programs, and the discounted prices programs; however, extreme caution is of the essence as the company’s production is extremely low and thus such strategies are quite risky. Pete should conduct a customer-profitability analysis to find out if there is an actual need for the customer discount program.