Economics of Computers :: essays papers

Economics of Computers Introduction and Background The computer service industry can be broken down into some(prenominal) categories ranging from reseller to consultant. Entr Computers / Executive Business Machines Inc. (EBM) was a sales and service organization for typewriters at its inception in 1972. However, as the corporate market shifted its needs from typewriters to word processors to in the flesh(predicate) computers, so did EBM change its point of intersection line to meet that demand. Now they are trying to grapple in a truly competitive low leeway industry. They are a small single location company with annual gross revenues of twenty million (USD). However, as the profit margin and price of their product continually drop at a rate of forty percent annually, it becomes more difficult to show increasing gross revenues. They will need to find out a place in the market, a niche, to survive and effectively compete with larger internationally known corporations as well as small topical anesthetic companies that are very much standardised their own. Industry Structure, Competitors The market is extremely competitive price-searchers market product is often sold below manufactures cost barely to maintain market share and brand loyalty. It is a competitive price-searcher market because of the low barriers to entry and no regulations in price. Firms in this market are approach with a downward-sloping demand curve. The sellers range from international organizations, which retain over twenty thousand employees, to very small local shops with as few as two workers. The low-end of the market could be considered a Natural Monopoly because the average costs of production are continually decreasing as a result of high production, improved technology and increased competition. However, there is a high end of market that would be deemed an Oligopoly, because it consists of a small number of sellers due to a very high barrier to entry. Typically the differ entiated products are custom-built solutions that can only be provided by companies of the size and stature of a big half-dozen consulting firm or an internationally know organization such as Oracle or SAS. There are very high barriers to entry to compete in this market since the clients to this product are looking for large-scale international support. In order to implement a sophisticated differentiated product like Oracle financials or SAP, a company needs to retain an enormous overpaid staff of software engineers to develop, support, and implement such solutions. Very few companies are fitting of retaining and / or attracting the staff necessary to provide such solutions.