Economics of Computers :: essays papers

Economics of Computers Introduction and Background The computer service industry disregard be broken down into several 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 trade shifted its conveys from typewriters to word processors to personal computers, so did EBM modify its harvesting line to meet that call for. Now they be trying to make do in a real competitive low margin industry. They are a small single location alliance with annual revenue revenues of twenty million (USD). However, as the profit margin and price of their product continually drop at a rate of forty share annually, it becomes more difficult to show increasing gross revenues. They will need to find a place in the commercialise, a niche, to survive and efficaciously compete with larger internationally known corporations as well as small loc al companies that are truly much like their own. attention Structure, Competitors The market is extremely competitive price-searchers market product is often change below manufactures cost just to maintain market share and defect 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 faced 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 gameer production, meliorate 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 differentiated products are custom-b uilt solutions that green goddess only be provided by companies of the size and stature of a puffy six consulting firm or an internationally know organization such(prenominal)(prenominal) as Oracle or SAS. There are very high barriers to entry to compete in this market since the clients to this product are spirit 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 capable of retaining and / or attracting the staff requirement to provide such solutions.