The report will enlighten the effect of the viability of the business in their long run operations. Given that, when they apply economic principles there will be the effect on their production and service delivery in the future. Cocas Cables Manufacturing Company is situated in Bologna state whereby there are many distributors and end users of the company’s final product, the insulated cables for domestic installation.
In this business, the company must be able to remain competitive in regards of cable manufacturing. The reason for this is that there is a lot of construction coming up, and the demand for cables is high. The primary customers are the local population who are in building sector that makes up 70% of the total user of the product manufactured.
Many customers are found in urban centers where the demand for housing is rising, and the construction is high to curb that shortage. In every business the competition is healthy so as to maintain high standard of the product, moreover, the main competitors produce low-quality products at low price and are located near the company, so the competition is excessive. The approximate market share the company enjoys adds up to 60%, where the chief competitor stands at 35% of the market share and the smallest has 5% of the total share market.
The competition environment is perfect competition, being that there are many producers and sellers, and every producer is a price taker. In the market, there are more than eight close substitutes, whereas the company’s product is relatively high compared to its alternatives. The demand curve will be relatively elastic due to the reducing price so as to remain competitive in the market while the demand will increase. The firm must increase the quantity and reduce the price of the product.
References
The Demand Curve in Perfect Competition. (2014). Boundless. Retrieved from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/competitive-markets-10/perfect-competition-66/the-demand-curve-in-perfect-competition-249-12346/
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