Describe your company and its major products and services from economic perspectives using terms and concepts learned in the course.
Solar energy is one of the most efficient energy sources. This is because sunlight is available most of the times. And in this case talking about the third world countries, sunlight is available for about 12 hours a day which is able to generate sufficient amount of energy to run several systems if available in sufficient amounts. My company is among the best solar panel manufacturers in the market. It provides the capabilities for solar panel production and it is as well backed up by local customer service. These solar panels have proved to work in a diverse environments and climates.
We are in a pure competition form of market structure. This is because we have a very broad range of competitors who make and supply the same products that we have (Ginevicius,& Krivka, 2011). The solar panels have high elasticity as their demand is rising every day. This is majorly because most people are trying to save on their energy consumption and thus are opting to use solar to achieve that purpose. This is because the prices are fairly affordable as well as our maintenance costs. Secondly, we have also tried to maintain as well as reduce our cost of production in order to maintain our prices in the market. The rise in the cost of production will often lead to change in the market price thus loss of clients. The climate conditions are also likely to affect the demand and supply of our products but in this case, most third world countries have favorable climate thus this is expected not to be a major problem(Bowen, & Sosa, 2014).
Technology on the other hand is our major stronghold. We are aware that the better the technology the more it increases production (Bowen, & Sosa, 2014). This thus translates to the increase in supply of the product. Our technology is thus up-to -ate so as to keep up with the changing economies.
Discuss the current and potential economic drivers and risk
Every business faces some macroeconomic drivers as well as risks that might be a big threat to them. Some of the macroeconomic drivers include: development in technology. According to Amalric,& Hauser, (2005), the betterment of infrastructure which continues to improve the connectivity that exists between hardware and software as well as people has med the technology to continue bringing forth greater opportunities which make us improve our services. The increase in urbanization is another factor as well(Amalric,& Hauser, 2005). This is because most people will have the need for better energy sources and thus our products are likely to be marketable. The macroeconomic risks that we are prone to include the shifting exchange rates(Shiller, 1994). Sometimes the exchange rates might be favorable to as it doesn’t have a big deviation margin. When the exchange rates increase, then we can record some bits of losses. The savings and loan risks may as well be of a threat to the company. The above named are some of the external drivers and risks.
The internal drivers that the organization faces include; the efficient supply and distribution strategy(Amalric, & Hauser, 2005). We have put in place this mechanism efficiently to ensure that the supply of our products is not restricted to one specific area but to different places. We also ensure that our clients get exactly what they ask for and this thus boosts growth. Another internal driver available is experienced personnel. They ensure that every product being manufactured is of high quality as well as make necessary improvement in technology and thus maintaining our high standards. The internal risks that we may face is the managerial issues. The change in the managerial system brings forth a lot a lot of problem as each one of them comes with a new strategy which conflicts with the existing ones (Shiller, 1994).
To manage these risks, it is advisable that the company stays in insurance and should as well stay in cash. This will ensure guaranteed returns in their investments. We also need to have very clear strategies so as to avoid rise in conflict once the managerial system changes.
Analyze your industry using Porter’s five Force’s framework.
|Threat of substitution
|Threat of new Entry
My choice of this classification is because this is a simple but rather powerful tool which provides an understanding of where the power lies in a business situation (Porter, 2008). This turns out to be very useful as it helps a business in understanding their strength in the current position that they hold as well as the strength in the position that they are intending to move into.
The company can know better how to use these forces by working through each of the five forces so as to make an identification of the current sector and thus they will be able to see who has power (Porter, 2008).
Present information on pricing practices, basic or discriminatory.
A company can choose to have various pricing strategies when they sell their products and services. The price can thus be set in a way that it can maximize profits. Any business thus has to have strategies for pricing as it is the most important aspect in a business. There exists several pricing practices or which can as well be termed as the models of pricing that our company is making use of. These include: the absorption prizing. This is basically a method of pricing in which all the cost is recovered (Tellis, 1986). The market price of the product is made up of the variable cost of the item onto which a proportionate amount of fixed cost is added.
Another pricing strategy that we made use of when we were just getting into the business was penetration pricing. In this, we set our prices to be a little bit less than those already in the market so as to gain customers and later on increased the prices.
There are several price discrimination strategies that have been not been used yet but are awaiting implementation. These include the group pricing strategy. It involve the division of the market into segments and thus going ahead to charge the same price for individuals in each segment. Personalized pricing can also be implemented. This can as well be referred to as one-on-one pricing. It involves the selling of the same product to each customer at different prices. This works with the maximization of the price each of the interested customers is willing to pay (Tellis, 1986).
Evaluate your company’s short-term and long-term economic outlooks.
A short-term outlook for this company can translate to decrease in prices. This is because there is likely to be an oversupply of solar panels as we have so many competitors and the demand is high as well. This will thus lead to a temporary demand fluctuation.
A long term outlook for our company is the creation of employment. This is because we intend to expand our services to other areas. This will lead to an increase in the production process as well as the administrative services. Thus, there will be need to have more employees who will be responsible for undertaking these services. Secondly, as research shows, the renewable sources of energy is expected to cater for about 11% of the entire global energy demand by the year 2030. This will be an increase over 10% up from 0.4% in 1990. One of the long-term challenges that are expected is mainly the increase in the manufacturers in the market. This will lead to decrease in the supply of the solar panels. This is likely to lead to a reduction in the profits made. We thus need to ensure that we keep up with the changing technologies so as to ensure that our products are not surpassed with other better companies with the latest technologies.