Economic Principle and Sen's Corporation

Economic Principle and Sen's Corporation

Introduction

In the world of globalization, the development of technology has taken really fast pace. People are now using new technology in order to get directions, read and collect information in the form of newspaper, ebooks, shop online and enjoy new featured games. With all this ease, they want to be connected with their family and friends via a technology device. Sen's Corporation is coming up with a portable, foldable Smart phone that has the quality of 3 D projection. The folding will enable one to carry it in pockets or purses. Sen's Corporation will work on how the company can lead to an increase in the revenue, also denoting the profit maximization quantity and determining the marginal revenue to maximize profit. The plan of Sen's Corporation is to analyze and implement the correct mix of non pricing and pricing strategies.

The purpose of the paper is to apply economic principles on the production of Sen's Corporation Smart phones and analyzing the business proposal (Forgang & Einolf, 2007). It will highlight the market structure and the elasticity of demand based on the industry.

Discussion

Market structure

There are many other corporations that are offering smart phones with excellent features, few being Apple, Samsung, HTC and others. Sen's Corporation merchandise consumer will have the option 3-D projection and since the corporation has its own patent on the 3-D technology, it will be considered as a monopoly at the initial stage.

However, this may not last long. A monopolistic competition may happen if there were a lot of companies competing and the numbers of suppliers were increasing (Sutton, 2001). The types of product that the company is offering will be differentiated in terms of the features it provides with. Since there are few companies that supplying the smart phones it will cater to oligopoly system. It can be observed that mutual independence exist between the companies. Oligopolistic markets have to face rivals unlike monopolist. The rival acts as any changes occur in price, output or the features as they are mutual independent. Moreover, the few firms in the industry are well aware of one another and also anticipate their moves in order to be prepared.

Therefore, the Sen's Corporation has to strategically aware of its competitors and be ready to react to the changes in the market. With the passage of time, the technological changes are taking place at fast pace and the company should be quick enough to respond it and amend the business strategy accordingly.

Elasticity of the product

Elasticity of a product shows the effect of change in demand due to percentage change in the prices or income. Smart phone industry is highly demand elastic. Any change in price will have impact the quantity demanded (Sexton, 2013). It is also considered as income elastic as personal electronic items does not come under the category of necessity.

Even though, cell phones have become a necessity in this era, but smart phones will be a superior good or a luxury ...