ECO365 Current Market Conditions Team Paper
ECO365 Current Market Conditions Team Paper
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Running head: CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 1 Current Market Conditions Competitive Analysis Manuel A. Munoz, Sandra Burnette, Ryan Martin, Jessica Edwards ECO/365 May 28, 2014 Dr. Gibran Rezavi CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 2 Current Market Conditions Competitive Analysis CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 3 Factors Affecting Supply, Demand, and Equilibrium Factors that affect demand in any market include the amount of buyers, the average income of the buyers, consumer expectation for income and prices in the future, and the price of available substitutes. The buyers in the Android market are the consumers who purchase mobiletechnology devices run based on Google Android software, such as smart phones and tablets. According to Gartner, Inc. (2014), the global android market experienced 127 percent growth in 2013, driven by a 68 percent increase in global tablet sales from 2012. The costs of the devices are within budget for the average consumer and offer specifications suitable for desire. Consumers expect prices to decline for products as new technology is developed. The top competitor for Google Android, Apple, experienced a 16.8 percent drop in tablet sales in 2013 when Android experienced its growth. Android reached the number one position for sales the same year for its tablet sales. Factors that affect supply include the amount of producers in the Android market, their expectations, the price of production inputs, and the production technology state at the time. The number of producers in the market affects supply directly since more competition results in decreased supply and less competition results in increased supply. As the demand for mobile technology devices increase, the software developed for the devices increases. Apple develops software for its products, and a majority of all other developers create applications with Android based software. The mobiletechnology market is in a state of equilibrium. The market for Google Android, the mobiletechnology market, is oligopolistic. There are two large firms to consider in the market, Apple and Google Android. Apple products operate with Apple software. According to Curtis (2014), Google Android software is available CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 4 to all smart phone suppliers to add to their devices at no cost. All though there are several suppliers competing in the mobiletechnology market, the devices produced use Apple or Google Android software. In addition, all though there are several smart phone suppliers that use their own software, most suppliers include Google Android software. Some suppliers for smart phones and tablets provide products that are both identical and different from competing suppliers. Issues or Opportunities Android operating system is one of Google’s many products available in the market and its popularity grows bigger as technology expands and more cell phone manufacturers opt to choose Android as their operating system. The competition is hard as Android faces operating systems such as Apple’s iOS, Window’s for Microsoft and Blackberry. Although in some cases the company’s geography matters while conducting business, the case is not the same for this particular product because of the nature of the product. However, the company’s location is in California where they conduct testing, software updates, new technologies and amongst other work performed by Google in order to continue providing a great service to their customers. Luckily for Google, they are operating from a great location, which works to their advantage considering they are in the same area other top technological companies conduct their business and demand for programmers software developers, and engineers is becoming increasingly higher than ever before. Initially, Android was supposed to be an application for digital cameras not an operating system, but later in 2005, after Google decided to purchase the technology then the company decided to go with the idea and it paid off great (Weinberg, 2013.) Android operating system is CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 5 now running in over one billion devices around the world and still going up. The chart below breaks down the number of Android powered devices against the competition. In addition, one can see the steady growth and demand for the technology since it first launched in 2008. Google has one major advantage over its competitors because they are able to supply their operating system to many different manufacturers. Android operating system is currently available in several different cell phone and tablet manufacturers allowing them to compete in a wider scale as opposed to Apple’s iOS, which is only available in their own products only. Demand for the technology remains high as more people continue to purchase products running Google’s Android operating system. Another major advantage for Google’s operating system is the fact carriers selling their products with Android operating system are lower than CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 6 Apple’s operating system. In April 2011, Samsung began experimenting with price elasticity when they introduced their Galaxy WiFi only tab at a price of $349.99 compared to its rival priced well over $500.00 dollars. Although Google’s Android is apparently dominating the market as far as devices powered and second in downloads from the application store, they still need to work against Apple, which is raking in a lot of money. The demand for Apple phones still high and Google, as an organization must continue to deliver and find other ways to compete against Apple and other competitors such as Microsoft, Blackberry, and Nokia. Apple is working as hard as Google to come up with innovations and ideas to revolutionize the market and they are on top of sales from the app store. One thing Google should do is work on developing more innovative applications to sell in the Google Play Store to try to maximize their profits. In addition, creating a new cell phone device to compete against the iPhone may increase their chances of success if they want to dominate the market. In earlier releases, Apple had to raise the price on their devices in order to find equilibrium because the demand for iPhones increased dramatically. Even when Android is in more devices than iPhones, Apple has created popularity between young and old and some prefer to keep purchasing Apple products. The idea of creating a Google owned device would require a lot of work and money since they would have to build phones, market it, and hire new people, research, all that would cost a lot of money, so this may not be the best solution. CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 7 Factors Affecting Variable Costs Three of the variable costs that Google’s Android faces is the Current market, Cost efficient parts, and the Production of products. The current market for Google’s Android product is constantly at war with the opposing company Apple IPhone. The market for Android products is constantly changing and every time an organization introduces a product to the market, the market changes and reflects the organization that has the newest product. The reason this is a variable cost is simple, as the economy and the market go up and down the cost of products tend to fluctuate to keep the consumers buying. This plays a big part in productivity because without parts that are less expensive, the cost of the product goes up and when the price rises, it takes the company out of a position to compete with the competitors. The cost of the parts can change based on the demand of the parts and the availability of the components for the part. This is a CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 8 variable cost in the sense that the price changes when the price of the components change in order to continuously make a profit. The production of the product is a variable cost in many different ways. For starters, the employees that physically build products tend to record different times for each product put together. Then the programmers come in and program phones and sometimes that process can take multiple tries, which bumps back completion time and in turn causes a fluctuation in the cost of the labor. Whenever Apple comes out with a new product to compete with Android the supply of the Android appliances goes down because the iPhone product is brand new. When the supply of phones and other products slows down the demand for a new product to compete with the current appliance goes up and creates a good selling platform for the Android Company to step in. Factors Affecting Fixed Cost CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 9 Conclusion CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 10 References Curtis, S. (2014, March 04). Android overtakes Apple iOS in tablet market. Retrieved May 24, 2014 from , Telegraph Media Group Web site: http://www.telegraph.co.uk/technology/news/10675014/AndroidovertakesAppleiOS intabletmarket.html Dignan, L. (April, 2011). Samsung's WiFi Galaxy Tab retail barrage starts: Price elasticity experiment begins. Retrieved from http://www.zdnet.com/blog/btl/samsungswifi galaxytabretailbarragestartspriceelasticityexperimentbegins/47000 Gartner, Inc. (2014, March 03). Gartner says worldwide tablet sales grew 68 percent in 2013, with android capturing 62 percent of the market. Retrieved May 24, 2014 from , Gartner, Inc. Web site: http://www.gartner.com/newsroom/id/2674215 McCracken, H. (2013, April). Who’s Winning, iOS or Android? All the Numbers, All in One Place. Time Magazine, (), 5. Retrieved from http://techland.time.com/2013/04/16/iosvs android/ McCarthy, N. (March, 2014). Is Android Becoming the New Windows?. Retrieved from http://www.statista.com/chart/2065/globalconnecteddeviceshipmentsbrokendownby operatingsystem/ CURRENT MARKET CONDITIONS COMPETITIVE ANALYSIS 11
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