COSHE.COM : Science / Technology : The Economics of the Computer Industry Click Here to Search COSHE's Database Again Introduction and Background The computer service industry can 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 market shifted its needs from typewriters to word processors to personal computers, so did EBM change its product line to meet that demand. Now they are trying to compete in a very competitive low margin industry. They are a small single location company with annual gross revenues of twenty million (USD). However, as the profit margin and price of their product continually drop at a rate of forty percent annually, it becomes more difficult to show increasing gross revenues. They will need to find a place in the market, a niche, to survive and effectively compete with larger internationally known corporations as well as small local companies that are very much like their own. Industry Structure, Competitors The market is extremely competitive price-searchers market; product is often sold below manufacture's cost just to maintain market share and brand 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 higher production, improved 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 h...
