Although Wall-Mart Is an enormous company it has issues like some smaller companies. The first Issue discussed Is the factors that affect supply, demand, and equilibrium prices in the market. Wall-Mart also has issues or opportunities they face that affect its competitiveness and long term profitability. These factors affect fixed cost and variable cost. Factors that affect demand, supply, and equilibrium prices Wall-Mart makes an average of four billion dollars a week before all other factors (“Wall-Mart Company Statistics”, 2013).

This makes us one of the most profitable businesses of all time but, all businesses regardless of success rate must consider the effects of demand, supply, and equilibrium prices of the items sold within our stores. When demand is low it causes a surplus of supply which would cause the apply curve to shift right which is not good for business and causes a need to lower prices, discount, or clearance Items. If the demand is strong but supplies are low It causes a demand curve to shift right reflecting a decline In availability of product which limits consumers spending and also leads them to shop with competitors.

Balancing supply and demand curves while ensuring a bottom line profit is an everyday struggle In big business. This is why businesses try and keep Inventory within the equilibrium price range that their professional researcher developers create (Colander, 2010). With Wall-Mart being one of the top retailers in the world due to ‘low prices’ any product sold at a lower rate could possibly attract customers. I OFF with those who are looking to budget for a television (Insignia, 2014).

Wall-Mart should look into tapping into this market with our availability to 250 million customers (“Wall- Mart Company Statistics”, 2013); by offering lower prices and comparable quality this could be a large success for Wall-Mart and our third party manufacturer. Tapping into this market could open the door to many other Wall-Mart brand electronic products. The key to ensuring success is seeing how current Wall-Mart customers will react to these products. This will ensure we do not have a surplus in supply and also guarantee we closely monitor customer activity for demand keeping relatively positive balance.

Potential gains and losses with new products When taking a detailed look into the issues and opportunities involved in creating this new product Wall-Mart must account for all factors from beginning to end. Televisions are priced according to a large number of factors including size, components, megahertz, misapplies, applications, and a host of different factors. Dependent upon the quality and size of each television, the price of the television we sell will alter due to price elasticity which compares a product to similar products that are in the current market (Colander, 2010).

The primary objective for Wall-Mart to take into consideration is ensuring our product is either as good as our competitors or surpasses them. Technology is also a primary target when dealing in electronics but, by also attempting to ensure a low price and high quality television can be a challenge. The revenue required to make this project transpire will be a challenge, understandably Wall-Mart must carefully review each project to ensure minimum risks and large gains for a product. Understanding what is spent versus what is predicted to be compensated can be difficult because it is a risk.

With the proper research and analysis put toward this venture Wall-Mart should be able to fulfill these goals and potentially surpass other store brand and name brand televisions. By ensuring we carefully approach this situation the profitability from this endeavor should be astonishing. Variable Cost Factors Business dictionary defines variable cost as a periodic cost that varies in step with he output or the sales revenue of a company. “(“Business Dictionary’, n. D. ). This means simply put that variable cost is not constant; it fluctuates due to several factors.

Some of the factors that Walter can anticipate affect variable cost are the cost of raw material. If this cost goes up then the cost of production will also. Another factor that can affect the variable cost is the cost of labor. If the employee is paid by the hour or by the unit then the variable cost is affected because the payout to the employee is not constant but varies depending on the amount of time worked or the mount of productivity. Fixed Cost Factors In addition to variable cost there are fixed cost that the company must also recognize.

These costs, as defined by Business dictionary are, “a periodic cost that remains or less unchanged irrespective of the output level of sales revenue. “(“Business Dictionary’, n. D. ). This means that bills have to paid regardless of profit or lack thereof. Some of the factors affecting fixed cost are depreciation, interest, rent, and salaries. Although an employees pay can listed as a variable cost, it raise or bonus incentive an employee paid salary can expect the same pay each pay redid. These two categories; variable and fixed, are careful monitored so that Walter can assess situations carefully.

Knowing how to calculate variable cost and being prepared and aware of fixed cost is one of many business practices that the company prides itself on. Conclusion Wall-Mart is a leading retail organization across the globe. Wall-Mart still has to monitor market factors Just as any other competitor or small corporation. These market factors affect the supply, demand, and equilibrium. Wall-Mart is very strict on their decision making when determining and finding price elasticity, technological innovation, the relationship between labor and capital employed, and cost structure.

Outage, Korea, Samsung started by exporting “dried Korean fish, vegetables, and fruit”, Samsung broke into the electronics field in 1970 with the production of its first black- and-white television, which were sold domestically in 1972. In 1974, Samsung began the washing machine and refrigerator production for which it is still well known. Mass production of the microwave oven began In 1979, followed by alarm conditioners In 1980 and Vicars In 1984. Over the years, Samsung has also won many awards, including five European EASE Awards. In 2010, Samsung brought the Galaxy Tab to the united States market.

While not the first contender against Apple’s pad, the Galaxy tablet might be the most serious contender. The Galaxy Tab ranges from 7 inches to 10. 1 Inches and Is built on the Android platform. There are three sizes available In wife only versions and five available with both wife and G capabilities. The latter can be used on the networks of the five major cellular service providers, which enables usage on the go as opposed to usage Just while connected too wife hotshot. Demand, Supply, and Equilibrium The tablet industry is one that is becoming more popular every year.

Apple’s pad is one tablet that is well desired by most consumers. The demand for tablets is increasing every year as excitement builds more over them. One factor that affects demand Is consumers are choosing tablets over notebooks. Tim Cook. Apple’s chief operating officer Indicated that “we believe some customers chose an Pad Instead of a Mac but even more chose an pad over a Windows PC” (Merritt, 2011). Competitor’s offerings also affect demand. Amazon and their introducing of the Kindle Fire that is an e-reader and tablet all-in-one has affected Pad’s demand.

Many people have steered away from Pad and bought the lesser feature packed Kindle Fire. The Kindle Fire is significantly cheaper though, which is more appealing to some consumers. 1 OFF of those consumers said they would purchase a $249 tablet over the average, $599 pad sold” (Amazon Kindle Fire Tablet at $199 Challenges pad, 2011). Having a successful offering, such as the Apple pad could induce supply issues as Apple has encountered. In the case of Apple’s issues, an earthquake in Asia shut production down for a period of time. Another factor with supply is having funds to secure parts that are vulnerable to shortages.

Managing the supply chains enables large companies like Apple to secure these key components and not endear supply assister. “Apple with continue to enjoy operational efficiency through upfront cash payments offered to its suppliers as strategic weapons to secure a significant advantage over its rivals” (Trifle, 2012). For a new company starting out in a market with big contenders, it is crucial to achieve market equilibrium. One point to ensure is the supply of the new tablets will meet the demand of the introductory device. Essentially executives must predict the demand of the new tablet.

If this prediction is skewed could place the company at a supply disadvantage and could take months to overcome this difference. If the supply decreases or unchanged with a high demand could lead too higher equilibrium price. Competitors in this market include the Apple pad, Motorola Zoom, Amazon Kindle Fire, Samsung Galaxy Tab (10. 1 inch), SASS Transformer, and the Blackberry Playbook. Potential customers include the person that wants an alternative too laptop or desktop PC. However, in many applications, the tablet is an extension of the laptop or desktop PC.

Photographers, photographers, college students, sales agents, and executives are potential customers as the tablet allows the person access to files and folder that pertain to their field of work or studies. With the invention of cloud computing, any document can be viewed anywhere an internet connection can be received. Competitiveness and Long-term Profitability Most markets are highly competitive, even if there are only a few organizations offering the product – the competition is for both initial and repeat sales. And of course, all organizations want their “slice of the pie”.

In other words, if Apple dropped prices, revenue would increase because of a larger quantity response, and if Apple raised prices from current levels, then revenue would decrease due to a disproportionate decline in quantity demanded. Technological Innovation The pad was incredibly popular among consumers, selling around 15 million units within the first year. In March 2011, Apple unveiled the second generation pad, which is 33 percent thinner, contains two cameras and runs on a dual core processor. The third generation, which is faster has a better camera and dictation, was announced March 7. Carving, 2010) One of the most fascinating things from an economic point of view happened during this most recent recession: Apple posted quarter-after-quarter growth and record-setting revenue numbers. When it comes to the U. S. Economy, Apple has been of the few bright spots lately, which has provided hope for many. During this past recession, as well as the one that happened after the dotcom boom, Apple didn’t sit still. The company innovated through both, launching two new categories of products that came directly as a result of research and development spending.

Those products were the pod and the pad. The law of diminishing marginal productivity states that as more and more of a variable input are added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall. Also, increasing one input, keeping all others constant, will lead to smaller and smaller gains in output (Colander, 2010). Being the firm that is going to be introducing a new tablet into the marketplace we need to be soused on producing where both average product and marginal product are positive and falling.

Cost structure is the expenses that a firm must take into account when manufacturing a product. A true cost structure includes all costs from the beginning, such as production, labor, marketing, warehousing, sales and marketing, and shipping. The cost structure of the firm is the ratio of fixed costs to variable costs. Some examples of fixed costs would be the manufacturing and direct labor overhead costs. Variable costs would be direct materials, commissions, production supplies. Tablets are made up of several parts that come from several suppliers.

There is the The cost of buying all these parts to build the tablet need to be kept as minimal as possible in order for the company to be profitable and competitive once the tablet is introduced into the market. Variable costs are the costs that change by the determining factor of business activity. Examples of variable costs for the tablet are the cost of labor, overhead and supplies. These costs are driven primarily by the productivity of the manufacturing of the tablet. Once the productivity for the tablet hinges, the total variable cost will also change.

Factors that can change variable cost for manufacturing tablets are inflation, supply, and demand. Inflation can change the cost of supplies creating a higher amount to overall production of the product. The amounts can change variable cost by increasing or decreasing the cost to produce the tablet. As inflation is present the cost of raw materials to manufacture product will increase. Thus creating a increase in supply cost. Changes in supply and demand effects labor cost. When supply is low the need to increase labor hours exists to meet demand of product.

When supply is high and demand is low the labor hours decrease to create minimal additional cost. Supply and demand are main factors in which changes productivity for the company. Productivity is reflected based on demand of the tablet. When demand is high the company has to increase labor cost to increase productivity of manufacturing of the product, thus creating a change in the company’s variable cost. Overhead cost is a variable cost that changes with productivity. Increase occurs in operations to manufacture product as productivity increases and decrease. Fixed cost is the cost that does not change by production or ales activity.

Fixed cost can be rent, salaries, loan payments, taxes, and insurance. These cost rarely change and can be easy identifiable by determining what cost would still need to be paid with no sales activity. Factors that can change fixed cost is when the company expands, changes in law, and new contractual agreements. The changes will determine the new fixed cost for the business. As the tablet company continues to grow the need for additional manufacturing plants and employees will increase fixed cost. The expansion will create a need for additional insurance and the property taxes will increase.

The company will change fixed cost if new assets are acquired by long or short term debt. The organization can maximize their profit- making potential by offering better service warranties and customer service compared to the competition. These are items that do not necessarily increase the costs as the product should be able to last the duration of the warranty through the use of quality parts. The same concept can be applied to the customer service quality. Enhanced customer service would not require additional employees, but would merely require the company to raise their expectations of their customer arrive employees.

These two features would provide our customers with unforgettable service which in turn will generate free promotion of our product and services. Word of mouth would travels from state to state or country to country and provides our company an edge over our competition without us negatively impacting our bottom line. The revenue would increase as we would offer our customers a quality product with peace of mind. These new feature would allow us to offer a complete package. As the value of these features will put us above the rest in time, we would be able to increase the price of these services.

This would the marketing would be to create models that would allow consumers to personalize their tablets. Our company can offer the tablets in different colors or cases with graphics. These additional features would increase our marginal costs. However, if this tactic is successful, the demand of the product would increase as well as the price for each customized unit. The increase in cost would be minimal compared the increase in revenue as these colors and graphics would be unique to our brand. It would also be in our best interest to manufacture Just a small quantity in order to drive up emend.

This will also guard the company if we are not successful with our strategy. The strategic planning group feels that it is well prepared for introducing a new tablet to the market. The group members have taken a look at their closest competitor, Samsung, as well as other organizations offering the same product. They have taken into consideration the fixed and variable costs, supply and demand, market equilibrium, the technological innovation required, and the cost structure required. One member was able to point out issues that might need to be overcome and opportunities too good to miss.