IntroductionSeveral key characteristics of executive finance are in existence and aids in understanding the nature of the theme matter and aid in clear understanding of terms such as:
Executive finance which is seen to be micro-financial in state. This is for the reason that the element of study is an organization and its problems. Executive finance deal not with the whole budget as an element of learning. Managerial Economics refers to the integration of the space between the business practice with/& economic theory in order to give way for "decision-making" outline/comment the scope and nature of the Managerial Economics with regards to this statement. The definition given imply that the Managerial Economics is the discipline that relates to the application of the economic theory of the business management. Therefore, the managerial Economics lies on the margin between the business management and the economics and acts as the link between the economics, managerial economics and business management, the following report is a Managerial Economics about hypothetical company operating in Saudi Arabia, known as ZED Technology and communications company, which is based in manufacturing the Smart phone "ZED sphere " and Tablet " ZedTab".
ZED Technology and communications company are a Saudi Arabian technology and communication company that deals with the manufacturing of the communication gadgets. The company main industries are located at Abu Dhabi, and their products are sold through the upscale phones and tablets stores in the Saudi Arabia. The firm has a dedicated management team that has a significant experience in the watch industry. It is affiliate d with other numerous electronic companies that operated under the similar brand name. ZED Technology and communications company have various strategies that it has adopted in the market operation which has enabled it to survive in this competitive market. Its product evolves with the present trends and they are made in an elegant posh and in a compatible manner. Some of the products produced include smart phones, tablets, laptops, Personal Computers, modems, routers, computer accessories, and speakers. However, the two products that have made the brand of this company to maintain its top position in the market and make the high profit are the Smartphone ZED sphere and Tablet ZedTab. The two products have made the company to record a higher profit margin the year 2016, due to the increase in its demand in the market and the new features that were introduced in the products.
The companys strategy is centered at serving the upscaling niche market of the technology and communication industry. There are various untapped potential market around that wish to get the high-standard, stylish cellphone and tablets, but they dont get the particular one that fulfill s there preference taste. The companys believe is that, by developing new and stylished communication gadget which definitely make them to remain competitive. In future, the company is planning to continue making investments in research and development, such as licensing, developing and acquiring of new technologies. According to the companys projection, there will be a continuous growth in terms of market and operations and profitability depending on their capacity to increase their brand awareness. Also, the company is intending to use technology to offer an exceptional service.
The number of the competitors in the communication industry is expanding in every fortnight. Samsung, Nokia, Apple, Blackberry, Windows, and Techno are dominant in the market and hence the strong competitors of ZED Technology, covering the 75% of the market share. Blackberry and Windows have a limited distribution, they certainly have a concrete brand recognition in the market. In the present economy, large ration of the income of people is spent on the basic needs. The purchase of the communication gadgets is regarded as the want and not a need. The level of income for most of the people is relatively low, while there is an acute increase of the people of the middle class. The people are either too poor or too rich and their consumption behavior varies respectively.
The main products produced by the ZED Technology and communications company include Smart phone ZED sphere and Tablet " ZedTab". The ZED sphere is a mobile personal computer that has been designed with a mobile OS having features that are helpful for a handheld or mobile use. This kind of smartphones are usually pocket-sized, (unlike the tablet, which are larger), they are capable or making and receiving both the video and voice calls together with receiving and creating a text message. They are also installed with the virtual assistance like google assistance, an event calendar, video games, media player, video camera GPS navigator and digital camera. The smart phones are internet access enabled through the Wi-Fi or cellular frequencies and it is android enables, therefore, it can run several third-party software components, such as the Google Play Store. They have color displays designed with the graphical user interface covering the front surface. The ZED sphere is touch screen enabled and the user can use the virtual keyboard for typing the numbers and words as well as pressing the onscreen icons to activate the "app" features.
On the other hand, the Tablet " Zed" (mobile PC) as another major product produced by the company. Just like the smart phones, the ZedTab has the LCD touch screen and the mobile operating system as well as the rechargeable battery. This product is widely accepted in the market because it resembles a normal PC yet it is easy to carry and operate.
Theory of Demand Curve
In order to analyze the rate of demand in ZED technologies, one has to further understand the theory of demand. To be precise, this theory states that the increase in price of a commodity results to a decrease in demand of a particular commodity and vice versa. It hence implies that the prices of ZED sphere and ZED tablet have an impact to the quantity of demand. In the year, 2010 this company had lowered its prices by 10 percent so as to limit the level of stiff competition that they were experiencing. Competition was stepped by companies like Samsung, Nokia and even Huawei. A 12% decrease in prices resulted to a 5% increase in demand of their tablets and mobile phone. The decision made by the managerial staff was hence a well calculated move in order to curb competition and increase the number of consumers.
Market Demand can be best defined as the total addition of an individuals demands. In some of the consumers one can consider to have either a phone or a tablet while other consumers prefer to have both. The managerial staff considered it vital to specialize on production of these two commodities since according to research 82% of the Saudi market preferred to have both a tablet and a phone. In accordance to this market an increase in both prices of their commodity would result to decrease in demand, however, according to this ZED economist they lowered the prices of the mobile phone and increased the prices of the tablet. Extra features like a high resolution camera were added to the tablet so that customers could consider the tablet to be worth the stipulated high price. The company realized a profit margin of 5% due to the joint purchase of a mobile phone and tablets. Economist in ZED hence agreed to maintain these prices for 2 years in order to increase profits. A Demand function can be considered to be a mathematical model that focuses on illustrating on the negative relationship between demand and price of commodity. The demand function can hence be used to illustrate the elasticity or changes in demand in ZED.
The above is a representation of the demand of ZEDs mobile phone and tablets against price. As illustrated, an increase in prices of mobile phones and tablets results to the decrease in the amount of demand of these products by Saudi market.
Determinants of the Demand Curve
In ZED technologies, considering the determinant of demand has been one of the factors which have guaranteed their success in the past decade. Michael Brown, who is the sales manager at ZED, has always considered these determinants during their annual strategies. This determinants include; Income earned by their consumers, prices of related commodities, credit worthiness of employees, consumers taste or preferences and even the size of population.
There is a large population in Saudi Arabia despite the fact that the larger populations are not financial stable. The marketing manager at ZED has always preferred the manufacture of cheaper phones and tablets which are easily affordable to most of people in the Saudi market. Competition from Samsung and Nokia is also another factor that has made them to offer cheaper prices in their commodities. Also, in accordance to consumers preference each phone or tablet has been provided with an external storage disk of 4Gbs in order to ensure that their customers have adequate storage space to store their media files. It hence implies that the determinants of supply are factors that have been considered in order to ensure that the prices of their phones and Tablets are appealing to their customers.
Revenue is a factor which has limited the growth of ZED technologies due to the high taxes posed on tablets and mobile phones. Total revenue, marginal revenue and average revenue are forms of revenue that have been used in the distribution process of their product. Marginal revenue is the total revenue that arises from selling additional commodities. In 2011, there was increase in marginal revenue due to the increase in demand of phones and tablets among their customers. Marginal revenue raises the prices of commodities hence ZEDs mobile phone and tablet experience a decrease in demand in the following year due an increase of their products by 2.5%. It concludes that revenue is among the determinant of demand which have vividly portrayed a negative impact on the demand of ZED phones and tablets.
The above is a representation of the ZEDs quantity of supply against price. As illustrated, an increase in prices of mobile phones and tablets results to the increase in the amount of supply of these products by ZED.
Theory of Supply CurveThe theory of has been upheld in this corporation in order to avoid tremendous losses on their already manufactured goods. The supply theory clearly illustrates that as the price of a product increases the supply of a commodity increase. In the beginning of the 21st century, there were few people who owned phones and tablets when compared to the current situation at hand. According to this companys statistics, only 34% of the Saudi Arabia population owned mobile phones hence this was a business opportunity that ZED technologies utilized in order to come up with phones and tablets. At this time the prices of phones was high hence this company is a manufacturer and a supplier their prices were high just like their competitors Samsung and Nokia. Despite the fact that they had limited market since at this time ZED had no the appropriate funds to invest in large scale production, so it produced phones in hundreds but at each was sold at a high profit margin. During this time, ZED enjoyed a profit margin of about 31% which reduce to 14.7% after the level of competition had steepened. The above analyzed statistic illustrate that the increase in prices of mobile phones and tablets in the 21st century resulted to increase in the rate of supplying which resulted to a stiff completion in the technological industries.
Determinants of the Supply CurveLike any other company, the forces of supply and demand have great influence in the produc...
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