Price wars

The Asian Wall Street Journal, AIDS—Drug Makers Escalate Price War— Treatment Price Plimges for Poor Nations, ... 

To compete on the basis of cost, a firm tries to be the lowest cost producer of a given product for a specific market. This gives the firm the ability to im-derprice its competitors if it needs to do this. For example, you work for a brewery that is able to produce and distribute beer cheaper than any other brewery in the market. You could sell it at the same price as the beer of the other breweries in the market and make more money than the other breweries. In addition, this low cost production allows you to win any price war that your competition may start because you can make money on your beer at lower prices than they can. 

This technique is utilised on those occasions when a price is calculated to cover only the variable costs of production and distribution, with little or no contribution required towards fixed costs or profit margins. It may be used during a temporary fall in demand (an economic recession, or price war), keeping assets ticking over pending the return of more normal trading conditions. 

The large-format lithium-ion cell market will face overcapacity and price wars because... 

High competition in the supermarket sector and price wars practiced by the big chains. 

Considerations of outsourcing decision Cost saving due to the price war between supermarkets Most of planning activities are the core activities Cost reduction Competition in the international market The activities not outsourced are the core activities Do not own transport vehicles. Warehousing won t be outsourced because it is very important... 

The first revenues come with the start of production of the new plant A rise in the revenue curve depends on the market A positive market development in the sense of higher demand enables e.g. higher sales prices and thus leads to a rise of the curve. A negative market development may lead to a price and/or sales slump, resulting in the decrease of the curve slope. This may occur, for example, because of tightened competition or even a price war with competitors. 

Today (early 21st century), rayon is not widely used in the tire industry, especially in the United States. In the late 1950s and early 1960s, there was a price war between the rayon manufacturers and the nylon manufacturers of tire cord. However, when the rayon manufacturers lowered their prices to meet the lower prices for nylon, the rayon manufacturers found their profits to be much smaller than the nylon producer s. Thus the cost of production for nylon was less than that for rayon. Over the years, rayon s market share of the tire cord market has been eroded away by not only nylon but also polyester and steel tire cord. 

In business, price wars are an example of the escalation scenario. Again, each price reduction made by one competitor is met by a new round of price cuts by the others. 

Declining revenue/oustomer - Inb oduction of non-voice services - Delayed availability of services and handsets - Higher than anticipated prices of handsets - Reduced revenue - Price war... 

---