Economics Assignment Help on Market Model
Introduction Due to rapid changes in market conditions, various industries have to make changes in its market model. In this market model case study assignment help paper, information technology industry has been taken in order to identify the changes in market model. Further, transaction cost incurred in IT industry is also analyzed. Along with this assignment help, hypothesis is created to analyze the market conditions.
Pattern of Change in Market Model Information Technology is the industry, which is highly competitive and lead to changes in market model. Due to the globalization, technologies are changing rapidly that forces the companies to change their market model. Globalization has increased the import and export of products within various countries. It is analyzed that price elasticity of demand has increased the competitive structure that changes monopoly to oligopoly to monopolistic competition and ends with perfect competition (Baschab & Piot, 2007). Thus, due to changes in market scenario, IT industry has to make changes in its market model. For example given by Australia assignment help experts, earlier Microsoft was oligopoly Software Company but due to continued modification and innovations in it, software has reduced the substitutes, which in turn move the company from oligopoly to monopoly. Therefore, due to change in market situation, company has also changed its market model. Apart from IT industry, other industries have changed their market model according to the situation due to highly competitive market environment (Westarp, 2003).
Hypothesize Short Run and Long Run Behavior Short- Run behavior in perfect competition market: In case of short-run, demand of products is low and new companies make behavior regarding how much they have to produce. Company has to decide lower prices for its products due to low demand. Initially, organization set high prices for products and adopts short down rule. In case of short run, market share is low and cost of production is high. Long-run behavior in perfect competition market: In case of long run, organization has gained market knowledge. Further, cost of products is low due to cost cutting measures and will get benefit through economies of scale. Company’s overall profit is high and cost of production is low (Taylor & Weerapana, 2011). Moreover, organizations do not have to do marketing of products in case of long-run behavior. Areas Leads to Transaction Cost Transaction cost is incurred by the organization in order to do the economic exchange. In case of IT industry, outsourcing is the area that requires transaction cost. While doing the outsourcing of software, IT industry has to incur the cost in hiring the employees for performing the activities of companies. Transaction cost plays an important role in managing the market failure of the companies (Cordella, 2001). For example, in case of Microsoft, company has to incur the transaction cost in order to make innovative software. Acquisition of technologies requires transaction cost. Thus, outsourcing of technologies lead to the expenditure of transactions cost in information technology industry. The hierarchal structure of the organization also requires transaction cost at each and every level. Transaction cost is needed in order to maintain the basic needs of organization structure. Physical contacts among the members in organization lead to the requirement of transaction cost. Further, organization also has to spend transaction cost in order to build IT networks and other physical investments, so that company can provide tools needed by the organization (Pour, 2006). Another area, where this industry has to incur the transaction cost is acquisition of resources. In order to acquire the resources, organization has to incur the transaction cost. Further, it is analyzed that every area need the transaction cost. This cost includes the search cost, negotiation cost and enforcement cost while doing the transactions.
Strategies for Reducing Transaction Cost Outsourcing, organizational structure and communication network has lead to the transaction cost in information technology industry. Due to the transactions that require transaction cost, organization has made proper allocation of resources. Transaction cost that needs to be incurred is majorly dependent on the quantity of goods that has been transferred during outsourcing (Cordella, 2001). Further, transaction cost also influence the market structure as well as intermediary networks. Further, transaction cost also determines the medium of exchange in an economy. It is identified that Information technology industry can be able to make decision regarding the adoption of communication network. In order to deal with the transaction cost, organization has adopted different strategies. Following are the two strategies for dealing with transaction cost:
- Organization can reduce the transaction cost by supplying the large volume products in other countries. Further, suppliers of the company fix the transaction cost irrespective of the volume of goods.
- Another strategy that organization can reduce transaction cost is moving the intermediary networks to other places where transaction cost is low (Taylor & Weerapana, 2011).
Modification of Data In information technology industry, insufficient development of IT infrastructure has raises the overall cost of this industry. Low level of skills does not able to make efficient use of technology and raises the challenges for IT industry. Industry should provide training and development facilities to workforce in order to develop the skills and knowledge of employees (World Economic Forum, 2012). In the year 2011, around $26.5 billion revenue has been lost by IT industry. Moreover, this industry has to make effective utilization of resources and technologies in order to overcome the downtime in IT industry. Due to the high technical environment, IT industry has increased the overall revenues. This industry has gained revenue around $76 billion in the year 2011. Therefore, organization has to adopt proper strategies in order to take proper decision related to increment in revenues and reducing the cost (Harris, 2011). Factors affecting Degree of Competitiveness There are different factors that affect the degree of competitiveness in IT industry. Due to emergence of highly advance technologies, level of competition has also been affected in IT industry. Mergers and acquisition between various companies also affect the level of competition in IT industry. In order to overcome these challenges, IT industry has to adopt three measures. Firstly, company should develop skills and knowledge of employees in order to sustain highly competitive market environment (World Economic Forum, 2012). Secondly, in order to deal with mergers, IT firms have to deal with competent software developers in order to give competition to the merged industry. Thirdly, strategies according to the changing demand and needs of people also help in attracting the large part of customers. Conclusion From the above discussion by our economics assignment help experts analyzed that due to rapid changes in the technologies, IT industry has moved towards making changes in market model. Further, industry has to incur transaction cost in outsourcing, organization structure and communication network. Thus, highly advanced economy has also increased the cost of IT industry. References Baschab, J. & Piot, J. (2007). The Executive’s Guide to Information Technology. USA: John Wiley & Sons. Cordella, A. (2001). Retrieved from http://csrc.lse.ac.uk/asp/aspecis/20010024.pdf Harris, C. (2011). Retrieved from http://www.informationweek.com/storage/disaster-recovery/it-downtime-costs-265-billion-in-lost-re/229625441 Pour, M.K. (2006). Emerging Trends and Challenges in Information Technology Management. USA: Idea Group Inc (IGI). Taylor, J.B. & Weerapana, A. (2011). Principles of Economics. USA: Cengage Learning. Westarp, F.V. (2003). Modeling Software Markets: Empirical Analysis, Network Simulations, and Marketing Implications. USA: Springer. World Economic Forum (2012). Retrieved from http://www3.weforum.org/docs/Global_IT_Report_2012.pdf Looking for best and original University and high school assignment help then contact us 24X7 at firstname.lastname@example.org