Economics for Business - Research Paper Example

Download file to see previous pages With this in mind, the company has been in the forefront of creating subnotebook computer named ultra Personal Computer (UPC) which the Guiness World Records describes as "the smallest full-powered, full featured personal computer" (Oqo 2007).
Unlike most of the products in the global business arena, the UPC which is offered by Oqo has not been driven by the demand of customers in the market. In fact, the creation of the product is through the company's effort of determining the evolving computing needs of the high-end clientle (Oqo 2007). Thus, the UPC is a product where the supply is generated first before demand.
The demand curve for the UPC can be drawn as a downward sloping demand curve. Though the UPC is generally targeted to individuals who posses higher purchasing power through their level of disposable income, the product also appeals to the mid-level consumers who also wants mobile computing (About Us 2007). However, it should be noted that the high pricing strategy employed by Oqo is generally done to enhance the attractiveness of UPC. Thus, at a much lower price level, demand can be offset. It is also worth mentioning that UPC is a normal good because demand for it generally rises with increases in disposable income.
Currently, Oqo is dealing with the rapid increase in demand for its products. The company's press release states that the company braces for demand as corporate clients has been more than eager to test the UPC (Press Releases 2007).
Supply
Being the pioneer in this technological innovation, Oqo has become the major supplier of UPC in the market. Thus, Oqo can be said to have a monopoly of the entire UPC market. The implication for this is the ability of the company to choose its own level of price and quantity supplied. However, it should also be noted that Oqo cannot fully exploit its power as a monopolist because of the presence of various substitutable goods like personal computers, laptops, and palm tops which are also used for the same function.
Price
As mentioned above, the innovativeness, quality, and image of Oqo's product commands a very high price in the market. As with any business organization in the market which invests huge capital for research and development, Oqo prices its products to compensate for these costs. The company's pricing strategy is generally putting a large premium over and above production costs.
Oqo does not charge a single price for UPCs and practice price discrimination. It should be noted that the company charges different prices to each customer according to how much they are willing to pay. For example, the base price of the company's Model 2.0 has a base price of $1,499 but this can vary according to the product features and specification that the client wants to integrate in the product that he/she is going to purchase (Press Releases 2007).
Production
The production of UPCs are solely undertaken by Oqo which includes the assembly of components from its various suppliers. The company has a manufacturing plant where production takes place. Being a small company which is only comprised of 105 employees, it maximizes production capacity in order to cope with the burgeoning demand in the ...Download file to see next pagesRead More