Situation. You work as part of an analysis team for a consultancy that follows t
ID: 1192297 • Letter: S
Question
Situation. You work as part of an analysis team for a consultancy that follows the semiconductor industry. Your boss saw the story from PC World and asked you to provide some analysis for an upcoming industry conference. There’s some concern as to whether Intel is executing properly to maintain its competitive edge against rival firms. Your boss asks you a few questions and asks you to write him a short paper (two pages or less) that explains Intel’s moves and make some recommendations. In your explanation, please address the following.
1. The PC World article states that Intel needs to have their new class of fabrication plants (Fabs) produce at a specified volume. Show why this is the case using the concept of cost curves to describe firm behavior such as that found on page 206 of the Baye text
Explanation / Answer
1. The questions can be as follows:
i. What are the new source of attractions that is going to be provided by them to the consumers?
ii. Why consumer will choose their products over the products of rivals?
iii. What are the costs of these newly launched product?
iv. Are they really cost competitive?
v. If they are cost competitive then, the formost important thing is that are they making any sort of compromise with the quality of the products?
vi. Does these products have any side effects for example does it have any impact on environment or human bodies?
vii. What are the marketing strategies and web-designing plans to promote the products?
viii. If it gets successful then, what is the foremost short-term onwards plan with it?
ix. How much are the scopes of expansion and generating employment?
x. Given the existence of market and new designs of rival how much market share do Intel assume to capture?
To answer the latter part more details are needed as the text is not given. But generally in a competitve structure we look for long-run equilibrium that says price is equal to average cost(AC). AC is U-shaped and marginal cost, MC is also U shaped. It passes through the minimum point of AC. Initially with the rise in production AC declines and with its full potential it reaches minimum point, but beyond that it won't produce as that would enhance AC with the rise in production. To carry on the production at minimal cost over time, lucrative offers, policies etc. are to be provided.