Managerial Economics Assignment | Market Entry

Added on - 06 Jun 2020

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MANAGERIALECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Question 1........................................................................................................................................1Evaluation of motives behind the expansion of firm boundaries...........................................1Question 2........................................................................................................................................4Discussing tactics that are deployed by Apple with actual or potential threat of market entry..4Critically analyse the structural barriers and strategic barriers merits and demerits in aneconomic and their types........................................................................................................5Apple's pricing and non pricing strategies and how did this eliminate their potentialcompetition.............................................................................................................................6REFERENCES................................................................................................................................8
INTRODUCTIONThe process to apply the economics concept and economic analysis in the problems offormulating rational managerial decision like using and applying economic to the pricingstrategic id known as managerial economics. The management undertake all the relevanttheories to set up the price and analysis demand and supply to have a look on innovationmanagement take the economics in to account. The present report will cover two parts firstpart will be describing merger and acquisition of AT&T acquisition of Bell south corporationand the reason behind this new combination of the two enterprise. And the second part willbe covering the structural barriers and all types of pricing strategies which are used by Appleto remain in market. The report will furthermore cover the reason, cause and effect behind theacquisition of Bell south corporation by AT&T and will have a look on the Porter 5 forcemodel. And the second part will be covering how and why Apple is still the market leader inthe industry of electronics.Question 1Evaluation of motives behind the expansion of firm boundariesMerger and acquisition is considered as two genera;l terms that relates to theconsolidation of two or more than two business enterprise from same industry. There is also amajor difference between both these terms (Cartwright and Cooper, 2014). Mergers iscombination of two different organization with each other to form a separate legal entity.Acquisition is take over of a company's business operations by other well established orfinancially capable enterprise (Judd, 2016). Purpose behind the merger and acquisitiongenerally given is that the two separate companies together will create more values comparedto being a individual stand. There merger and acquisition cane be done by purchasing theasset, common shares, exchange of share for getting asset, exchange of shares against theshares (Joskow, 2012). In present scenario, the analysis of acquisition of AT&T take over thebell south is done which are both major companies in telecommunication sector withinAmerica. As per the analysis, the federal communications commission has the provided anapproval and declared that it was the largest merger in telecommunication sector in history.Bell south corporation was a telecommunication of America whose holding companywas based in Atlanta. It was one of seven regional bell operating company after USdepartment of justice forced the American telephone companies to divest themselves of thereregional telephone March 2005 after the approval of ACC and it was executed on 29December 2006 (Antonio, 2017). Purpose of AT&T for acquisition of bell south corporation1
was to create premier global communication enterprise that was bound to drive aconvergence with continuous innovation and competition in the market of communicationand entertainment (Blair and Kaserman, 2014). As said by chairman and CEO, AT&T willbecome engine for innovation, competition and growth of their customers in domesticcountry and abroad. Economies of scale are considered as the factors that cause the averagecost on producing something to fall as the volume of its output increases. Horizontalintegration of business enterprise is considered as process of acquiring the competitors firm,leading to the consolidation of industry whereas Vertical integration is condition in which thebusiness entity enhance in to another stage of production rather than merging and acquiring acompany in similar stage of production. In present case, a horizontal integration has been leadby AT&T and acquired its competitors firm in order to become a country's largest mobiletelephonic service provider. Bell south corporation has given AT&T complete control ofCingular wireless, which was wide telephone servicxe provider, at the time wireless mobilephone was newly introduced for reaching the service of Internet.In addition to this, there are also some important factors which has led this acquisitionhappen and provide positive influence like Supply and demand, interest rates, inflation,unemployment and for exchange rates. One of main economic factor, demand and elasticitywhich impacts on GDP, that is combined dollar value of products and service which areproduced by country in present year. Therefore, High demand of wireless Mobile telephonesin America in 2005-06 has led an increase in supply of customers which has increased theGDP in that period. In order to meet the demand and maximize profitability, Acquisition ofAT&T over bell south has taken place and achieved a wide recognition and success (AT&T,BellSouth to Merge, 2017). Other than this, higher the demand of Mobile phones and internetservices, the greater need of workers to produce them which leads to economic growth. Thisacquisition has accelerated the business operations of AT&T and made largest the companythe largest telecommunication service provider in US. Further, company has announced thatthis has resulted in reduction to $2 billion if expected annual expenses of business operations.This deal has lead a step towards the monopoly of AT&T in telecommunication industry butthe FCC has declared that it will be beneficial for consumers, including rise in deployment ofbroadband, rise in competition in video services and expansion in national security. It isexpansion of business corporation that makes the innovation and capability of conversationon economies of scale. The merger will also provide an assistance to closer integration oforganization's wireless, wireline and IP products and services on a single IP global network.Other than this, additional savings are expected by enterprise to come from collaboration of2
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