On Sat, 11 Jun 2005 18:23:49 GMT, james wrote:

On Wed, 08 Jun 2005 08:59:32 -0400, Dave Hall
wrote:

I think you need to go back to school. You don't quite have a complete
grasp of global economics and the dynamics of the free market and the
effects of competition on the selling price. Demand causes the price
to rise. Competition causes the price to fall.
********

Demand and shortages influence pricing.

Dumping will cause prices to fall. Companies with deep pockets can
afford to dump product on the market for very low profit margins to
either gain market share or drive competition from the market. Thus in
hopes that they can recover profits in the near future with higher
prices and the resulting higher profit margins.

Applied on a larger scale, that's known as deficit spending..... ;-)
Invest now, and recover more later.



All too often in global economics discussions is that in the
manufacturering of consumer products one forgets that the consumer is
a fad conscience buyer. Getting to market to late or to early too many
times and you are staring bankruptcy head on. Life cycles of many fad
products may be as little as six months.

Just look at the personal computer. (or the pet rock)

Often it is two yrs. Even at
this rate so much has to be rolled into R&D to pump out the next
generation of products. R&D is paid for by profits. That is why deep
pocket corporations that can affors low profit margins and still fund
R&D will ultimately drive smaller less affluent companies out of some
of the consumer market.

Or take my company. The unofficial motto is, "If you can't beat 'em,
Buy 'em".

THe saving grace to competiton is when a product is so low a run rate
that large companies find it not worth their time to get into such a
market. A free market society does not insure smooth steady even
prices. Instead it better marries high production companies with high
running products and low running products with companies that
specialize in small production. 30,000 units per year would be
considered in most circles small production. 5,000 units per yr would
be almost a cottage industry. Large mass production would be in the 1
million per yr run rates and higher.

Demand is what sometimes caused small companies to make those small
runs. If people need it and are willing to pay for it, SOMEONE will
make it.


Also remember this to stay in a market it is necessary that profit be
at least what one could get in a passbook savings account for the
value of all capital assets of the company. IF a company had 1 billion
in assets and a passbook savings account is 2%, then the company
making a product would need to make 20 million or it is better to sell
the assets and go find something else to do.

Commonly referred to as "return on investment" or ROI. It makes no
sense to go through all the trouble of manufacturing a product, when
you can take all of your startup capital and drop it into a securities
account and make more in return.


Dave
"Sandbagger"