• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Pricing in a volatile market.

Extracts from this document...

Introduction

Price case Pricing in a volatile market Questions : 1)What are the main causes of price volatility in a market? To what extent and how have this general causes applied in the pulp and paper market? First of all the fragmentation of the market causes prices to be volatile. Indeed a unique policy can not be set up and a sort of jungle's law is created. Each producer adapts its own prices as regard its operating costs, investments, volume of production.... More over the working rules are different from one country to another and standards of living are world's apart so it can easily explain the gap between two prices. As no single producer has a large production compare to the others, it can not impose its prices to the market and that is why it is obliged to cope with. The volatility of the market is also created by the gap between a so to speak prosperity period during which the producers invest and the second period when capacity created is too much compare to the needs. ...read more.

Middle

They can be able to have a real power to decide prices. The joint ventures can also allow the producer to share their necessary investments or simply to delocalize their production in countries where operating costs are much lower. It was the case for a Swedish company Stora which entered into a joint venture with a Brazilian partner with a view to building a production plant in Brazil. - (B) their customers The consolidation in the industry reduces the differents choices. The number of suppliers because of their new concentration is reducing, that is why customers can not make play competition as they were used to doing. More over as the number of companies is decreasing we can think that prices will grow so the customers will probably be obliged to follow this trend by increasing their own prices. Concretely if the paper's price is high, the newspaper might be expensive. ...read more.

Conclusion

He may also lose the confidence he had on the product. The only interest a customer may have in price volatility is, of course, when prices decrease, but only if it concerns involving purchases ; we recently saw that a high volatility in petrol, for instance, has no real impact on the consumption of petrol by the customers, because it is nowadays a necessary purchase. Then price volatility can be very dangerous for the customers. First of all the forecasts are impossible if the paper's price is constantly varying. For example a newspaper or a magazine depends daily or monthly on this price. If the paper's price suddenly rockets, how can the magazine for example cope with without revaluating its price to sell... But it also mean that the new price can cause a lot of readers to give up selling this title. It also can create a vicious circle. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    Private creditors have become increasingly numerous, anonymous and difficult to coordinate.32 The problem is exacerbated by the variety of debt instruments now available in both markets, and in the case of emerging market bonds the range of legal jurisdictions in which debt is issued.

  2. Chinese car market overview. Citroen case study

    Every year, the country is increasing the production and investment in the car market. YAO, general secretary of the "China car production Association", explains that most regions in China are considering the car industry as the industry number one in the country.

  1. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    With scarcity land available and stricter planning permission regulations, builders are going to difficult to obtain planning permission, especially builder that do not have an existing relationship with councils. There is possibility that government new regulation to protect green belt areas against sprawl, can act as barrier of entry for new competitors.

  2. mergers and acquisition

    He argues the increased value comes about because of an increase to revenue and/or a reduction in costs. He goes on to say that occasionally it is the ability to share sources of supply or production activities that helps to improve the corporate position of the company.

  1. Option Pricing Models

    Their approach utilizes the idea of Jarrow and Rudd (1982) to find an approximate option price under general stochastic process. Meanwhile, significant computational simplification is achieved when option pricing is approached through the change of numeraire technique. By pricing an asset in terms of another traded asset (the numeraire), this

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    Investment in Research and Development and hi-tech machinery increases competition because it benefits Sony in the long run. Also money is saved because Sony can't afford to produce products that consumers don't want and as continuous research is done Sony know that products that are made are what consumers want so revenue is also continuous.

  1. Kingfisher is the largest home improvement retailer in Europe and the third largest in ...

    Kingfisher is becoming less efficient in which it uses its assets and has high profit margins which contradicts their pricing strategy of EDLP. The fall in fixed assets and turnover by 11% and 17.9 last year is part of its strategy aimed at increasing their market share by demerging.

  2. Morrison's and Safeway Acquisition

    suppliers, "It needs to be recognised that buyers can abuse dominant positions when suppliers have no alternative economically viable route to market for their products".6 Morrisons after the acquisition has an advantage in terms of buying power after the takeover because in many areas it is likely to operate a

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work