We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Demand-Supply Analysis of Acer Notebooks

The whole doc is available only for registered users

A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteed

Order Now

Supply and demand is one of the most fundamental concepts of economics and it is the backbone of a market economy. It is defined as an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity DEMAND: The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time.

A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation between quantities of Acer Laptops demanded (Q) and corresponding price (P). So, at point A, the quantity demanded will be Q1 and the price will be P1, and so on. The demand relationship curve illustrates the inverse relationship between price and quantity demanded. The higher the price of a good the lower the quantity demanded (A), and the lower the price, the more the good will be in demand (C). LAW OF DEMAND

Law of demand is an economic law, which states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant.

Factors Affecting Demand
Price: Generally the relationship is negative meaning that an increase in price will induce a decrease in the quantity demanded. Income: A lower income means that there is less to spend in total, so people spend less on some—and probably most— goods. As individual’s incomes rise, they tend to buy more of almost everything, even if prices don’t change. Tastes or preferences: The greater the desire to own a good the more likely is people to buy the good. Tastes are based on historical, social and psychological forces. Consumer expectations about future prices and income: If a consumer believes that the price of the good will be higher in the future he is more likely to purchase the good now. If the consumer expects that his income will be higher in the future the consumer may buy the good now. In other words positive expectations about future income may encourage present consumption.

Prices of Related Goods: When a fall in the price of one good reduces the demand for another good, the two goods is called ‘substitutes’. Substitutes are often pairs of goods that are used in place of each other, such as hot dogs and hamburgers. When a fall in the price of one good raises the demand for another good, the two goods are called ‘complements’. Complements are often pairs of goods that are used together, such as gasoline and automobiles, computers and software. Special Influence: They affect demand for particular goods. Traditional and religious festivals and events can influence the demand of certain goods, like Christmas tree is in higher demand in the month of December. The Demand Schedule and the Demand Curve

A demand schedule is the relationship between the price of a good and the quantity demanded. Demand curve, which graphs the demand schedule, shows how the quantity demanded of the good changes as its price varies. The downward-sloping line relating price and quantity demanded is called the demand curve. Because a lower price increases the quantity demanded, the demand curve slopes downward.

A demand curve is drawn holding many things constant, such as assuming that the person’s income, tastes, expectations, and the prices of related products are not changing. Economists use the term ceteris paribus to signify that all the relevant variables, except those are being studied at that moment, are held constant. The Latin phrase literally means “other things being equal.” The demand curve slopes downward because, ceteris paribus, lower prices mean a greater quantity demanded. SHIFTS IN THE DEMAND CURVE

Whenever any determinant of demand changes, other than the good’s price, the demand curve shifts. Any change that increases the quantity demanded at every price shifts the demand curve to the right. Similarly, any change that reduces the quantity demanded at every price shifts the demand curve to the left.

Supply means the quantity of a commodity which a firm or an industry is willing to produce at a particular price, during a given time period.


The “law of supply” is a fundamental principal of economic theory which is that quantities respond in the same direction as price changes .It states that (all other things unchanged) an increase in price results in an increase in quantity supplied. This means that producers are willing to offer more products for sale on the market at higher prices by increasing production as a way of increasing profits.

A, B and C are points on the supply curve. Each point on the curve reflects a direct correlation between quantity of Acer Laptops supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and theprice will be P2, and so on. SUPPLY SCHEDULE

Supply schedule is the relationship between the price of a good and the quantity supplied. The table shows the quantities of a commodity supplied at various prices during a given time period.

Supply curve is a graph of the relationship between the price of a good and the quantity supplied. The curve relating price and quantity supplied is called the supply curve. As the price increases from Re. 3 to Rs. 6, the supply also rises from 1000 units to 2000 units, in response to the rising price. The supply curve slopes upward because, ceteris paribus, a higher price means a greater quantity supplied. What is the basis of the law of supply? Other things remaining the same, an increase in price results in higher profits for the producer. The higher the price of the commodity, the greater are the profits earned by the firms and the greater is the incentive to produce more. Similarly when the price falls, profits decline, resulting in a decrease in quantity supplied of the commodity. Thus the price and quantity supplied of a commodity are directly related, other things remaining the same. ‘CHANGE IN SUPPLY’ VERSUS ‘CHANGE IN QUANTITY SUPPLIED’: (‘shift of supply curve’ versus ‘movement along a supply curve’)

The supply of a commodity depends on its own price and ‘other factors’ like input prices, technique of production, prices of other goods, goals of the firm, taxes on the commodity etc. the good only, other things remaining the same. MOVEMENT ALONG A SUPPLY CURVE:

The law of supply states the effect of a change in the own price of a commodity on its supply, other things remaining constant. The supply curve also carries the same assumption. Thus when other factors influencing supply do not change, and only the own price of the commodity changes, the change in supply takes place along the curve only. This is what movement along a supply curve means. A movement from one point to another on the same supply curve is also referred to as a change in quantity supplied”. In figure shown above, OQ is the quantity supplied at price OP. When the price rises to OP1 the quantity supplied increases to OQ1.

Thus there is an upward movement along the supply curve from point A to B. It is extension of supply. Similarly, when the price of a commodity falls from OP to OP2, there is a decrease in quantity supplied from OQ to OQ2 and thus a downward movement along the supply curve from A to C. It is contraction of supply. Movements along the supply curve are caused by a change in the own price of the good only, other things remaining the same. SHIFTS OF THE SUPPLY CURVE:

When supply changes due to changes in factors other than the own price of the commodity, it results in a shift of the supply curve. This is also referred to as a “change in supply”. An ‘increase’ in supply means more of the commodity is supplied at the same price. As a result the supply curve shifts to the right. In figure shown below, at price OP the previous supply was OQ which increased to OQ1. This also means that OQ units can now be supplied at a lower price OP1 with the new supply curve S1S1. An increase’ ‘in supply can take place due to many reasons. For example, if the input prices fall or there is an improvement in technology, it will enable producers to produce and sell more at the same price resulting in a rightward shift of the supply curve.

A decrease in supply means less of the commodity is supplied at the same price, than previously. As a result, the supply curve shifts inwards to the left. In figure shown , at price OP, previously OQ units were supplied which decreased to OQ1. This also means that OQ units can now be supplied at a higher price OP1 with the new supply curve S1S1 Shifts of the supply curve of a good are caused by a change in any one or more of the ‘other factors’ affecting supply, own price remaining unchanged. For example, if the input prices fall or there is a decrease in the prices of other related commodities, the producers supply more at the same price resulting in a rightward shift of the supply curve.

Acer Sertek Inc. (the “Company”) was incorporated on August 1, 1976, as a company limited by shares under the laws of the Republic of China (“ROC”). On March 27, 2002, the Company merged with Acer Incorporated (“AI”), with the Company as the surviving entity from the merger but renaming itself as Acer Incorporated. After the merger, the Company’s principal activities are aimed at globally marketing its brand-name IT products, and promoting E-commerce solutions to clients. On October 15, 2007, the Company completed its acquisition of 100% equity ownership of Gateway, Inc. (including eMachines brand), a personal computer company in the U.S., through its indirectly wholly owned subsidiary. The Company also acquired the 100% equity ownership of Packard Bell B.V., a personal computer company in Europe, through its indirectly wholly owned subsidiary on March 14, 2008 and June 30, 2008.

Following the acquisitions of Gateway and Packard Bell, the Company has defined a clear path for its multi-brand strategy. Additionally, on September 1, 2008, the Company entered the smart phone market following the acquisition of E-Ten Information Systems Co., Ltd. In October 2010, in order to expand into the market in China, the Company acquired the PC business, management team and employees, regional sales and marketing channels of Founder Technology Group Corporation, through it’s indirectly wholly owned subsidiary. The reporting entities of the consolidated technical and fundamental analysis include the Company and its subsidiaries (herein after referred to collectively as the “Consolidated Companies”). On December 31, 2011 and 2010, the Consolidated Companies had 7,894 and 7,757 employees, respectively.

1. In the year 2008, the stock started at the level of □61. 2. During this year a dividend of □3.51on 14/7/2008 was paid and earnings of □1.18 per share on 31/7/2008; □ 1.21 per share on 31/10/2008 were recorded. 3. The year 2009 started with a stock level of □43.

4. Dividends of □1.98 on 20/7/2009 and earnings of □1.10, □0.88 and □ 1.30 were recorded in the months of April, August and November respectively. 5. The year 2010 started with □97.
6. Recorded earnings were □1.32, □1.26 and □1.48 per share in the months of August, September and November respectively. Dividend of □3.10 was paid. 7. In the year 2011, dividend of □3.65was paid and earnings of □1.41, □-2.56 and □ -0.43was recorded in the months of April, August and October respectively. 8. The year 2012 started at a stock level of □35.

9. Till August 2012, earnings of □0.03 and □0.12 were recorded in the months of February and May respectively.

There is one point at which the supply and demand curves intersect; this point is called the market’s equilibrium. The price at which these two curves cross is called the equilibrium price and the quantity is called the equilibrium quantity.

As you can see on the chart, equilibrium occurs at the intersection of the demand and supply curve, which indicates no allocative inefficiency. At this point, the price of the goods will be P* and the quantity will be Q*. These figures are referred to as equilibrium price and quantity. In the real market place equilibrium can only ever be reached in theory, so the prices of goods and services are constantly changing in relation to fluctuations in demand and supply.


If we compare this stock with the same sector within the same industries, it seems to have relatively outperformed the other stocks. It is clearly evident from the above data that the company is on a growth mode. But on the other hand, along with the company’s progress its debts are also rising which in turn depicts the financial leverage of the company.


The total sales were 380000 million in 2006 as compared to 500000 million in 2012.although the company announced a prominent 10% decrease in laptop sales for Q1 2011 compared to Q4 2010 when Acer previously expected a 3% growth for this latest quarter. The company is expecting a huge profit in the year 2012 as comparison to the past year because of the launch of new generation processors along with straight drop in the price. The sales are expected to rise by 20% p.a. for the next two years.


It is clearly evident from the above data that although the company is facing a downfall but it is still able to sustain in the competitive market by providing a low cost,high performance laptops.The company is still able to maintain its third position in the india’s technological sector by providing its variance models which is capable of satisfying the requirements of different sectors. Economic-Industry-Company (E-I-C) Analysis

India is the fourth largest economy in the world by purchasing power parity and the tenth largest in the world in terms of nominal GDP. India’s GDP growth rate doubled from 5.7% in 2000 to 9.3% in 2007 and in 2010-2011 financial years it is hovering around the 8.5% mark. Being an open economy industrial sector has the lion share in this economic growth. Between 2008 and 2012 period India’s GDP is expected to range in between 6.5%-9.8%. India’s economy is witnessing a decline of primary sector participation like agriculture and increased participation by non-primary sectors like services and manufacturing. This shift that we are witnessing highlights the importance of infrastructure and construction industry in the economy. India’s planning commission has set a targeted growth rate of 9%and in order to achieve this targeted rate gross capital formation (GCF) in infrastructure should rise to 9% of GDP by the end of 2012. Government of the country has implemented sector specific policy initiatives that provide incentives to private investors, such as in the form of tax breaks so as to attract more private investments.

* India offers a favorable business environment for investing in infrastructure development and has a relatively stable political system. It
has been seen that the ruling party and the major opposition parties have the same ideology when it comes private participation in infrastructural development activities. This makes investments in infrastructures activities of the country less risky when compared to other sectors. * Significant improvements have been seen in legal and regulatory environment to bring in more clarity and transparency especially in areas of FDI’s in infrastructure and construction sector. * Tax system in India is relatively advanced and Government is trying to attract more investments into this sector by offering incentives like tax breaks and other similar incentives. * The problem posed right now is in the form of corruption and security issues which is very much prevalent in the country.

A laptop computer is a small, portable computer that is small enough to sit on a person’s lap. Global PC industry grows at a compound annual growth rate (CAGR) of 5.4% in market value during 2007-2012, with laptops (a sub-segment) being the major contributor to its growth. In addition to the economy, the laptop segment is expected to face increased competition from both new devices and technologies. Smart phones (iPhone, Blackberry, Palm Pre) and Mobile Internet Devices (Nokia N800 Tablet) are starting to compete with laptops due to features such as gaming, internet access and enterprise applications. Changes in demand and new technologies will continue to alter the outlook for the laptop industry in the coming years. New demand for low cost ultraportable laptops – called netbooks – has created new competitors like ASUSTek as well as forced companies to change their business models to succeed.

New technologies such as cloud computing and hosted virtual desktops (HVDs) may change the requirements of the laptop industry, from powerful stand-alone laptops to less-powerful wirelessly networked laptops. This will likely affect the profitability of existing manufacturers. The focus in this analysis is therefore on the macro- and micro- factors affecting the global laptop PC manufacturers In the new IT age, successful high-tech manufacturers need to react quickly to advances in technology and changing market conditions. At the same time, it’s just as important to keep costs as low as possible. To succeed in this ever-changing open-environment, Acer had to find ways of implementing decisions quickly in the face of strong competition, and reach economies-of-scale in low-cost manufacturing—it had to develop its own “disintegration” business model.

In 2011, laptop computer vendors encountered two major difficulties. First, Eurozone debt crisis deteriorated, while Europe is one of major laptop computer markets; second, the Thailand flood in October hit the HDD disk industry severely and impacted laptop computer shipment in best-season Q4 since nearly half of the hard disks worldwide were produced there. As a result, the laptop shipment registered 195 million units in 2011, just up 1.6% from 2010. COMPANY ANALYSIS:

Acer total net operating revenues increased with 14.84%, from INR 1,681.93 tens of millions to INR 1,931.52 tens of millions which means 124.65% change.  Stan Shih Ex CEO of Acer Computer in his 1992 book.

The emergence of tablet PCs has made a strong impact on sales of consumer notebooks and netbooks, making Acer’s strategy ineffective, and therefore Acer has to initiate a corporate restructuring. it is still not necessary for Acer to lower its shipment target for tablet PCs at the moment. Acer aims to ship 5-7 million tablet PCs in 2012. Acer has also avoided adding more functions to motherboard, which at times can cause compatibility difficulties. Meanwhile, Acer also has invested aggressively in R&D to develop innovative technology.

The concept later became widely cited to describe the distribution of value-adding potentials in various industries to justify business strategies aimed at higher value-adding activities. In addition, to the core of our business of PC they are stepping into the new mobile device market, where we will invest cautiously and aim to become one of the leading players. Acer will also rally its contract manufacturers, including Compal and Wistron, and supply-chain member firms to establish factories in the city, thereby forming a complete manufacturing clustering. Also the company has targeted raising the share of the Chinese market in its total revenue to 20% by 2013, up from 7% now. ANSHUL

Related Topics

We can write a custom essay

According to Your Specific Requirements

Order an essay
Materials Daily
100,000+ Subjects
2000+ Topics
Free Plagiarism
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access

Your Answer Is Very Helpful For Us
Thank You A Lot!


Emma Taylor


Hi there!
Would you like to get such a paper?
How about getting a customized one?

Can't find What you were Looking for?

Get access to our huge, continuously updated knowledge base

The next update will be in:
14 : 59 : 59