Challenges of Expansion to a Foreign Location Grading Guide ECO/561 Version 10 3 Individual Assignment: Challenges of Expansion to a Foreign Location Purpose of Assignment The Week 6 assignment integrates the theoretical concepts and empirical data relevant to the preceding weeks in this course into a comprehensive analysis of evaluating strategic business decisions regarding production, market analysis, international production risks, and supply chain challenges of expanding a business into a foreign country. Resource Week 3 Individual Assignment https://www.wto.org/english/news_e/archive_e/stat_arc_e.htm http://www.worldbank.org/en/publication/global-economic-prospects http://www.worldbank.org/en/publication/global-economic-prospects/summary-table http://datatopics.worldbank.org/hnp/popestimates http://data.worldbank.org/indicator/NY.GDP.PCAP.CD Grading Guide Content Met Partially Met Not Met Comments: The student based the assignment on their Week 3 Individual Assignment and selected a foreign market in which to expand their selected product. The student described current global economic conditions and their effect on local macroeconomic indicators in their selected country. The student considered forecasts for population growth, GDP growth, GDP per capita growth, export growth, sales growth. The students evaluated their competitors’ existing products or services in the chosen country. The student evaluated the forecasted sales in the selected country. The student described how the chosen country’s current credit market conditions affect demand for the product or service and planning or operating decisions for production in that country. The student analyzed the role of the selected country’s central bank on that country’s economy The student evaluated the availability, education and job skills of the work force in the selected country. The students also discuss the additional challenges of international production, such as political stability, availability of government financing or other incentives, threat of capital controls, exchange rate risks. The student discussed any additional supply chain challenges anticipate if attempting to sell a product made in the selected country to countries outside of that market. The student discussed any comparative advantages your company will have over competitors in that country. The student recommended either for or against expanding the company’s production into your chosen country based on research The student cited a minimum of three peer-reviewed sources. The assignment is 1,750 words in length. Total Available Total Earned 8 #/8 Writing Guidelines Met Partially Met Not Met Comments: The paper — including tables and graphs, headings, a title page, and a reference page — is consistent with APA formatting guidelines and meets course-level requirements. The paper includes properly cited intellectual property using APA style in-te ...

1. Challenges of Expansion to a Foreign Location Grading Guide
ECO/561 Version 10
3
Individual Assignment: Challenges of Expansion to a Foreign
Location
Purpose of Assignment
The Week 6 assignment integrates the theoretical concepts and
empirical data relevant to the preceding weeks in this course
into a comprehensive analysis of evaluating strategic business
decisions regarding production, market analysis, international
production risks, and supply chain challenges of expanding a
business into a foreign country.
Resource
Week 3 Individual Assignment
https://www.wto.org/english/news_e/archive_e/stat_arc_e.htm
http://www.worldbank.org/en/publication/global-economic-
prospects
http://www.worldbank.org/en/publication/global-economic-
prospects/summary-table
http://datatopics.worldbank.org/hnp/popestimates
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD
Grading Guide
Content
Met
Partially Met
Not Met
Comments:

2. The student based the assignment on their Week 3 Individual
Assignment and selected a foreign market in which to expand
their selected product.
The student described current global economic conditions and
their effect on local macroeconomic indicators in their selected
country. The student considered forecasts for population
growth, GDP growth, GDP per capita growth, export growth,
sales growth.
The students evaluated their competitors’ existing products or
services in the chosen country.
The student evaluated the forecasted sales in the selected
country.
The student described how the chosen country’s current credit
market conditions affect demand for the product or service and
planning or operating decisions for production in that country.
The student analyzed the role of the selected country’s central

3. bank on that country’s economy
The student evaluated the availability, education and job skills
of the work force in the selected country. The students also
discuss the additional challenges of international production,
such as political stability, availability of government financing
or other incentives, threat of capital controls, exchange rate
risks.
The student discussed any additional supply chain challenges
anticipate if attempting to sell a product made in the selected
country to countries outside of that market.
The student discussed any comparative advantages your
company will have over competitors in that country.
The student recommended either for or against expanding the
company’s production into your chosen country based on
research
The student cited a minimum of three peer-reviewed sources.

4. The assignment is 1,750 words in length.
Total Available
Total Earned
8
#/8
Writing Guidelines
Met
Partially Met
Not Met
Comments:
The paper — including tables and graphs, headings, a title page,
and a reference page — is consistent with APA formatting
guidelines and meets course-level requirements.
The paper includes properly cited intellectual property using

5. APA style in-text citations and a reference page.
The paper includes paragraph and sentence transitions that are
logical and maintain flow throughout the paper.
The paper includes sentences that are complete, clear, and
concise.
The paper follows proper rules of grammar and usage including
spelling and punctuation.
Total Available
Total Earned
4
#/4
Assignment Total
#
12

6. #/12
Additional comments:
Copyright © 2016 by University of Phoenix. All rights reserved.
MARKET STRUCTURE AND PRICE POWER
Alisa V. Brady
ECO 561
April 18, 2016
David Mozinski
Running head: MARKET STRUCTURE AND PRICE POWER
1
MARKET STRUCTURE AND PRICE POWER
10
MARKET STRUCTURE AND PRICE POWER
Huawei Technologies limited company is a Chinese
multinational network and telecommunications equipment
company based in Shenzhen China. It has been in the
telecommunications industry since 1987 when it was founded.
The company has proven to be one of the leading players
through its unending innovations and introduction of new and
exciting products especially the smartphones. The latest product
in the market is the Huawei Mate 8. A definition of what

7. innovation entails.
Huawei Company as a firm in the telecommunication industry
falls under the market structure of oligopoly. This is the most
prominent market structure where a majority of the smartphones
manufacturing companies fall. This is attributed to the features
that define an oligopoly market which is very profitable. There
are other players within this industry, and some of the main
players or competitors are Apple, Samsung, HTC, LG,
Blackberry and the recently introduced Microsoft Lumia just to
mention a few. The most outstanding feature of an oligopoly
market structure is the number of sellers. In the smartphone
industry, the number of sellers is relatively small. Each of the
firms occupies a sizeable proportion of the market share. In this
smartphone industry, the total number of sellers is quite small,
and therefore the companies are interdependent, and the
competition is based on the model designs and advertisement
which is a key factor (Norman, Thisse & Phlips, 2000). The
small proportion means that Huawei as a company always tends
to anticipate the reactions by competitors before making the
decisions on pricing.
P1 = Product Price of the Oligopoly
Entry to this kind of market is quite difficult even though there
are no barriers to entry or exit. The difficulty is attributed to
high customer switching costs and also due to customer loyalty.
These clients tend to stick to the products they are using; also,
the setting up of the companies that manufacture these
smartphones is quite an expensive affair. In the smartphone
industry, the elasticity of demand is not of one particular type
this is because the demand for smartphones lies in both domains
of the luxury and necessity products. The demand for the
smartphones is dictated by several factors which are the age
group, allowance, trend, taste, and preference.

8. The price elasticity demand of a newly launched smartphone,
for instance, the Huawei Mate 8 depends on the regions where
the phone is being sold. This is in context to the incomes levels
of a particular country. For example in the U.S.A, this phone is
considered an inelastic demand. This is because the smartphone
is seen as a luxury item in the lives of most people compared to
the developed country. This is because incomes in the
developed countries are relatively high, and the set price for the
newly Huawei model is very affordable to many people. On the
other hand in the countries with average incomes for instance
Malaysia, the price elasticity demand of the Huawei Mate 8 is
considered an elastic type of demand. This means that if the
introductory price of this device dropped then, the demand
would significantly rise. This is because in the oligopoly market
people will tend to compare relative alternative prices when a
commodity is a luxury product. To calculate the price elasticity
of demand, we divide the percentage change in quantity
demanded by the percentage change in price. If the figure
obtained in the end is more than one, then we assume the elastic
demand of the given product is elastic. This indicates that
consumers are responsive to the product change of price
(Stackelberg, Bazin, Urch & Hill, 2011)
Pricing of competing models of smartphones tends to affect the
elasticity of demand in various ways. For our case, we could
compare how the pricing is related to competing models of the
Huawei Mate 8 to the pricing model of the smartphone with
similar specifications which is the Samsung Galaxy S5. Price
elasticity can be termed as the degree of the response to the
quantity demanded in response to the changes in the pricing of
that particular good. Having cited smartphones as mainly luxury
goods then the elasticity of demand is very elastic. This is
because when the prices are increased the consumers opt not to
buy the smartphones. However for competing models the
elasticity of demand resulting from pricing is referred to as
cross-price elasticity. In essence, this is a measurement of the

9. quantity of goods demanded about the change in the price of a
related smartphone. The cross-price elasticity of demand for the
smartphones is more than zero. The value obtained tends to be
positive.
The implication of this is that the smartphone users will tend to
change their products from the Huawei Mate 8 probably to the
Samsung Galaxy S5. Due to the substitution based on the fact
that the two phones possess the same features. However, the
case would not have been the same if the two models of phones
contained different specifications and features. Pricing can be
used as a regulator of the supplies the Huawei Company makes
to the market on whether to supply more of the new
smartphones or decrease the supply of the same. To establish
which decision to effect then, the company managers compare
the marginal costs and the marginal revenues.
The marginal revenue and marginal costs are used in the
determination of the amount of output to produce and the
particular price to be established to maximize the profits
realized by a company. The point where the maximum benefit is
attained is that point where the marginal revenue is equal to the
marginal cost. The marginal costs of production tend to measure
the change in the total cost of the smartphone which is a result
of the manufacture of an additional smartphone. The marginal
revenue, on the other hand, aims at establishing the change of
income that results from the supply of the smartphone. It is
observed that if the marginal revenue is less than the marginal
cost of production, Huawei Company is producing too much and
should minimize the quantity of the phones supplied to the
market. On the other hand, if the marginal revenue tends to be
greater than the marginal cost, the company is under producing
the smartphones. Therefore, it should increase the supply to the
market. The immediate reaction by other producers in case the
manufacturer changes pricing strategy will be in such a way that
Huawei lowers its product prices the other smartphone
companies will reduce theirs further. This case exists when
there is no joint control of the costs by the different companies.

10. To develop a product differentiation and for effective market
segmentation as a way to stand out among the competitors of
this smartphone then the strategy of lowering the cost can be
applied in regions where the price market is nor legislated. This
will ensure that the company enjoys from more customer
numbers who might in a way translate to high profits for the
company. The company can also employ effective advertisement
strategies which are not common in such an appealing way to
lure the potential buyers.
Several strategies can as well be affected to create a barrier
which is aimed at ensuring that there is no entry of new
companies in the already competitive market. The reason for
preventing these new entrants into the market is to avoid being
competitively knocked out of the market. The most common
strategy observed within the smartphone industry is the creation
of mergers. When companies merge, they create joint policies in
the production and pricing of their products. This ensures that
they continue enjoying profits without the fear of the new
entries which may divide the profits further (Estelami &
Maxwell, 2006).The producers can support their pricing strategy
through the alteration of the fixed and variable costs. The
variable costs are those who tend to change with the production
volumes or activities of production. On the other hand, the fixed
costs like the name suggest doing not change regardless of the
activities undertaken nor the volume produced.
The variable costs are more important in the making decision on
the determination of how to affect prices than the fixed costs.
An alteration of the two can determine whether the company
plunges into losses or profits. For instance, when the producer
aims at whether to increase the levels of supply or keep them
constant to lower the market prices. The producer will have to
focus on the variable costs that come with the putting up units
of production. The producer will not look at those factors that
will not tend to change in the line of production. However, the
fixed costs will determine how the expansion will established
occur. Therefore, a mix of the two costs determines the final

11. decision made on the price.
References
Norman, G., Thisse, J., & Phlips, L. (2000). Market structure
and competition policy. Oxford, UK: Cambridge University
Press.
Estelami, H., & Maxwell, S. (2006). Strategic pricing. Bradford,
England: Emerald Group Pub. Norman, G., Thisse, J., & Phlips,
L. (2000). Market structure and competition policy. Oxford,
UK: Cambridge University Press.
Stackelberg, H., Bazin, D., Urch, L., & Hill, R. (2011).
Market structure and equilibrium. Berlin: Springer.
Arroio, A. (2004). China’s Telecommunication Market—
Entering a New Competitive Age. Technovation, 24(11), 923-
925. http://dx.doi.org/10.1016/j.technovation.2004.07.020
Zein, H., & Dermawan, E. (2012). Cost Allocation of
Transmission Losses in Electric Market Mechanism.
TELKOMNIKA (Telecommunication Computing Electronics
And Control), 10(2), 211.
http://dx.doi.org/10.12928/telkomnika.v10i2.779
Display each reference as a hanging indent, see example below:
Zein, H., & Dermawan, E. (2012). Cost Allocation of
Transmission Losses in Electric Market Mechanism.
TELKOMNIKA (Telecommunication Computing Electronics
And Control), 10(2), 211.
http://dx.doi.org/10.12928/telkomnika.v10i2.779
Week 3 Grading Guide Individual Assignment Market Structure
and Pricing Power
Purpose of Assignment

12. The Week 3 assignment provides the students the opportunity to
examine market structure, competition and pricing decisions
for real world products evolving under rapidly changing
environments.
Grading Guide
Content
Met
Partially Met
The student based their assignment on a new, realistic good or
service from an industry they are working in or in which they
are interested in working.
0.5
0.5
The student identified the market structure of the industry
(monopoly, oligopoly, competitive monopoly).
0.5
0.5
The student determined the elasticity of demand for various
quality ranges of the product based on textbook theory and

13. judgments about the degree of luxury vs. necessity represented
by various brands (e.g. a luxury car vs an economy car).
1
1
The student determined how pricing relates to elasticity of
demand for competing models.
0.5
0.5
The student explained how changes in the quantity suppled as a
result of pricing decisions might affect the selected product or
service’s marginal cost, marginal revenue, and market share as
production volume rises. The student also discussed the
possible reactions of other producers if one producer changes its
pricing strategy.
1
1
The student determined strategies that a company might use to
develop product differentiation and market segmentation. The
students also discuss the possible alternative non-pricing
strategies that might be available and the possible alternative
non-pricing strategies to increase barriers to entry.
1
1
The student discussed how producers might alter the mix of
fixed and variable costs to support their pricing strategy.
1
1
The assignment is 1,400 words in length.
0.5
0.5
Total Available
Total Earned
6
6

14. Writing Guidelines
Met
Partially Met
The paper — including tables and graphs, headings, a title page,
and a reference page — is consistent with APA formatting
guidelines and meets course-level requirements.
1
1
The paper includes properly cited intellectual property using
APA style in-text citations and a reference page.
1
1
The paper includes paragraph and sentence transitions that are
logical and maintain flow throughout the paper.
1
1
The paper includes sentences that are complete, clear, and
concise.
1
1
The paper follows proper rules of grammar and usage including
spelling and punctuation.
1
1
Total Available
Total Earned
5
5
Assignment Total
11
11

15. Alisa, your paper closely follows the grading rubric. Your
writing style is clear and fluid. There are APA reference page
display errors. Huawei Company is a good example of how
oligopoly market structure affects pricing power. The use of
data tables, subheadings, bolding, or underlined words make
your assignment easier to read and understand.
Your paper:
· Identify the market structure of the industry (monopoly,
oligopoly, competitive monopoly).
· Determined elasticity of demand for various quality ranges of
the product based on textbook theory and judgments about the
degree of luxury vs. necessity represented by various brands
(e.g. a luxury car vs an economy car).
· Determined how pricing relates to elasticity of demand for
competing models.
· Explained how changes in the quantity supplied as a result of
pricing decisions might affect the company's marginal cost,
marginal revenue, and market share as production volume rises.
What reaction might be expected by other producers if one
producer changes its pricing strategy?
· Determined strategies that a company might use to develop
product differentiation and market segmentation. What
alternative non-pricing strategies are available? What
alternative non-pricing strategies can be used to increase
barriers to entry?
· Discussed how producers might alter the mix of fixed and
variable costs to support their pricing strategy.
See my comments in red in the attached graded assignment.