Running head: AUTOEDGE SWOT AUTOEDGE SWOT 5 AutoEdge SWOT Desmond Sangbong Gerald Weisenseel Applied Managerial Economics May 28, 2015 The SWOT analysis is a useful tool that helps AutoEdge to understand the future current prospects for business success. The tool evaluates the internal factor to the company such as the management personnel as either strength or weakness. On the other hand, the tool describes the external factors such as economic, social/cultural and political environment as threat or opportunity to the business. In other words, the SWOT analysis provides AutoEdge with a snapshot of business’s situation. Strengths Weaknesses 1. Recognized as market leader 2. Adequate financial resources 3. Strong management team 4. Proprietary technology 5. Strong financial performance 6. Innovative culture 7. Growing brand reputation 8. Trusted brand name 9. Loyal consumers 10. The company is the leading provider of auto parts 11. Knowledgeable employees with abundance of skills 12. High quality standard of services 13. Positive consumer perception towards the organization 1. Costs disadvantage with competitors 2. Weak market image 3. No clear strategic direction 4. Lack managerial depth 5. Outdated facilities 6. Overdependence on limited services to customers 7. Price inelasticity 8. Inefficiency in terms of diseconomies of scale 9. Oligopoly market 10. Low Barrier to Entry 11. Raise unemployment 12. Overleveraged with risk and cash outflow 13. Lower interest rates 14. GDP higher per capita Opportunities Threats 1. Expand product line 2. Add related service 3. Form strategic alliance 4. Target new market 5. Increase in service demand 6. Increase inelasticity by differentiation & capture higher marginal revenue 7. Growth, efficiency, managed fixed costs with economies of scale 8. High EVA unique to demographic 1. Entry of strong competitor 2. Increased regulation 3. Change in customer buying preferences 4. Potential substitutes from the competitors 5. Inflation causing price reduction 6. Market volatility causing fluctuations in the rate of exchange Strength Strength refers to an inherent capacity that AutoEdge can use to gain a strategic advantage. The business can use its strength to obtain competitive advantages (David, 2007). The business must nurture on its strengths. The employee capabilities combined with finances becomes an essential strength especially for neutralizing the competitors’ moves. Weaknesses This refers to an inherent limitation or constraint that creates a strategic disadvantage to AutoEdge. The business must devote attention in correcting its weaknesses in order to achieve its objectives (Leigh, & Pershing, 2006). Concentrating on weakness is essential since failure can lead to business failure. Opportunities An opportunity refers to a favorable condition in the business environment that enables it to consolidate and strengthen its position (David, 2007). Opportunities can enable AutoEdg ...

1. Running head: AUTOEDGE SWOT
AUTOEDGE SWOT
5
AutoEdge SWOT
Desmond Sangbong
Gerald Weisenseel
Applied Managerial Economics
May 28, 2015
The SWOT analysis is a useful tool that helps AutoEdge to
understand the future current prospects for business success.
The tool evaluates the internal factor to the company such as the
management personnel as either strength or weakness. On the
other hand, the tool describes the external factors such as
economic, social/cultural and political environment as threat or
opportunity to the business. In other words, the SWOT analysis
provides AutoEdge with a snapshot of business’s situation.
Strengths
Weaknesses
1. Recognized as market leader
2. Adequate financial resources
3. Strong management team
4. Proprietary technology
5. Strong financial performance
6. Innovative culture

2. 7. Growing brand reputation
8. Trusted brand name
9. Loyal consumers
10. The company is the leading provider of auto parts
11. Knowledgeable employees with abundance of skills
12. High quality standard of services
13. Positive consumer perception towards the organization
1. Costs disadvantage with competitors
2. Weak market image
3. No clear strategic direction
4. Lack managerial depth
5. Outdated facilities
6. Overdependence on limited services to customers
7. Price inelasticity
8. Inefficiency in terms of diseconomies of scale
9. Oligopoly market
10. Low Barrier to Entry
11. Raise unemployment
12. Overleveraged with risk and cash outflow
13. Lower interest rates
14. GDP higher per capita
Opportunities
Threats
1. Expand product line

3. 2. Add related service
3. Form strategic alliance
4. Target new market
5. Increase in service demand
6. Increase inelasticity by differentiation & capture higher
marginal revenue
7. Growth, efficiency, managed fixed costs with economies of
scale
8. High EVA unique to demographic
1. Entry of strong competitor
2. Increased regulation
3. Change in customer buying preferences
4. Potential substitutes from the competitors
5. Inflation causing price reduction
6. Market volatility causing fluctuations in the rate of exchange
Strength
Strength refers to an inherent capacity that AutoEdge can use to
gain a strategic advantage. The business can use its strength to
obtain competitive advantages (David, 2007). The business must
nurture on its strengths. The employee capabilities combined
with finances becomes an essential strength especially for
neutralizing the competitors’ moves.
Weaknesses
This refers to an inherent limitation or constraint that creates a
strategic disadvantage to AutoEdge. The business must devote
attention in correcting its weaknesses in order to achieve its
objectives (Leigh, & Pershing, 2006). Concentrating on
weakness is essential since failure can lead to business failure.

4. Opportunities
An opportunity refers to a favorable condition in the business
environment that enables it to consolidate and strengthen its
position (David, 2007). Opportunities can enable AutoEdge to
improve its market position besides growing its operations. The
business must strive to take up the opportunities in the
environment in order to remain competitive.
Threats
This is an unfavorable condition in the business environment
that can create a risk or causes damage to the organization. This
is usually a potential challenge that the business must consider
and address (Leigh et al, 2006). The business must strive to
identify its threats in order to identify areas that requires
enhancement.
Conclusion
The business can use SWOT analysis in determining its core
competencies that enhances the performance of the business.
The core competencies includes the capabilities that can enable
the business realize its competitive advantage. These
capabilities include strong branding and efficient processes as
well as expert sales team or assets that are critical to the
success of the business (Leigh et al, 2006). Through the SWOT
analysis, the business can match strengths and weakness
existing in the business environment and match opportunities
with threats operating in the environment so that it can
formulate an effective strategy. An effective strategy is the one
that capitalizes on the opportunities using strengths to
neutralize the threats and minimizing the impacts of
weaknesses.
References
David, F. R. (2007). Strategic management: Concepts and cases.
Pearson Prentice Hall.
Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The
Handbook of Human Performance Technology, 1089-1108.

5. Running head: ECONOMIES OF SCALE
ECONOMIES OF SCALE
4
Economies of scale
Student name: Desmond K Sangbong
Professor: Gerald Weisenseel
Course title: Applied Managerial Economic
Date: May 26, 2015
Without efficiency in the organization, the entity can continue
to losing lots money since it incurs extra cost, which is usually
controllable using few management techniques. Seeking
economies of scale is one of management techniques that
enhance the efficiency of company and reduce it costs and
increase the potential income. Efficiency is all about acquisition
and utilization of resources in the right manner in order to
reduce costs associated with resource such as wastage and at the
same time enhance the revenue of the company. This is possible
by developing and implementing plans such as economies of
scale, which ensures realization of efficiency within the
organization. Therefore, organization efficiency is the ability of
an entity implementing set plans using smallest possible
overheads or resources.
As far as microeconomics is concerned, economies of scale is
all about cost advantages that an entity realizes due to scale of
operation and size as well as output with the cost incurred per
unit of output decreasing with rising scale since the fixed cost
spreads out with more units of output. In most cases,

6. operational efficiency is the fundamental factor that increases
with increases scale and ultimately causing a reduction in
variable cost (Moore, 2011). In simple terms, the organization
achieves the economies of scale upon producing goods or
services in large scale with less input costs. The company thus
increases units of product besides growing hence and it becomes
in a better position to reduce costs. This is because growth goes
hand in hand with economies of scale.
Two ways exists in which the organization use in realizing the
economies of scale. Classical economists such as Adam Smith
(1776) believe that the organization can realize the economies
of scale by first ensuring there is division of labour and second
is through specialization (Moore, 2011). These two techniques
ensure that employees are able to concentrate on their specific
task and with progress of time, they improve the skills required
to perform the job, courtesy of learning curve. They thus
perform tasks with less and less time and in a quicker manner
with progress of time due to growth of competencies in their
various areas of specialization. Therefore, with efficiency the
organization can save both time and money with the level if
production increased.
Besides division of labor and specialization, the organization
can achieve economies of scale by buying inputs at lower costs
due to bulk purchases. The seller can provide quantity or
volume discount to the organization (buyer) upon buying large
quantities of goods Canback, Samouel, & Price, 2006). The
company thus enjoys the economies of scale resulting from
reduced price per unit due to bulk purchases.
Costly inputs such as research and development as well as
advertising besides managerial expertise are expensive but in
the long-term leads to increase in efficiency (Moore, 2011).
Such undertakings combined with skilled labour can cause a
reduction in the cost of production and selling which in turn
enables the organization realize economies of scale.
In the same that economies of scale exist, diseconomies of scale

7. exist as well. Diseconomies of scale exists in circumstances that
the production becomes less than the proportion of inputs. This
implies that there is some degree of inefficiency within the
organization or the entire industry leading to a rise in average
costs (Canback et al, 2006). Continuous losses can be a good
indication of economies of scale.
References
Canback, S., Samouel, P., & Price, D. (2006). Do diseconomies
of scale impact firm size and performance? A theoretical and
empirical overview. ICFAI Journal of Managerial Economics,
4(1), 27-70.
Moore, R. (2011). Economies of scale. Containerisation
International, 44.
Surname3
Surname: Desmond K Sangbong
Economics – Case Study – AutoEdge Auto Company
Professor: Gerald Weisenseel
Date: May 24, 2015
Elastic and Inelastic changes in demand and supply
Economists assert that when the price of a product falls, the
quantity demanded increases and quantity supplied decreases. In
many cases, directions of such changes matter most. In other
scenarios, the magnitude of such changes matter as well. A
change in price therefore has an impact on product and
consumer behavior. The term elasticity is used to measure such
changes. Price elasticity of demand is calculated as percentage

8. change in the quantity demanded divided by percentage change
in the price, as the price elasticity of supply is calculated as a
percentage change in the quantity supplied divided by
percentage change in price. Price elasticity of demand simply
depicts the proportionate change in demand in a given change in
price.
Motor vehicles are now being considered as a way of life for
people and have consequently had an economic impact through
becoming a primary means of transportation for people to
commute to and from work, travel between destinations or
vacations. Family budget now encompass allocation for
transportation costs. Price elasticity of supply in auto industry
depends on the number of particular types of vehicles available.
The automotive industry is regarded as being elastic as prices
fluctuate with regards to supply and demand. Consumers are
now able to choose from a vast amount of vehicles make with
many models being in the market. This means that although
vehicles are considered as necessity, some cars are considered
as luxury. Another factor that has a direct impact on supply and
demand of vehicles is the inflating costs of fuel as this makes
less people purchase automobiles. This consequently affects
manufacturing on the number of vehicles to be produced, and
subsequently, the numbers of vehicle parts. This means that the
price of vehicles as well as vehicle parts increases as the
demand is low thereby making price elasticity of demand be
elastic.
Elasticity is used to measure how sensitive the consumers are
with regard to changes in price. In scenarios where prices
matter little, the changes in price will often have small effects
on the willingness of consumers to buy or sell. As the changes
in quantities supplied and demanded will be small, calculation
of elasticity will consequently be small resulting to inelastic
outcome. On the other hand, if consumers are sensitive to
prices, small price changes will result to large changes in
consumers’ willingness to buy or sell. Large changes in
quantities usually result to large elasticity’s. Elastic simply

9. depicts something that stretches easily. For instance, if
consumers willingness to buy a particular auto part stretches
quite a lot when there is a change in price, its demand is
considered as being very elastic. If consumers willingness to
buy a product doesn’t stretch or change much when the price
changes, then the demand is considered as being inelastic.
If AutoEdge does raise price, how will its total revenue shift?
Total revenue is price multiplied by the quantity produced. If
AutoEdge raises its price by 10 %, then its total revenue will
depend on whether the demand turns out to be inelastic or
elastic. Id demand turns out to be elastic, then AutoEdge will
find its total revenue dropping. The 10 % rise in price will be
most likely offset by the significant drop in quantity. If the
demand is inelastic and the company can manage to maintain
majority of its customers at a higher price, then its total revenue
will increase. The effect of higher prices will most likely offset
the small decrease in volume.
The relationship can therefore be summarized as: if the demand
is elastic, then the percentage change in quantity will
consequently exceed the percentage change in prices and total
revenue will shift in similar direction as quantity. If the demand
is inelastic, then the percentage change in quantity will be small
than the percentage change in prices and total revenue will shift
in similar direction as the price.
Desmond k
Sangbong
Gerald
Weisenseel

10. Applied Managerial
Economics
May 22, 2015
There are many factors that AutoEdge needs to consider as it
relates to the manufacturing operations going forward. While
financial questions may be the most significant ones, there is
also the question of legal and cultural factors involved in the
manufacturing process. Considering the factors of production
can be a great way to decide where the best place to go is
(Singh).
First consider some of the financial factors that should be
involved when deciding where manufacturing should take place.
One of the key factors here is going to be the labor rate. There
are multiple countries that have non-existent or very low
minimum wages compared to the rest of the world. For example
many Asian countries or Caribbean countries offer a great
opportunity for cheap labor rates. Along with the labor come
other costs to consider though. It is going to be harder to train
people in an Asian country that does not speak English as their
primary language. It is going to require hiring people who are
effective with both English and whatever the native language
might be for that country. Training will more than likely
involve lots of travel to the country of choice so employee
expenses for travel and training need to be considered.
The availability of parts is also important financially. If the
company were to choose an Island in the Caribean for the low
labor rates, they are going to have to consider the costs of
shipping products overseas. Islands generally do not have all of
the resources required to build a full size factor and it will
require bringing in large amounts of resources from other
countries for production. If raw materials are not located in the

11. chosen country, then there will continue to be costs for getting
the raw materials for production brought into the plant.
Being in the auto industry, there are countries all over the world
that use the final products. It is important to know where the
final products AutoEdge is producing go to as there could be
large shipping costs if they need to travel a long distance.
As mentioned financial factors are not the only important
factors. Legal factors come into play as well. A company needs
to make sure that there are no local laws that would hinder the
production of the products AutoEdge is producing. For example,
there could be certain restrictions on what is allowed to be
produced in the region. Also there could be laws set in place
regarding how the environment is treated that could be hard to
comply with. Another legal factor to consider is the nation’s
shipping and receiving laws. There could be certain items that
take on taxes in some countries, but not in others.
When it comes to cultural factors the nation of choosing must
not be one that is dealing with any sort of domestic issues such
as civil war or political disruption. These types of issues can
slow down any sort of business taking place in the region. The
people living in a country may also not want a large corporation
to take over the area. This presents another cultural issue that
needs to be considered when moving into a country.
Economic factors need to be considered as well when it comes
to picking a nation for handling production. An economy in
turmoil could lead to the government wanting to take over or
mess around with operations of successful operations. It is hard
to prevent government interaction sometimes and a poor
economy can lead to government action quickly. The economy
does not need to be one that is top tier, but it should at least not
be one that is currently in a dangerous position.
When deciding where manufacturing should take place all of the
following need to be considered. Without understanding of not
only financial factors, but economic, cultural, and legal ones as
well AutoEdge could make a decision that would cripple
operations for years to come.

12. Reference
Singh. (n.d.). Factors of Production : Land, Labour, Capital and
Entrepreneur | National Income. Retrieved May 17, 2015, from
http://www.bibme.org/apa/website-
citation/edit?hide_webeval=true