Due to the advanced and evolution trends in computer technology, computer suppliers are suffering from a global shortage of components. The suppliers need specialized products for printers, monitors, jumbotrons, LCD displays, store lights, P.C., applications processors, microprocessors, and memory controllers. The components cannot be easily found at the retailers. They are assumed to be obsolete. This can’t be possible if such items like screen drivers are absent. Therefore, there are a few different issues that are relating to the shortage of the components.
Shortage of Memory Controller
In case a company thinks of investing in the memory controller, then the company should think about them being obsolete. There are different types of memory controllers, and they come from different companies. Hence, some major corporations control the memory controller market, thus, they have a lot of influence in it. The company that plays the biggest role of a memory controller is Sony, therefore, they control the global market, and thus, the products are made for their purpose only (McCarthy, 2010). Such a company also has the pressure for producing one of the most and fastest-growing components of the company. These thoughts influenced the company; hence, they started to come up with a price raise. This will increase the profit and also increase the demand from people.
This can make their customers spend more. Consequently, prices of components such as LCD displays will be high. For example, getting a suitable product may cost about 80% of the expected sales or more (McCarthy, 2010). That is not going to be profitable. If a company wants to decrease the prices then they may compete with other companies’ products. This will increase the prices of the products. For example, let us think of the LG. Consumers will choose another computer manufacturer. Which will reduce the number of computers and save the company money. In other words, the firm will reduce the costs. For example, they will be lowering the prices of LCD monitors which will not be considered until they purchase from LG or Panasonic (McCarthy, 2010). It is not possible as prices will not be lower due to the fact that the company will not decrease the prices if they are doing well.
There are different retailing companies like RadioShack and general stores like Best Buy. Sony has a dominant share of market share (McCarthy, 2010). There are two choices, therefore, Sony stock prices increased after the share price increase in April 2007. Sony is feeling the pressure of loss of money (McCarthy, 2010). Customers are going to buy computer components like LCD monitors and Samsung LCD or Apple products. For example, Apple products are expensive for consumers because consumers go to Apple. Therefore, the average prices are high. Sony has the first and second position, therefore, they can become the hardest hit because they are the only manufacturer (McCarthy, 2010).
In short, when the supply of computer components is affected, the consumers’ prices will be affected. This will be a negative for the company. The companies can boost the demand for supplies by producing more products of different categories. This will make the stock for the component below. Therefore, a product’s price will be fixed. In addition, they can flood the market with the products, therefore, a price will be low and still reduce the profitability of the company. The product costs are less than a company’s profits, thus, the customers will decrease their demand. In the longer term, the company’s overall profitability may be lower (McCarthy, 2010). This may negatively affect the company because their very primary objective is to minimize the losses. Therefore, if they can’t lower the product prices, then they will produce fewer products for the consumers. And this may bring a decrease in the quality of the product.
If the prices of the product are reduced, the quality is given a normal value. But, the quality should be high enough. In the long run, the consumers need to provide quality and sufficient products to their expectations. The quality of the product will be higher if the consumers purchase from major manufacturers. Therefore, if the consumer waits to purchase a new product because it is expensive, they will not be able to pay their costs. For example, the consumers may wait to buy Samsung from RadioShack (McCarthy, 2010). They can only buy if the price is very low and become a quality product. Therefore, Sony will be the hardest hit. The losses will be more, therefore, there will be a decrease in overall profitability.