One economics aspect of oil industry Essay Example | Topics and Well Written Essays - 500 words

One economics aspect of oil industry - Essay Example The oil industry focuses on demand as a central point of production. As such, a given energy demands rely on the existing economic activity.Supply is a general aspect of the oil industry affected by weather and other geopolitical elements. Oil demand is a vital feature that largely affects the oil industry. Unreliable economic activities directly affect the demand for energy. As such, the oil demand decreases within a given duration. A decrease in oil demand results in a low number of investors within the industry. As such, the industry experiences rising cases of companies practicing monopoly. The ideology revolves around limiting consumers to regulate the supply chain. As such, the independent companies overcharge the government for using the organization’s oil reserves. Independent companies raise revenues through the monopoly policy affecting a country’s revenue or source of income(Spilsbury, Richard &Louise, 202). Countries that produce oil contribute largely to the changes in oil prices. These countries regulate supplies based on individual interest or political gains. As such, the world oil prices fluctuate to accommodate the given interest. Other countries such as the superpowers also engage in practices that undermine oil prices. The various changes within the economy depend directly on the oil prices. Inflation rates shape the oil industry with key participants who tend to control the industry. Powerful countries tend to enlarge shares within the oil producing countries through the oil companies. Decreasing oil fields affect the oil production percentage and eventual supply to the world. Different countries struggle to obtain stable supplies of the oil to meet the rising demands. As such, the world thrives on an unstable environment that reflects on the economy of various countries (Spilsbury, Richard & Louise, 171). Additionally, various organization emerge to regulate the

Contrast the three general approaches to setting prices Essay

Contrast the three general approaches to setting prices - Essay Example The demand for the product would be lesser when the price is kept high, but the revenues could be more because of the high selling price. (Bovay, 2008) There are many instances of new products following the market skimming strategy including Mercedes Benz, Sony High-definition television, Nokia N series cell phones and so on. All these products have one thing in common: they are all high quality products. Setting a high price for a new product could be disastrous for products that do not offer premium quality. As price gives a perception of quality to the consumers, setting a price too low for a high quality product just to make it more affordable, is also not a good strategy. It says to the consumers that the product is not of the premium quality they expected, and deteriorates the brand image of the company. Therefore, market skimming strategy is ideal for cases in which the product is innovative or does not have competition. Also, if the new product is of a strong brand, the company can use premium pricing because the consumers are less likely to switch to another product because of their loyalty with the brand. Apple Computers is an ideal example of such a case. Even though the company has several close competitors that offer the same products with the same specifications, it’s the perception of the brand that lets the company demand a higher price for its products. In contrast to the market skimming pricing, this strategy focuses on attracting a large number of buyers through setting a low price for the product. This pricing strategy is usually adopted when there are a number of sellers in the market and the company wants to penetrate into the market quickly. When the consumers see the low priced product that offers them the same product that other companies are offering, they are attracted towards the low priced one. In this way, the company is able to attract a large