Purchase Solution

Price Wars & Environmental Conditions

Not what you're looking for?

Ask Custom Question

Under what environmental conditions are price wars most likely to occur in an industry? Why? What are the implications of price wars for a company? How should a company try to deal with the threat of a price war? Explain.

Purchase this Solution

Solution Summary

This detailed solution discusses under what environmental conditions price wars are most likely to occur in an industry and why. It also explains the implications of price wars on a company and how a company should try to deal with the threat of a price war. Examples and reference are given.

Solution Preview

Price wars are most likely to occur in an industry in which savvy customers force down a company's prices by pitting competitor's product against one another. Price wars are also likely to occur if there are new entrants to the market, who are able to come in at a low price to buy business. This is especially true if the company is well funded or has name recognition. An example of this would be the price wars involved in the smart phone industry. Apple's entry in 2007 was initially pricy, but the category has been reduced to price wars as more manufacturers are involved and consumers play each company off the other.

Another environmental condition for price wars is when an industry's product is seen as a commodity. The airline industry is viewed in this manner, and at various times price wars ignite. This might be due to a carrier entering a new market (as discussed previously) or as a way to gain market share ...

Solution provided by:
  • BA, University of Southern California
  • MSS, United States Sports Academy
  • Ed.D, Boise State University
Recent Feedback
  • "Thk u"
  • "Thank you!:)"
  • "Thank you!:)"
  • "Thank you!:)"
  • "Thank you!:)"
Purchase this Solution

Free BrainMass Quizzes
Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Learning Lean

This quiz will help you understand the basic concepts of Lean.