Start-up

Div-En

Getting down to basics
1. Our firm starts up at a beach in Miami whereby we can sell aquatic sport goods as well as other services such as rental of surfboards. We have a wide range of aquatic goods for children as well as the elderly. We also provide rental of scuba diving equipment (air tank, flippers etc.), wakeboards plus scuba diving lessons. Prices of our goods would be slightly below market price as well as ensuring goods are in good quality so that we can make it more affordable for everyone, increasing demand for our goods.

2. Our firm will likely to fall under monopolistic competition. Even though there are a large number of independent firms producing similar goods. There are many market participants in our market. ie many buyers and sellers in these markets. Our firm will generate our own market price because they have more market power over the product they sell since each product is slightly differentiated. The firm we set up in the market will incur advertising costs to market our slightly differentiated products from other firms and to inculcate brand loyalty among our customers. The products we produced would be substitutes since other firms are producing the same good.

3. Allocate efficiency occurs where suppliers are producing the optimal mix of goods and services required by consumers.

4. Productive efficiency is when a firm produces its product at the lowest possible unit cost (average cost)

Who are your competitors?
1. Arena, Speedo, Ken Done, Billabong, Roxy, Quicksilver, Ocean Pacific.

2. Brand loyalty. Produce products that are sui generis and ground-breaking so that consumers are loyal to the brand. E.g. we can produce swimsuits with the latest designs, produce diving gear that is more advanced in technology and safer than other brands, more buoyant floatation devices. Also we must gain the customer’s trust. Make good first impression by giving good service and making price relatively low. Make designs of sport wear with good quality materials as well as make it nice and catchy. Trust in the brand makes people want to buy products. Advertisements must be truthful, deliver value, and resonate with consumers. Advertisements must also be catchy and appealing to consumers. By capitalizing on first impressions, the firm can start building trust with their customers and prospects. Receiving feedback is a gain knowledge and tremendous insight, allowing us to be able to provide better goods and service to the consumers.

3. Internal economies of scale. As a source of monopoly power/ barrier to entry, economies of scale occurs when increasing of the scale of production leads to lower cost per unit of output.

To expand the output along the SRAC, our firm moves down along the u-shaped SRAC. Before the minimum point is reached, we should consider building a new outlet/plant in order to enjoy economies of scale on another larger outlet/plant. This is because successive new outlets have lower SRAC. The LRAC can be constructed from this succession of SRAC curves.

The economies of scale classified in some factors:

· Division of labour
· Indivisibilities
· Research and development
· Distribution
· More means of raising funds.
· Bulk-buying
· Advertising
· Credit worthiness

4. Our firm will be practicing non-pricing competition. We will offer memberships to give our customers discounts to our goods and services. Our firm will sponsor swimming competitions such as Fina/Arena and the Olympics include special features in our goods such as less resistant swimsuits. Also we can advertise on television, radio as well as billboards to feature our products and what services we provide as well.

5. Yes, we will practice price discrimination. Offer children and senior citizens cheaper prices for goods as well as cheaper rates for rentals so that children get special benefits in comparison with older people. Moreover, during peak season offer make prices high while during off season make prices low. We also have memberships to give our members privileges.

Members: Iijee, Isaac, Darren, Vu and Nam.