Dynamic Computer Company.docx

DYNAMIC COMPUTER COMPANY Dynamic Computer Inc. (DCI) is a highly regarded personal computer manufacturer based in central Africa. DCI designs, develops, produces, markets and service personal computer systems for individuals’ needs in business education, science, engineering and at home. The company’s main product is dynamic two personal computer systems, complete with optional accessories and software. The company has recently announced a new system. The dynamic three that is aimed at large business firms. It is much more expensive than the Dynamic two. Dynamic computer systems are distributed in the Central Africa by 1000 independent retail stores and internationally through 21 independent distributor, who resell to 850 foreign retail outlet. The Central Africa computer industry grew at an inflation – adjusted, compound annual rate of about 20% from 1979 through the late 2000s, when real annual growth in computer industry was expected to average about 18% a year. The outlook for personal computers continues to be positive. However, this market is highly competitive and is characterized by rapid technological advances in both hardware & software. Margins on software is nearly double operating margins on hardware. New firms are entering the industry at an increasing rate and this has resulted in a decline in Dynamic’s sales earning and market share in recent years. Most Computer Companies expected software sales and services to represent 50% of their total revenues by 2012. Dynamic is concerned about its future direction and competitiveness.

Required. a) Explain the growth strategies to be used by dynamic computer Inc. b) ‘New firms are entering the industry at an increasing rate.’ Explain the barriers to entry that can decelerate this trend. c) Explain the reasons behind technological advances in both hardware and software at Dynamic computer. Inc.