I own a local business

I own a local - I own a local business that provides Internet access to individuals and businesses my business is one of four businesses in the

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I own a local business that provides Internet access to individuals and businesses, my business is one of four businesses in the local market that provide internet access to both individuals and businesses. Each of the four businesses charges the same price of twelve dollars a month for unlimited dial up services. My businesses breakeven price is seven dollars per customer, so no matter what I must charge it least seven dollars per package in order to cover all my costs. Recently my business and the other three businesses have begun to enter into a price war, to ensure that my business isn’t destroyed I will have to develop specific pricing strategies based on certain situations brought upon by my competitors. Demand for my businesses service is often fluctuating because of the constant price changing between my competitors and I. Demand for my service is affected by changes in prices because people are drawn more toward the lowest priced Internet service providers The provider that offers the most bonuses and upgrades along with a strategically low priced internet service, will most likely succeed in bringing in the most customers. Dramatic price drops by my competitors would make it hard for my business to stay afloat because my breakeven price is seven dollars per person, so if they drop their prices to seven dollars or less, then my business would probably have to close because of insufficient profits. My business has three competitors selling the same service as I am, and most any of their business decisions can affect my business in either a positive or negative way. If those businesses are able to drop their prices and offer more extras with their Internet service than my business is able to, it could result in a dramatic loss of business for me and a gain of business for my competitors. The opposite could also occur, my competition could start losing profits and have to raise their prices to maintain operations. In this instance some of their customers might switch to my Internet provider so they wouldn’t have to pay higher prices. My customers who were
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previously thinking about switching to one of my competitors will now decide to stay with my business rather than switching to a provider with fluctuating prices. Having too many of the same kinds of businesses (such as an internet service provider) in the same area, results in a loss of business for everyone because now consumers have so many options of which business to choose form. Where as if my business was in an area where it was the only Internet service provider or it had only one business competing for consumers, I would
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This note was uploaded on 10/07/2011 for the course BUS 362 taught by Professor Smith during the Spring '11 term at ASU.

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I own a local - I own a local business that provides Internet access to individuals and businesses my business is one of four businesses in the

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