1.1 Demand and supply

The over-supply of lcd-televisions led to a drop of about 40% in the prices over the past year. It is expected that prices will still come down with a further 20% in the course of this year. According to experts lcd-television sets are a boon to the consumer, but a disaster for manufacturers. They had to witness how fat profits changed into fat losses.

The over-supply of modern, flat televisions clearly illustrates the present risk of making money from consumer electronics. Technology changes so quickly that products soon become redundant and prices drop drastically. The personal computers of two years ago are almost worthless today, as is the case with digital cameras.

The reason for this is that electronics make use of chips, and every two years the speed of chips is doubled.

Chinese manufacturers copy everything in an instant, enabling them to sell quality imitations at rock-bottom prices.

Samsung and LG Philips nevertheless continue to invest large sums of money in new factories. This year the latter has opened the biggest lcd-factory in the world at a cost of 40 milliard rands. Nevertheless, these two market-leaders expect a growing demand for lcd-television sets which will cause new shortages. Should this happen, next year’s profits will be sky-high again.

In the meantime these manufacturers must also take note of new companies entering into the market. Also the more up-to-date and advanced technologies need to be taken into account, such as plasma televisions that have flat screens as well. Modern, energy-saving technology like oled-televisions could probably replace lcd in the future. OLED is an acronym for organic light emitting diodes.

Adapted from an article in Elsevier , 7 May 2005

Activity 2:

To determine why certain products are more expensive than others

[lo 1.3]

Your parents have decided that it is time to buy a new television set. You visit some shops selling television-sets. There you discover that there is quite a variety of sets available. The salesperson immediately points out the television sets with a plasma screen. It appears that these sets are much more expensive. But then again, the image is that much sharper and clearer.

Discuss the following questions :

• Why are the sets with the plasma screens (LCD= Liquid Crystal Display) more expensive?
• s that new or old technology?
• Are the sets manufactured locally or are they imported?
• Is there a big demand for these television sets?

Activity 3:

To make inferences from a graph on new technology

[lo 1.3]

Discuss this graph by answering the following questions:

1. Have the sales of ordinary TV sets decreased at the same rate that the sales of lcd sets increased?
2. How many fewer ordinary TV sets have been sold in 2004 and 2005?

a) How many lcd sets have been sold in 2005 and 2006?

Assessment

Memorandum

• It is very rarely the case that a specific trader is the only one who sells particular products. Therefore he / she must be properly equipped to handle competition in the market-place.
• By way of an analysis chart, the learners are guided to determine exactly who the consumer is that they wish to target.
• By answering simple questions the learners become aware of specific characteristics that an entrepreneur must possess in order to ensure success.