Witman essay

Vodafone has to cover its fixed costs. So when Vodafone gets the service from the government, it pays this cost even much of these costs are not only fixed cost but also sunk cost. However, the more customers, the less cost and the more profit. Alternatively, the cost of additional customers using the service is practically low and lower. As a result, to apply this cost to customers it must take into consideration the existing competitors, which build up a force to the company to keep on the market prices and to the degree of the service quality (Porter 2008). Rice (2010) mentioned that, competition is particularly critical to profitability only if it drops exclusively to price as the competition on prices transfer's profits straight from the service provider to its customers. Cutting down prices are typically easy for competitors in order to see and match competitors price. However, continual price war makes customers pay a smaller amount for products. The power of rivalry reflects on the force of competition and the foundation of competition. The magnitude on which competition takes place, and whether competitors meet to compete on the matching dimensions, will have a foremost effect on profitability (Rice 2010).

Witman essay

witman essay

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