Economics 12 Chapter 2

Sony presses 'stop' button on the Walkman

http://www.vancouversun.com/news/world/Sony+presses+stop+button+Walkman/3723420/story.html

Summary:

In Japan, Sony will stop selling their Walkman cassette players. Known as one of the greatest inventions of all time, the Walkman has long been outclassed by portable CD players and more recently, Apple's iPod. About 220 million Walkmans have been sold since its release in 1979. It wasn't too popular at first, but sales quickly caught up when the company decided to change their target market to younger consumers. A spokesperson for Sony in Tokyo, George Boyd, says "There is still demand in certain regions, including in emerging markets, but in Japan there has been a shift to other forms of recording media." The Walkmans popularity has been going downhill ever since the introduction of CD's, downloadable music, and devices (namely iPods) which can store thousands of songs with much better quality.

Connections:

This article demonstrates the concepts of supply and demand, and the factors affecting them. I agree with Sony’s decision to stop producing these Walkmans, because it’s a thing of the past. The reason being is that it simply can’t compete with the modern music player. For example, the iPod can hold many more songs, and at the same time it’s also more compact, making it more portable as well. However, the Walkman is not to be blamed for its poor performance (compared to the iPod). On the supply side, the major factor causing Walkman sales to spiral downwards is technological change. Technology has been developing so much faster than it was 30 years ago. With a few clicks you can download music (for free!) and then add those songs to your music player, ready to go when you are. This is also similar to a factor on the demand side, changes in the price of substitute products. Why buy an old cassette player when you can have free music with excellent quality?  

Reflections:

After reading this article and analyzing Sony’s actions using the concepts of supply and demand, I now understand more about the consumer and producer sides of a market, and what influences their actions. I think it was a good choice on Sony’s part to not bother wasting time and energy in trying to revive something dead, when they can focus and pool their resources into creating something new and (possibly) revolutionary.

Economics 12 Chapter 1

“Dell to invest $100 billion in China by 2020”

Read more: http://www.vancouversun.com/business/asia-pacific/Dell+invest+billion+China+2020/3543381/story.html#ixzz108katvoH

Summary

As the title says, the computer company Dell plans to invest $100 billion in China by 2020. They will be opening their second centre in Chengdu, Sichuan. The centre will include manufacturing, sales and services to help the rapidly growing market in the area. It expects to be open in 2011 and will have around 3000 employees. One reason as to why the company may have decided to invest in China is because investing in the coastal regions is becoming too expensive for the company.

Connections

This article really made me think about the idea of opportunity costs. Every time you decide to invest in something (opportunity), there is a loss. The loss is the potential money you could have made if you hadn’t made that decision. Every action you take has a consequence; it doesn’t matter if it’s something as large as investing 100 billion dollars into a country, or if it’s as small as buying something from a vending machine. Usually, the loss is something as simple as time. For example, in this article, Dell is not putting 100 billion dollars into China overnight. Rather, it is a long-term plan spanning 10 years, during which a lot of time and effort will be spent. Will the investment be worth it?

Reflections

I now understand why making financial decisions is not easy. Even the smallest steps of a plan can cause huge losses. As well, every step is crucial. You can’t ever really avoid opportunity costs, you can only hope that the decision you make will reward you with something bigger than what you could have lost. Even when you do nothing, you just lost time, time which could have been spent more productively somewhere else. In conclusion, I think I now have a much better grasp about the concept of opportunity costs, and how I should always be more thoughtful about the decisions I make.