Market Conditions

Future Market Conditions Paper

Introduction

While many establishments have left the competitive landscape, average revenue per establishment actually exceeded inflation by about 2 points over the past six years. Valued added sales in the printing industry actually outperformed inflation. Almost all industry growth came from printers who described themselves as digital print specialists. The study concluded that the commercial printing industry is a highly competitive manufacturing market that effectively leverages technology to reduce prices to customers and increase value to business owners. Survey participants expected revenue from offset to decline 7.7% over the next two years and that revenue for digital printing would increase 5.5% and value added services would grow 2.3%. While the industry retains a manufacturing focus it is moving to more of a service orientation. 77.8% of the respondents claim that "reducing production cost and improving efficiency is a current business strategy" but many lack the plans to effectively achieve this goal for the future.

Future Market Structure

The future market structure for the printing industry will remain monopolistic, as many different printing companies add to the competition. Looking ahead, with the advancements of technology and global competition, the printing industry will remain strong. Determining the future market structure is important because it will determine the strategy needed and enable the printers to see how to position themselves in the ever-changing market.

Strategies for growth include increasing customers since it is a service business. This will be done by offering new products and services and keeping the prices competitive. The other strategy would be acquisitions as consolidations are happening with many companies in the U.S. This approach could increase the size and offerings of the company, which in turn could increase profits.

As technological changes advance in this industry, firms will increase the value and effectiveness they offer their customers. As they pass on the savings to their customers, they will increase their volume for these products and services, thereby maintaining and strengthening their revenue. More customers, expanding operations and increasing profitability are what these printing companies are looking forward to in the future.

Impact of New Companies Entering the Market

Due to the fact that there is a lot of competition in this industry, each company must find ways to service their current customers and increase their customer base. The impact of new companies entering the market will cause existing companies to offer more services that will satisfy their customers' needs and at the same time, keep their prices competitive with the market by differentiating their products, service and distribution and advertising. Those that cannot keep up with these changes or are poorly supervised will not survive in the future.

Investing money into new technology will increase their products and services keeping up with the growing demands of the market. Providing these products and services in a timely and cost effective way will also strengthen their customer base.

Consolidation is also a way for some of these small and medium sized companies to stay competitive in the future within this market. Global expansion is another area where the printing industry is increasing the volume of sales. As the industry grows, these products and services can be offered to customers throughout the world.

Future Pricing

Based on recent trends both inside and outside of the print industry, it is certain that the world market will continue to expand. Technological advancements have also seemed to expand exponentially. In light of these trends, organizations within the industry will face entirely new pricing and productivity situations. As the world moves closer to true globalization, firms inside the printing industry and other areas of the manufacturing sector will face huge new challenges. Instead of solely relying on local and regional companies for various parts and services vendors, companies in the printing industry will need to browse the world market to find the option that best suits job requirements while offering the best price. This will assist in driving down production costs for firms in the industry, allowing for lower prices and higher overall profits.

As the global economy grows and organizations throughout the world are able to develop improved economies of scale in print production, globalization will also increase competition for the field. Companies within the printing industry in various countries will capitalize, "on their position as world leaders in their fields to place themselves as providers of high quality goods" (Sheridan, 2005). This increased competition will in turn have a distinct effect on prices in the industry. The entrance of the additional firms to the industry will create a larger supply and improved choices for the consumer. This additional supply of product to the market will create a downward push on the price point.

Future Productivity

Productivity in the printing industry will also feel the effect of the expanded global marketplace and improved technology. Off shoring has become increasingly prevalent in the printing industry, as other countries get experience in the manufacturing industry and begin to build a comparative advantage for specific processes. "The benefits of off-shoring outweigh the drawbacks, given that the strategy will increase productivity, profitability, and economic growth" (Venables, 2005). As firms are able to obtain less expensive production through cheaper labor, additional technology can be purchased that will increase productivity levels.

Understanding the technological advancements in the industry will also be a key factor to consider for managers in the print industry in the years to come. When it comes to purchasing new equipment, timing is everything. In order to effectively make strategic decisions regarding equipment purchases, firms will need to actively pursue empirical data on the effects on productivity the new machinery will have. In addition, they will need to thoroughly analyze the information to determine the shelf life of the chosen technology. After time, firms will be able to develop decision-making models based on the information collected. This will allow managers in the firms to properly time purchasing decisions so that productivity is maximized while the cost of obtaining the equipment is minimized. This kind of cost/benefit analysis