Smith & Wesson Corporation A Supply and Demand Analysis - 550 Words

Smith & Wesson Holding Corporation: A Supply and Demand Analysis (Essay Sample) Content: Smith Wesson Holding Corporation: A Supply and Demand AnalysisMilestone TwoKristin WilsonInstitution AffiliationAbstractSupply and demand forces are imperative to the success of the firm. As such, this paper transcends a discussion of the supply and demand conditions as well as price elasticity of demand for Smith Wesson Holding Corporation (SWHC). Smith Wesson Holding Corporation is a US-based manufacturing company for firearms. Its headquarters is based in Springfield Massachusetts. Its products revolve around pistols and revolvers. Recently, they have gained much popularity in worldwide. Recently, the company has hit its stock in August 2, 2016.Arguably, the demand for guns in the nation has also increased impeccably due to the unrest caused by terrorism activities.Smith Wesson Holding Corporation: A Supply and Demand AnalysisDemand ConditionsFirst, in the analysis of the demand conditions at SWHC, we will consider the market demand conditions. As such, an anal ysis of the demand for guns over time will be presented in Table 1 below.Table1. The table below shows the net sales report for SWHC from the year 2011 to the year 2016:Year Net Sales [in dollars] 2011 $342,233 2012 $411,997 2013 $587, 514 2014 $626,620 2015 $551,862 Market Demand DiscussionThe market demand trend for guns at SWHC has been increasing from 2011 to 2014 and dropped in the year 2015. A report suggests that FBI background checks proved that the demand for guns by the American populace had increased dramatically from the year 2011 to 2015. The reason behind the rise in demand for guns was initiated by the insecurity propagated by terrorist activities in the country CITATION Fus16 \l 1033 (Fuscaldo, 2016). Alternatively, the net sales in the year 2015 had a major drop due to the companys decision to reduce stocks.Supply ConditionsThe input costs, as well as the prices of substitutes, are a critical feature that affects the supply conditions at SWHC. First, let us examine the input costs that the company dedicates to its firearms. The table below depicts the operating expenses of the company from the year 2011 to the year 2015.Year Operating Costs [in thousands] 2011 $86,897 2012 $82,990 2013 $85,238 2014 $108,117 2015 $105,298 Supply Conditions DiscussionThe operating costs for the firm for the year 2011-2013 averagely were $85041 while from the year 2014-2015 was $106707. Such a trend indicates that the company increased its costs so as to distribute more guns to its customers. Additionally, reports suggest that the prices of guns in the year 2014 skyrocketed in the country, and as such the company had to make a decision to increase the supply of its firearms. Alternatively, SWHC faces competition from companies such as Sturm Ruger, Remington Outdoor, and O.F. Mossberg and Sons breed competition to SWHC as they increased their supply of guns. The snapshot below shows how the supply of guns in the US increased drastically, conventionally termed as the Barack Boom. Price Elasticity of DemandPrice Elasticity of demand replicates to the responsive change in demand of a product, in this case, the firearms to the change in the price of the product. It is noted that the demand for guns increased f...