Analysis of the Arabian Construction Companys Costs Essay

Analysis of the Arabian Construction Companys Costs - Essay Example ACC tries to minimize costs by cutting down on some of its expenditure. The expenditure on unnecessary variable costs is cut down to ensure efficiency. Analysis of the firm’s market structure Arabian Construction Company is operating in a perfectly competitive market, which has many buyers and sellers. The forces of demand and supply therefore determine the prices of the products offered by the company. Among the competitors of ACC, we have the Larsen & Toubro, which carries out large-scale construction projects and designs. The other is the DLF, which deals in the development of housing and retailing in property as well. The company has developed over 70 million square units of housing projects up to date. The firms in the construction industry do not deal on single products qualifying them to be in a perfect competition form of market. The industry is free to enter and free to exit with very few legal formalities placed by the government governing company registration hence no barriers to entry into the market. Any firm which feels can withstand the fierce competition in the field can enter the market. The firms are also not forced to stay in the market hence they can a lways leave at their pleasure most so if they are not able to compete favorably (Etro & Federico, pg.132). The firms in this market are therefore neither price takers nor price makers; the forces of market, which are the forces of demand and supply, dictate the prices of their outputs. Profits are therefore highly regulated.