Davis Technologies, a computer-chip maker, could solve its problem of declining sales by dropping its prices. This would make Davis better able to compete in the highly competitive computer chip market. The sales of chips would increase and this would sub

In the text above the author states that the computer chip manufacturer, Davis,whose sales are declining should lower prices to boost its market share. The author makes many assumptions which may be wrong and his analysis may not be correct.

The customers of computer chip are very technology savvy. They will be willing to pay more for better quality and updated products. Davis may not be modernizing its product line to attract such customers. Cost lowering will not help get more sales in this case.

The quality of products manufactured by Davis may be deteriorating day by day so customers will not trust products from Davis even if offered at a lower price.So the company should first check its quality.

After sales service is also an important factor in the computer chip market. If Davis' after sales service is not as good its competitors,customers will pay more for competitors products if they have better after sales services.

As the author has noted the computer chip market is very competitive, so if Davis lowers the price of its products competitors will also lower their prices.Thus no market share will be gained, Davis will only end up making lesser profits. This decision is neither beneficial for Davis nor for the computer chip market.

Davis should ideally improve products, after sales services and also think about modernizing products. Dropping prices is not at all a good decision to take in this scenario.