Economic Analysis: Electronic Arts Inc. (Ea) in Essay

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Economic Analysis: Electronic Arts Inc. (EA)

In this text, I concern myself with Electronic Arts, Inc. (EA). In so doing, I will amongst other things describe the business, its operations, and why I chose to focus on the company in my application of economic ideas. Further, I will also analyze Electronic Art's financial health using the relevant tools of financial analysis.

Electronic Arts, Inc. (EA)

Electronic Arts Inc. according to Yahoo! Finance (2013) "develops, markets, publishes, and distributes game software content and services for video game consoles, personal computers, mobile phones, tablets and electronic readers, and the internet." In terms of revenue, the company is the third-largest video games entity in the world. Its main competitors according to Yahoo! Finance (2013) include but they are not limited to Activision Blizzard, Inc. And Nintendo Co. Ltd.

Two things make Electronic Arts Inc. An interesting company to focus on. To begin with, the company happens to be one of the main players in the Multimedia and Graphics Software Industry. For this reason, it would be interesting to see how the selected economic ideas apply to an organization of such significance. Secondly, the products the company develops and offers for sale are largely unique. The very nature of these products makes Electronic Arts Inc. An interesting company to focus on.

Big Ideas

The big ideas I select in this case are Idea 1 and Idea 5.

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As per Idea 1, choices involve tradeoffs. In the words of O'Cannor (2004), "trade-offs occur when individuals, businesses, government, or other groups choose to produce or consume more of one thing at the expense of the second." In the past, Electronic Arts Inc. sought to expand by primarily acquiring other gaming entities. In an attempt to enhance its revenues going forward, the company had the option of using its limited funds to increase employee salaries (as a motivation tool) or pursue expansion by making acquisitions. This is an example of a situation where the company has had to reduce spending in one area so as to be able to spend more in another area.

When it comes to Idea 5, the market does not always function in a manner that can be regarded efficient. For this reason, government intervention/action may be required. Government intervention according to Hall and Lieberman (2012) is usually necessary when a market cannot operate efficiently (from an economic perspective) even with the appropriate institutional support. To enhance efficiency, government intervention can assume various….....

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