Economics for Managerial Decision Making: Market Structure Quasar Computers is a market leader for establishing their business around the Neutron notebook computer. Competition and the need to differentiate have required management to make profitable decisions to increase sales and revenue streams. The company must focus on aligning strategic variables with pricing and non-pricing options while considering how to rebrand Quasar to sustain marketability and a competitive force.
Strategic Variables
Quasar established their business in 2003, to make the initiative to produce a notebook that took over worldwide and was considered a monopoly. Consumers will know Quasar’s products uniqueness and the style of the computer once introduced
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Computers have to be upgraded to make the laptops or notebooks faster and easier to use. The supply and demand of selling these notebooks to clients incurs a reduction of cost to spike sales.
Once Orion Technologies entered the market in 2006 with a notebook similar to Quasar Computers the market became oligopolistic which “involves only a few sellers of a standardized or differentiated product” (McConnell & Brue, p. 177). Table 3 shows the market shares for Quasar Computers in an oligopolistic market.
Table 3 Oligopolistic Market Shares
Market Shares for Neutron
Market Shares ($) 38M
Revenue ($) 908M
Profit ($) 123M
Quasar Computers can face the competition. In oligopoly’s the revenues, market shares, and, profits depend on both price and the competition while the differential in the price will determine the market shares (“Economics for managerial decision making: Market structures:, 2013). Both Quasar and Orion are in deep competition but has to make modifications to earn profits.
Pricing Strategies
Quasar computers will need to choose a pricing strategy that will work otherwise their profit margins will be impacted. An important step is deciding how Quasar should price their products. Competition based strategy is one of several
The Aerospace and Defense (A&D) is a highly concentrated industry (Global Edge, n. d.). The market is largely dominated by a small number of large companies in the industry, which is a characteristic of an oligopolistic competition. The major players in the industry include Boeing, Lockheed Martin, General Dynamics, Northrop Grumman, and Raytheon, (Choi, 2016). In oligopolistic market, companies make decisions based on their own actions as well as of others’ in mind (Johnson, 2014; Boundless, 2017). According Pettinger (2016), the key characteristics of oligopoly are
Intel began supplying microprocessor to IBM. To meet the demand, Intel licensed to as many as 12 other companies to produce 8086 chips, which left Intel with just 30% of the total revenues and profits for that product. Gradually, they reduced the number of licensee to only IBM. Thus they retained the “profits pool” within their value chain.
Teams were able to introduce a new line of microcomputers in four different regions. All five teams were entering the market at the same time and they started with exactly the same amount of resources and knowledge of the market. There were three business segments in PC market. The higher priced Mercedes segment, included high performance computer for use in engineering and manufacturing applications. The medium priced, largest group of customers was the Workhorse segment, which was based on easy to use PC. The Traveler segment included practical computer to use while traveling and their customers were price sensitive. In quarter one, the teams were to establish their firm and set up their shop. Following, in quarter two, the teams dived in to test the market. In quarter three, the teams had to make some changes and decided on market expansion. In quarter four, they made choices to invest in the future. In quarter five, they had to expand their business strategies. In quarter six, they were able to adjust their firm’s strategies, tactics, study the market, review financials, evaluation production data if it was
The major market trends faced by the organization are the rapid development of the technology. This trend gives the customer an uneasy sensation, so the customer will ask for the upgrade at the lower cost conceivable. Other trend is the cost of the internet, and the use of the computer by their employee for personal matters.
Microsoft is the software giant responsible for bringing Windows operating system to the PC (personal computer). Microsoft is also a known and well respected company in the global market. The tech giant has dominated the computer industry since 1981. Due to the nature of such a huge company, Microsoft has its hands in multiple markets. Microsoft currently competes in file hosting, software, operating systems, and gaming consoles. Unfortunately, each of the afore-mentioned markets differ from one another. For the purpose of this paper, the market that
The pricing of the new products will be both affected by the cost plus pricing and competition -based pricing. Even though there will be no very similar products that directly compete with the new products, there exist alternatives that at some level compete with the new products. The cost plus pricing will leverage the current cost and price of regular burgers. At the same time, the competition-based price would allow the products to sell well.
A company needs to create a series of programs to differentiate their product from those from its competitors and to appropriately price the product to achieve the maximum demand, in order to set up the dynamics of its competitive strategy (David, 2007). The competitive strategy of a company is also expected to offer better products or services to its customers, at a reasonable cost. Due to the mass influence of the external environmental on the customers’ preference, it is vital for the company to develop an available competitive strategy to be able to solve a series of problems, and ultimately to improve the company’s performance. Those problems include: how to differentiate its products or service from competitors, how to create market segments to maximize demands, and how to offer a wider range of products or services to better meet the customers’ needs at more acceptable costs (David, 2007).
dominant incumbent even if the incumbent priced its products substantially above competitive levels for a significant period of time” (“Microsoft: Court’s Findings…). Obviously, the rival companies such as, IBM and Apple, have found great fact, that
|5000 employees at the beginning of the 1990s, it has grown to exports of $70 billion and 2.8 million employees today, and a globally dominating |
Quarter six began by updating each of the product lines that Team 4 features. The Workhorse and Traveler market segment both had the same changes in this quarter. Here, the team analyzed both the customer needs and best competitor product for this market segment. The change made here we added ultrafast computing power; this was one of the most important features in terms of customer needs. Next, the group altered the Innovator product; ultrafast computing power was added, as well as changing the desktop to a 21” high resolution monitor. These decisions were based of the leading competitor’s product in this market segment; the strategy implemented here was to match competitors product (which was already proven effective) to
Once the patent rights expired, the entry of Orion technologies reduced the market share of Quasar in 2006 as it captured 50% market share. It created an oligopoly market structure for the product in which each firm acts like monopolist but at the same time, the decision of a firm affects the decision of another. "A key characteristic of an oligopoly (a highly concentrated industry) is that competitors are mutually interdependent; a competitive move by one
Software companies want the best products to sell in order to stay in business and remain productive. This organization is on the rise to find the most reliable and best personal computer for excelling students by comparing and contrasting the prices, performances and models from three different brands sold by the most popular vendors. Our company selected the Apple-13.3” MacBook Pro Notebook, the HP-Envy 15.6” Laptop, and the Dell-Ultra book 15.6” Touch-Screen Laptop. After careful reviews and investigations, the organization decided that the HP Envy Laptop was best for their excelling students’ organization.
The Market-Based Management philosophy was developed by Charles Koch and is employed by Koch Industries, the largest privately-held company in the world, according to Forbes magazine. MBM is based on rules of just conduct, economic thinking, and sound mental models which harnesses the dispersed knowledge of employees, just as markets harness knowledge in society. Market-Based Management enables an organization to succeed long term by applying the principles that cause a free society to prosper. Market-Based Management applies concepts and tools posed in the application problems, it allows you to learn experientially by changing input values to see how different situations impact performance, and also teaches to perform
Investing in research and development to create new product line or enhance current products adds considerable expenses. Development costs will need to be re-cooped. This will keep competitors in check, but will be challenging to keep pricing competitive.
a) In a perfect competitive market, the sole determinant of pricing is the market demand and the supply curves. A demand curve refers to the total amount that consumers will pay for their products. The supply curve is the total amount that the producers can actually make to supply to the company at the price they can afford or are willing to pay. Another factor in a perfect competitive market structure is the equilibrium price which is basically when the supply of the market meets the market demand of the consumers. Anther unique feature of a perfect competition market is that it is a price taker. In essence, this means that the company doesn’t have any influence on the price. Again, this can only be caused through a market that has a large number of firms with identical products. (Samuelson and Marks, 2010).