Evolution of Monopolistic Competitive Market

Economic analysis of a monopolistically competitive industry is more complicated than that of pure competition because:

Since a monopoly is the only seller of a good in the market, the demand curve is the market demand curve. Therefore a monopoly has a downward sloping demand curve, in contrast to the horizontal sloping demand curve of a firm in a competitive market (Mankiw, 2014). Monopolies aim to find the profit-maximizing price for its product. If a firm is initially producing at a low level of output, marginal revenue exceeds marginal costs (Mankiw, 2014). Every time production increases by one unit, the marginal revenue increases again and is greater than marginal costs (Mankiw, 2014). Therefore

(Demand Under Perfect Competition) what type of demand curve does a perfectly competitive firm face? Why?

This paper will discuss a company called Apple computers. It will further access the market forces and strategies used by apple.

Threat of New Entrants: When Apple first began in the early 1980’s, the threat of new entrants was significant. PCs were a relatively new commodity with little distinction, few competitors, and no government regulation, and although initial R&D was complex, assembly was simple. Unsurprisingly, new firms emerged quickly and forced Apple to differentiate its product over time. This push continued through the years, and ultimately, Apple was forced to create more innovative, unique, and quality products—a dynamic favorable to both Apple and the industry. At the same time, the industry’s dominant players were becoming established, reducing the threat of new entrants and solidifying Apple’s position.

In January 9, 2001 Apple introduced iTunes, and later that year on Oct 21 2001, Apple introduced the first iPod. (Apple Introduces iTunes, n.d.)Steve Jobs announcement about the release of the iPod would be the demise of the industry leader in personal music storage devices the Sony Walkman (Walters, 2011). The IPod provided “consumers a device with instant purchasing power and the ability to listen to high quality audio files on the go” (Walters,

As a strategic planning group at Target, the group decided to develop a new product; a device similar to the MP3 player. This paper will discuss the results of the competitive market analysis and the products potential success after comparison to the primary competitors in the products market; Apple, Inc. It will also discuss a short history on Apple’s MP3 player, the factors that affect demand, supply, equilibrium prices in the market, and any issues or opportunities that would affect profitability.

The shifted new strategy of Apple was initiated by the release of iPod in 2001, followed by the iPhone in 2007, then by iPad in 2012. It was the iPod that brought significant growth in Apple. Initially, the iPod was just another MP3 but soon became the icon of the digital age due to its sleek design and user friendly interface. Moreover, iPod could sync with Windows as well as a Mac and offered accessory markets. Soon enough all the competitor in MP3 market had to face the challenge of consumers comparing their model with iPod. However, the greatest challenge that the competitors had to face was the introduction of iTunes store.

In this paper, we will discuss the four market structures of Monopoly, Oligopoly, Monopolistic Competition and Pure Competition. We have identified four companies that operate in each of these market structures: Salt River Project, The Coca Cola Company, Russ 's Market, and Columbia House. In each market structure we will describe the pricing and non-pricing strategies of the companies operating in that market. We will also examine Quasar, a notebook computer company. They entered the market with a new product and we will explain the progress from one market segment to the next as the lifecycle of the product changes and the number of

The industry environment is the set of factors that directly influences a firm and its competitive actions and competitive responses: the threat of new entrants, the power of suppliers, the power of buyers, the threat of product substitutes, and the intensity of rivalry among competitors (Hit, Ireland, and Hoskisson, p.40). In this case, Apple is just one of the many competitors in a saturated markets offering both hardware and software for personal computer systems. Intense players such as, HP/Compaq, Dell, Gateway, and Microsoft all take substantial market share in the industries Apple is competing with. Today in the computer hardware industry there is intense competition and the

Apple Corporation was initially operating into the personal computer arena but later diversified into other segments. The change was brought by changes in management and differences in views that were coupled with missed opportunities resulting in loss of competitive advantages. The company currently operates in the music and personal computer industry as part of its initiative to continue providing innovative products for its customers. Despite venturing into different industries to enhance competitive advantages, the corporation is still confronted by intense opposition across all its business segments or industries. The aggressive competition is mainly because the markets for personal computers, mobile communication devices, consumer electronics, and digital music services are increasingly competitive. The competitiveness of these markets is also attributed to the rapid technological advancements that constantly increase the capabilities of these devices. In light of the increased competition, the Apple Corporation needs to develop and establish measures for sustaining competitive advantage with evolving external environment and executive succession.

The free marketplace within our economy provides a tremendous opportunity for small businesses and companies to grow and prosper. This type of economic system provides business owners the independence to design and supply almost anything. But this fluid environment can also limit and even closedown a company if the demand for their products isn’t sustained. The company Apple Inc. is known for their competitive advantages in the current marketplace and worldwide. This company is known for their creation and design of Macintosh personal computers and its signature look is in the shape of an apple, creating instant visible product recognition for customers. Currently, Apple Inc. leads the industry in the digital music revolution with its iPods and iTunes online stores. In addition to their creations they have also reinvented mobile iPhone and iPads which have defined the future of mobile media and computer systems with new advanced technology. These innovations with electronic devices have enhanced the overwhelming worldwide demand for their products which has affected the way other technology companies around the world, market and strategize their current and future products to its customers.

In order for Apple to gain so much success from their products, advertising has been an essential aspect. Apple Inc.’s first successful product on the market was in 1977 when Apple II, a microcomputer, was released. Apple Inc. did not implement portable music devices until 2001 when the first iPod was released. Coincidentally, former Apple CEO Steve Jobs was given the title the year before in 2000. The ‘iPod classic’, Apple’s first portable music device, is considered to have not only transformed Apple as a firm but the entire music industry as well. (Linzmeyer, 2006). Post the release; Apple received success from their products. As time went on, the quality of their products

Monopoly markets have one provider for a good or service. With no competition to influence demand or supply, the monopolist offers less goods than demanded at prices higher than competitive market forces would dictate. Monopolies are notable for their market power (can raise prices without losing customers). U. S. drug manufacturers are an example of monopolies, as they have exclusive rights to sell goods in the US (even though competition exists in other parts of the world). They have a relatively inelastic demand curve (a 1% increase in price will likely reduce demand by less than 1%).

Apple operates with fierce competition in the consumer electronics segment which comes in many different forms. There are a large number of competitors in the different market niches who offer many similar products. Furthermore, many of these competitors' products are priced much less than an Apple branded products. Just as soon as Apple releases a new product, major companies begin imitating it immediately. In the personal computer industry, market pressure is continuously being exerted from such companies such as IBM, Dell, HP, and Toshiba (Wildstrom, 2009). Furthermore, with its flagship product the IPhone, Apple competes with companies like HTC, Palm, Blackberry, and Motorola (Wortham, 2011). Apple has had significant success despite the competitive environment because Apple commands a brand loyalty and dedication to innovation that few companies have ever achieved.