“Market Structures” Simulation

We are ready to represent the best custom paper writing assistance that can cope with any task like “Market Structures” Simulation even at the eleventh hour. The matter is that we posses the greatest base of expert writers. Our staff of freelance writers includes approximately 300 experienced writers are at your disposal all year round. They are striving to provide the best ever services to the most desperate students that have already lost the hope for academic success. We offer the range of the most widely required, however, not recommended for college use papers. It is advisable to use our examples like “Market Structures” Simulation in learning at public-education level. Get prepared and be smart with our best essay samples cheap and fast! Get in touch and we will write excellent custom coursework or essay especially for you.

Market Structure Simulation -


Quasar Computers





Economic Strategy Team A


Do my coursework


Chris Ford


Abdi Humphries


Karen Kennedy


Chris Shugart


Irene Vela


Facilitator David Tucker


July 0, 00





“Market Structures” Simulation


A) Over the course of a product life cycle, as the firm moves through the sequence of monopoly, oligopoly, monopolistic competition, and pure competition, the profit opportunities diminish. What strategies could the firm pursue to prolong its profitability?


The recommended strategies to prolong the profitability in each of the phases are as follows


1. In the Monopoly phase the company must aggressively defend its patent and keep the market in a monopoly as long as possible since this is the phase in which it will see maximum profits. Offering great value to the consumer at this point builds a strong brand that will be hard to match by the entrance of the first level of competitors. Even if consumers are paying a little higher price than with a soon-to-release competitor, they will accept this if they view it as a superior product. Another point that probably should be made is to invest in R&D-type activities to keep patents and other barriers to entry as high as possible. Use the monopoly profits to find new products and innovations that others do not have so as to keep the monopoly going.


. In the Oligopoly phase, the company must tacitly cooperate with its competitor to maximize profit. Together, they should work to make entry by other competitors difficult by dominating suppliers, protecting their intellectual property, building brand loyalty, and furthering R&D advancements. However, the company must be careful not to violate anti-trust laws in this effort. Yes, this is important. Good point.Some ways of trying to stay ahead in the market


· Money back guarantees


· Service calls at home for free with the purchase of an extended warranty


· Offer upgrades at a discounted rate within a year of purchase to all buyers who purchase the notebook computers within the first year of business


. In a change of structure to Monopolistic Competition, the key strategy is product differentiation. Introduction of the Ceres line with features specially designed for the printing industry will allow the product to stand out from the crowd and demand a higher price. The company should always be looking for that next opportunity to differentiate itself. They should be looking for that not only in MC, but also when they are actually a monopoly. Your last sentence here is the same point I was trying to make in my comments on monopoly.


4. Once the market reaches the Pure Competition stage, such as for our Optical Display Systems, the product is available from many suppliers and the firm has become a true cost taker, unable to differentiate the product by advertising or changing the focus of the product towards specific markets. In this stage the company should implement continuous improvement programs to reduce their costs, and if the market reaches a point where it cannot make a profit at all, the company should be wise enough to know when exiting the market is justified. Yes, once you reach the dreaded (to the producer) PC stage, there is nothing much left to do except cut costs.





B) Firms that operate in an oligopoly must take into consideration how competitors will react to their price and output decisions. In addition to the model used in the simulation, what other strategies might govern how one competitor reacts to another’s price and output decisions?


Competitors normally follow the strategies of other companies when they first enter the market. If one company raises or lowers prices, it drives another company to do the same for fear of losing its established customer base. If one company offers free software, then another company may do the same in an attempt to stay on the same page as the other company. However, in order to get ahead of the competitor and create your own market, it is important to have a knowledgeable and determined marketing department. These people are well trained in knowing how to jump ahead of the competition. Each situation is different for them, but they have the skills required to know how to analyze the product and do the required and necessary research to get the job done.


Secondly, a firm’s decisions depend on predicting what the competition will do in reaction to their moves; over time, they may learn to predict the competitors actions, but they can always be surprised. We recommend trying to make only small incremental moves in this market structure, to encourage competitor behavior that allows a stable market and small reactions. Making rapid price increases and cuts will induce volatile and unpredictable behavior in the competition in response, and will result in failure to reach optimum profit points for either firm. When running the simulation, the price change did not exceed $50 in any month, allowing the competition to slowly and gradually react and follow our lead.


Reputation is a third primary consideration as a barrier to entry for new firms. Established companies in the market have clout, and have already established themselves as suppliers of the goods in question. New firms wishing to enter the market must spend additional resources on advertising for their product. Existing firms have already spent these dollars in building consumer awareness.


Lastly, firms in an oligopoly market, to ensure that premium shelf space is secured for their products, use long-term contracts. Firms wishing to enter the market must truly provide a unique product in order to compete with established brands. Coming late to the party is very difficult, as long as all new innovations have been exploited and existing market competitors at the time of a consumer’s decision to purchase the new technology already provides the best product available. I think you are dancing around this point that I am going to make, but you don’t actually state it. One thing to remember is that there can be a lot of non-price competitive reactions. A company can compete on price, but more often than not, a company will compete on such non-price factors as location, service, quality, hospitality, and a whole host of things that don’t directly involve price.





Quasar Computers





Memo


To David Tucker, President


From Strategy Team A


Date October 6, 00July 1, 00


Re Recommendations for Neutron’s Future


Quasar has pioneered an all-optical notebook computer, the “Neutron”, which is the only one of its kind in the present market. Quasar being the only player in this market increases the chances of succeeding with the new Neutron. In evaluating the all-optical notebook computer, we as a strategy team had to look at the firm’s prolonged profitability and consider potential competitors’ prices when they come into this market with a similar product. It is widely known that any monopoly player is a price maker. Remember that any increase in price regardless of the product, will only lead to the quantity demanded decreasing.


Therefore, to encourage strong profits throughout changes in the competitive market, Quasar must invest in advertising, improve productivity, and cut costs at the proper time, in response to a growing host of competitors. Our evaluation resulted in the following specific recommendations


Ruthlessly driving down costs and improving production costs in the monopoly stage not only boosts our profits in this stage, it better positions us to have a competitive advantage when the market opens up and our patent expires. Anyone who suggests that aggressively pursuing such initiatives during the monopoly stage is a waste because we can pass the cost on to our customers is wrong; unlike electricity, optical computers are certainly not a must have product, and demand can be expected to be highly elastic. Yes, what you are saying is true, but the point is that while a company is a monopoly, there is not as much incentive to drive down costs. It takes a very disciplined and determined monopolist to drive down costs in this sort of market structure when there is no competitor breathing down your neck. Raising prices to cover rising costs will certainly result in a reduction in demand.


After evaluating all stages of the business cycle, we found that in the monopoly stage, predicting the link between advertising and the shift in the demand curve was essential to making the right advertising choice. Even boosting advertising up to $600M, we still received over $700M of incremental profit for every $100M of incremental advertising expenditure. Like other financial decisions, we should set advertising at the point where the incremental advertising spending matches the incremental profit thus obtained. Yes, and to continue with the thought I expressed in the answer to the second question, advertising is a non-price competitive strategy.


1


With more and more competitors entering the market, the need to be highly innovative is a must. Yes, exactly. This is the point I was trying to make in the answer to the first question. Good to see that you guys understand it.To be able to differentiate our product during the early stages of competition will be beneficial to the company in the long-run, giving customers the opportunity to separate our product from others. Pricing and advertising will be major factors for our product to move to the consumer. If you feel you need further assistance, you are more than welcomed to contact us. We have one of the best marketing teams in the area and feel very confident that Quasar Computers will remain the number one company with its new notebook computers.


Sincerely,


Strategy Team A


I think you guys have all of the points I was looking for, but they were just not made where I was expecting to see them. 5/5





Mind that the sample papers like “Market Structures” Simulation presented are to be used for review only. In order to warn you and eliminate any plagiarism writing intentions, it is highly recommended not to use the essays in class. In cases you experience difficulties with essay writing in class and for in class use, order original papers with our expert writers. Cheap custom papers can be written from scratch for each customer that entrusts his or her academic success to our writing team. Order your unique assignment from the best custom writing services cheap and fast!