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    Strategy Simulation Game (Tata Interactive System)

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    Please help getting started with a two to three page review of playing the strategy simulation game, the decisions you made and the results of those decisions. Relate your experience to what you learned in the assigned readings below (it doesn't have to be all the assigned reading).

    Required Reading:

    Porter, Michael E., The Five Competitive Forces That Shape Strategy: In HBR's 10 Must Reads on Strategy
    Grant, Robert M. The Resource Based Theory of Competitive Advantage: Implications For Strategy Formulation, California Management Review, Vol. 33, Number 3, Spring 1991.
    Grant, R.M. (2008). Contemporary strategy analysis (6th ed.). Malden, MA: Blackwell. Chapters 3-5. (Optional)

    YouTube - The Five Competitive Forces That Shape Strategy
    YouTube - How to Develop Competitive Advantage
    MBA Reference Guides
    Competitive Advantage
    Porter's Five Forces
    Porter's Generic Strategies

    The following is a highly educational interactive exercise which visually demonstrates the impact of various strategic decisions that you can make, under different kinds of industry characteristics. Play the simulation.

    Tata Interactive Systems. Economics for Managerial Decision Making. Retrieved April 29, 2005, from http://info.umuc.edu/mba/public/TIS/economics/market/economics_market_part1.swf

    NOTE: You may have to copy this link and put it directly in your browser window to reach the simulation.

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    Solution Preview

    Strategy Simulation Game

    Course: Section:

    Table of Contents
    Introduction 2
    Pure Monopoly 2
    Oligopoly 3
    Monopolistic Competition 4
    Perfect Competition 4
    Relation with Porter's Five Force Model 4
    Conclusion 6
    References 7

    Strategy Simulation Game
    This paper explains the use of economics in managerial decision making based on the simulation. It describes decision making process of management in different market structures. The main objective of an organization is to maximize the profits in each type of market structure. Quasar Computers has done extensive research for the development of optical notebook. In the Year 2003, the company launched the first all-optical notebook computer branded as 'Neutron'. Neutron uses energy saving optical technology that established it as the market pioneer (Tata Interactive Systems, n.d.). The following pricing and other decisions are taken for this product in the different market structures.

    Pure Monopoly
    Quasar was the sole seller for the new and unique computer technology that established monopoly market structure for it. In the monopoly, profit maximization occurs at the point where marginal cost and marginal revenue equate to each other (Baumol & Blinder, 2005). In this scenario, Quasar objective was to maximize the profits because of its monopolistic situation caused by the patent rights on all-optical technology valid for three years from 2003. Quasar was able to control the demand of the product and to earn maximum amount of profit by setting the price at $2,550 per unit. This situation enabled Quasar to earn a total amount of profit of $1.29 billion. An increase in the price from this level would have caused a decline in the profit as well as quantity demanded. Similarly, a decrease in the price from this level also would have caused a decline in the profit though the demand was marginally more. The total quantity demanded at this price level was 5.3 million units. Quasar can also control the quantity supplied and its price due to absence of competitors and substitutes. In order to increase the awareness about the product among large corporations, $600 million was spent on advertising with appropriate pricing policy. It optimized profit for Quasar by increasing demand and sales of the products. A price of $2,450 set for the computers produced total profit of $2.74 billion in the year 2004. ...

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