Strategy and Value Creations in traditional industries.
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Please help with an analysis of the simulation (link provided below). Give specific details of the results obtained and alternatives you looked at while playing the simulation. Discuss why one decision is more appropriate than others.
Link to simulation: http://info.umuc.edu/mba/public/TIS/economics/market/economics_market_part1.swf
Note: In my analysis I want to include various alternatives. Try alternatives. In your response please look at other choices and try to explain the difference in results. Please cover the following questions in your response:
1.Describe the competitive advantage/unique resources Quasar Computers possesses in the monopoly market scenario. To this end, describe why intellectual property rights are important in a capitalistic market system. How might a firm hedge against an expiring patent so they can maintain some sort of competitive advantage into the future?
2.In an oligopoly, firms try to avoid competing on prices, and probably try to avoid competing in other aspects to the marketing mix (products, promotion, placing). Is this possible in this market?
3.In a monopoly scenario, the firm does not need to worry about generic strategies. However, as firms move through successively more competitive market structures, they need to consider which type of generic strategy to implement. After referring to Porter's Generic Strategies, please comment on which strategy you recommend depending on the oligopoly, monopolistic competition, and perfect competition scenarios. Please justify.
4.Consider the perfect competition scenario. Based upon Porter's Five Forces, rate each of the forces as high-medium-low and justify your rankings. In a perfect competition scenario, is the computer industry attractive? Why, or why not?
Please provide response in about 4-5 pages.
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Solution Summary
This response provide guidelines for analyzing the strategy of Quasar Computers based on the simulation. Firm's competitive challenges in the scenario of monopoly, oligopoly, and perfect competitive are discussed.
Solution Preview
This response provides insight into the market structure, porter's five force model, and porter's generic strategy in context of Quasar computers which introduced first optical notebook computers in the world. Additionally, it is analysed that how Quasar use differential strategy in different situation. Apart from this, it shows the importance of intellectual property in capitalism economy.
1. Monopoly:
Monopoly represents the situation of the market where there is only single supplier of a particular product. This situation occurs when the supplier of goods enjoy the uniqueness in his product or has the monopoly over resources and obtained patent right of the product (Baldwin and Scott, 2013). Quasar computers developed a optical notebook named 'Neutron' which is very new and unique in the world. Quasar obtained a patent right on this optical computer that provided it with monopoly power in the market. The uniqueness of this computer is the energy saving optical technology and its rechargeable batteries which can live up to three days, even if it is used continuously. From above graph, it can be understood that if the price of the optical computer is $2550, Quasar can earn maximum profit that is $1.29bn.
Capitalistic market system refers to the system of economy where the private owner or individual can own the capital and production inputs or factors. In this system the goods or services are produced on the basis of the demand and supply factors. Government does not intervene to decide the price, production, promotion, and other important decisions of the company (Economic system, 2016). Intellectual property rights play crucial role in this system to generate more revenue for the company. Patent rights provide Quasar to exploit the market for three years continuously without any risk of competitors. Because it hamper the healthy competition against Quasar in the market (Free foundation for economic education, 2011).
Quasar has patent on the optical computer for three year only so it can exploit the market situation (Monopoly) by using the ...
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