Premium Essay

Strategy Pricing of Quasar

In: Business and Management

Submitted By Sisi01
Words 1889
Pages 8
Strategy Simulation Individual Assignment

Introduction
There are four types of market categories used to classify pricing of product that are as follows: monopolistic competition, monopoly, oligopoly and perfect competition. The type of company and the amount of products being produced determines the market structure for any given company. Each market structure is used to help determine the pricing and non-pricing of the products. The economy in the US is very competitive with numerous of buyers and sellers.
Monopolistic Competition
According to McConnell & Brue (2004), the idea that each market has its own pricing method is known as a monopolistic competition. In this structure is there are several vendors, variety of products and an easily accessible industry. Each company has the ability to determine its own pricing and can make adjustments according to the sales threshold. However, these industries gain a small percentage of the market price and they will adjust their products to meet customer demand in order to remain profitable. The idea is to make the product more attractable than to make a profit. For instance, if Nike creates a fabulous running sneaker then Adidas will try to imitate and create fancier running sneaker to remain competitive and profitable. According to Wikinomics (2010), the industries in this market rely heavily on advertising in order to entice consumer to purchase their products. Another example of a monopolistic industry is the auto industry. The auto industry constantly displays advertisements and commercials in order to get consumers to purchase their products. The company can experience an economic loss or a profit but easily exit the market if they failed in the markets. Moreover, an industry can easily adapt an effective marketing strategy to stay competitive and make it difficult for its competitors to remain profitable.

Similar Documents

Premium Essay

Managerial Decisions

...obtained written permission from the copyright holder for any trademarked material, logos, images from the Internet, or other sources. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature.  Samuel Cole In the present global market, firms compete for market share and the demand from consumers using many strategies and systems. There is a significant difference between price competition and non-price competition. “Price competition can involve discounting the price of a product to increase demand (cost-plus, predatory and limit pricing). Non-price competition focuses on other strategies for increasing market share (advertising and sales promotion policies, and collusion and cartels,” (Margetts, 2010). Quasar Computer is a pioneer in the manufacture of optical laptops and has done extensive research and developed an optical notebook which is almost five times faster than traditional chip-based computers. In this paper, this writer creates a set of pricing and non-pricing strategies designed to enable Quasar to maximize its economic profits in different market structures. This writer also...

Words: 1371 - Pages: 6

Premium Essay

Simulation Game

...Strategy Simulation Game Name: University: Course: Section: Instructor: Date: 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 Introduction 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...

Words: 1550 - Pages: 7

Premium Essay

Strategy Simulation

...Introduction Recently being named the CEO of Quasar Computers, decisions have to be made on operational and business strategies in a wide variety of market conditions. The world’s first all optical notebook computer, the “Neutron” sets the pricing strategy, marketing efforts and revenues. These decision making processes of management have been described in different market structures and the use of economic tools making managerial decisions becomes vital throughout the simulation. Quasar’s product lifecycle is reviewed through the phases of Monopoly, Oligopoly, Monopolistic Competition and finally Perfect Competition. Each decision that is made provides instant results and how this directly affects the product. Monopoly Grant (2010) defines that a monopoly exists when an organization is protected by high barriers to entry whereby it optimizes profits by maximizing its value creation activities to the fullest potential. Quasar has emerged as the only player in the market for the unique all optical notebook, the Quasar. Within this monopolist market structure, maximizing profit tends to occur at the point where marginal cost equals marginal revenue based on the result shown by toggling the demand curve. In the initial scenario, it was presented that Quasar had the patent rights on all-optical technology for three years from the launch year leaving the company faced with the objective of maximizing profit in this monopolistic situation. In order to accomplish this, the price...

Words: 1279 - Pages: 6

Premium Essay

Simulation Analisys

...Simulation Analysis Quasar has pioneered an all-optical notebook. In this paper will be make recommendations so that the management team can make decisions on the operational strategies and business in a wide variety of market conditions (Simulation UOP, 2002). To make appropriate recommendations, should discuss the two options that Quasar has to maintain gains after overcoming the cost of capital. One of the feasible options is to identify markets where competition is not positioned and they don't have a real power. This advantage allows obtaining profits or monopoly profits. Another option would be to keep specific assets which allow establishing competitive advantage in this market. Before considering pricing, you must set an appropriate valuation model. Wrong pricing can lead to the failure of Quasar in its purpose. The development of effective techniques in the prices for your notebook can maximize margins and earnings of the company. Both, the development of strategies and the appropriate pricing, require that they are directed to the objective and mission of the company. The recommendation to the management team of Quasar is to focus their strategies on the penetration of the market. Attractive in order to maximize sales and position itself in the market prices must be. The main objective should be its positioning in the market in the shortest possible time; since the consumer leaves are carried away by the brand recognition in the market. The brand recognition is a...

Words: 904 - Pages: 4

Premium Essay

Economics for Decision Making Market Structure

...In week four, the innovative firm, Quasar, is introduced in the market structures simulation. Quasar is leading the way in the computer industry with the design and manufacturing of an all optical notebook computer. Through the market structures simulation, examples on how decision-making differ among the market structures of monopoly, oligopoly, monopolistic competition, and perfect competition. This simulation and the real-life scenarios detailed within, provide insight and understanding to the intricate decisions that are made in each type of market structure and the impact of those decisions. In the Quasar simulation, the C.E.O. utilized pricing as tool for optimizing profits, and with the input from the board of advisors decided to allocate funds to advertising, technology, and other ventures. (University of Phoenix, 2008) Through the course of this paper, a solution will be created using strategic variables, in order to sustain the economic profits that the firm can earn. This paper will also look to identify pricing and non-pricing strategies that will further facilitate the goal of maintaining economic profits. Finally, this paper will ascertain what kind of innovations will best prolong Quasar’s distinctiveness. In 2003, Quasar launched the world’s first all optical notebook computer branded Neutron. Because of Neutron’s processor, memory use and high-speed optical conductors, Neutron boasts approximately 5 times the speed of existing microchip-based computers. Neutron...

Words: 1167 - Pages: 5

Premium Essay

Strategy Simulation Game: Economics for Managerial Decision Making

...cut and maximize profits in each type of market structure. Based on the information provided in the simulation, Quasar Computers were involved in an extensive research in developing a pioneer product “the Optical Notebook.” In 2003, the company launched the first all-optical notebook computer and branded it the “Neutron”. This product is described as an energy saving optical technology with its rechargeable batteries capable of lasting up to three days; hence, transcending it into a leading technological product in its unique class. With the assistance of senior executives in the company, the decisions on operational and business strategies relative to a variety of market conditions are taken and discussed. Monopoly Quasar emerged as the only player in the market for its unique optical notebook computer; therefore, establishing a monopoly market structure. Within this monopolist market structure, maximizing profit tends to occur at the point where marginal cost equals marginal revenue based on the result shown by toggling the demand curve. In the initial scenario, it was presented that Quasar had the patent rights on all-optical technology for three years from the launch year leaving the company faced with the objective of maximizing profit in this monopolistic situation. In order to accomplish this, the price per unit is set at $2,550.00, as this enables Quasar to control the demand for the product while earning a maximum total profit of $1.29 billion. If for any reason the...

Words: 1205 - Pages: 5

Premium Essay

Forms of Industrial Organization

...firms in an industry; and imperfect (monopolistic) competition, in which there are many competitors, but each produces a slightly unique good. Market Simulation Market structure is not a concept that is stable. In fact, it is not uncommon for a firm to have more than one market structure over time. It is interesting to examine how the dynamics of market structure evolve by adding competition. The market simulation showed a great example of market structure evolution. In the simulation Quasar entered the computer market with cutting edge technology making it a monopoly. Team B then recognized that investing in advertising was profitable for Quasar only if it reduced the price of its computers. In this market there are no changes in the suppliers and we saw an increase in consumers after investing in advertising. The dynamics of the market changed when Orion technologies entered the market, making it an Oligopoly taking over 50% of the market. As a result of the entering competition Quasar had to find a perfect price to offset the competition from Orion technologies....

Words: 1924 - Pages: 8

Premium Essay

Forms of Industrial Organization

...Forms of Industrial Organization Forms of Industrial Organization In today’s business world companies operate within different market structures, which include pure competition, monopoly, monopolistic competition, and oligopoly. These market structures are characteristic descriptors that reflect the strength of buyers and sellers within the market. This writing will examine each of these market structures and identify a company which operates within the market structure. This writing also examines Quasar Computers, a fictitious company in which the authors participated in a software simulation. Throughout the simulation the Quasar evolved through the four market structures. This writing will identify the findings of that evolution through the life cycle of their products and the changes of buyers and sellers over time. Pure Competition In pure competition, a large number of independent sellers of standardized products characterize the market. Information is free flowing and free entry and exit exist. The seller is the price taker and not the price maker (McConnell & Brue). The firm in perfect competition is a structure that demonstrates the market under degrees of completion, given certain conditions. Pure competition is an unlikely scenario and is rare in the real-world; moreover, this market model is significantly important. One can learn from this model, from various markets, such as form agricultural, fish products, from foreign trade, and metals...

Words: 1789 - Pages: 8

Premium Essay

Forms of Industrial Organziation

...difficult it is for firms to enter the industry (McConnell & Brue, 2004). This paper further defines each market structure and provides an example of a company representing each market structure. Monopoly A monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it, and what pricing can be charged for it. A great example of a monopoly was the company Standard Oil, which existed roughly from 1895 to 1911. Standard Oil grew by acquiring its competitors and forming secret agreements with railroad transport to allow them to undercut competitors. Because Standard Oil was able to sell its product cheaper than its competitors, consumers continued to purchase Standard Oil product, forcing the other companies to either go out of business or sell out to Standard Oil while there was still some value in the company. Marketshare soared and Standard Oil gained the ability to set what pricing it wanted on its product because other competitors simply did not exist or did not have the distribution penetration of Standard Oil. In 1909 the government stepped with the Sherman Anti-Trist Act and broke up Standard Oil into several well known companies that still exist today, including Chevron, Amoco, BP, Exxon Conoco and Philips. Oligopoly “An oligopoly is a market dominated by a few large suppliers. The degree...

Words: 1443 - Pages: 6

Premium Essay

Term Paper

...Introduction When a product is produced, the company that produces that particular product falls into one of four categories: pure competition, monopolistic competition, oligopoly, and monopoly. Depending on how many companies are producing a product determines what market structure the company is labeled. Each category determines how a company will use pricing and non-pricing to advance in the economy. The United States economic market is competitive with various buyers and sellers, and each company is constantly looking for ways to be better than its neighbor. The following examples of each category will show different companies and how they use pricing and non-pricing to advance to the top. Pure Competition Monopolistic Competition Monopolistic competition is a “Market situation in which many independent buyers and sellers may exist but competition is limited by specific market conditions” (Answer.Com, 2010). This structure is characterized as a relatively large number of sellers, differentiated products, easy entry and exit from the industry. Each industry is autonomous and determines its own pricing policy; can also decrease prices to increase sales moderately. Industries have a small percentage of the total market and have limited control over market price. It is almost impossible among large firms to conspire and restrict outputs and set prices. Product differentiation include: functional features, materials, design and workmanship, service and conditions...

Words: 941 - Pages: 4

Premium Essay

Eco/561 Ecomonics for Managerial Decision Making

...learner plays the role of the newly appointed Chief Executive Officer of Quasar. As the CEO, the learner will approve decisions on the pricing of Neutron based on the cost and revenue structures for each market structure that Quasar transitions through.   Cycle 1 – 2003 - Monopoly In this cycle, Quasar Computers introduces Neutron, the world's first all-optical portable notebook computer. This cycle is divided into three steps, each of which requires the learner to take a decision that will increase the profits for the firm.   Decision points Step 1 - The price at which Neutron should be introduced to the market is ___2550_____? Step 2 - The advertising budget to be allocated and the price for Neutron is ____2,450___? Step 3 - The amount to be invested on internal processes improvements and the price for Neutron is _2200_____?   Discussion question In spite of being a price-setter (a company that can set its own price), why would a monopoly player choose to pursue cost reduction and demand stimulation strategies? They would pursue a cost reduction and demand stimulation strategy by increasing profit because the ATC would be reduced.   Cycle 2 – 2006 - Oligopoly In this cycle, the learner is faced with another entrant in the optical notebook computer market, Orion Computers, which has captured 50% of the market share. The objective for the learner is to stabilize the market price at which Quasar makes the maximum profit.   Decision points The learner needs to decide...

Words: 646 - Pages: 3

Premium Essay

Forms of Industrial Organization

...Forms of Industrial Organization Forces Influencing Business in the 21st Century MMPBL/501 May 16, 2011 Introduction The goal of any company is to compete and be profitable because in the free market economy all the company needs is demand for their product. The market structures allowed companies to compete and market their products in four different markets pure competition, pure monopoly, monopolistic, and Oligopoly. Some companies like McDonalds have a strong brand and powerful easy to recognize nationally and internationally. McDonalds have found ways to be more efficient keeping their prices low which ensures their profit in the long run. The Electric companies compete, and more than one electric company helps to keep the cost of energy. Other companies compete with exclusive, geographical products like wine, organic foods, shoes, or furniture. The profit in this type of companies is short run, unless they find new ways to cut cost, and become more efficient (Hartman, 2011). Oligopoly Competition Because the number of sellers in an oligopolistic industry is small, the decision of one firm will influence the demand, price, and profit of rivals. The distinguishing uniqueness of an oligopolistic market of rivals is small in number (Southwestern, 2003, p. 259). McDonald’s has no boundaries concerning good food, prices, and fun with more than 32,000 locations in 100 countries around the world (2010-2011, McDonald’s). McDonald introduced the one dollar value...

Words: 1351 - Pages: 6

Premium Essay

Forms of Industrial Organization

...would group them together. The four models are pure monopoly, oligopoly, monopolistic competition, and perfect competition. To begin, these market structures vary according to the number of firms in the structure, product type (similar or different), ease of entry, control over price, and marketing strategy (McConnell, Brue, & Flynn, 2009). For this reason, this discussion will focus on four contemporary firms that exemplify the respective differences in competing structures concluding with a summary of how a conceptualized industry evolves through the four structures during its product life-cycle. Pure Monopoly Structure A pure monopoly company does not always fit the description of a company who has no competition or close substitute. The label of a monopolistic company often follows companies such as Microsoft, even when there are similar products in the market. Microsoft currently holds approximately 90% of market share, whereas competing firms like Macintosh and Linux are close in substitution. Although consumers have the option to purchase systems such as Linux and Macintosh, they seem to choose Microsoft. The article Microsoft's Aggressive New Pricing Strategy, describes an approach that Microsoft took recently in lowering their profit margin to satisfy their quest for new growth opportunity. In this article, Peter Burrows (2009), states that Microsoft’s idea to lower prices on software is a strategic plan to increase profit margins in the future. By lowering...

Words: 1948 - Pages: 8

Premium Essay

Introduction to Data Mining

...Data Mining D t Mi i Module 1 Introduction to Data Mining Dr. Jason T.L. Wang, Professor Department of Computer Science New Jersey Institute of Technology / Data Management: Its Evolution  1960s: – File management and network DBMS  1970s: – Relational DBMS  1980s: 980s – Non-first normal form, extended-relational, OO, deductive databases and application-oriented DBMS pp (spatial, scientific, CAD/CAM, etc.)  1990s - present: p – Data mining, digital library, and Web databases – Cloud databases, data science, and Big Data Data Mining © Jason Wang 2 Data Mining: Its Definition  Data mining (knowledge discovery in databases): ) – Extraction of interesting (non-trivial, implicit, previously unknown and potentially useful) information or patterns from data in large databases  Alternative names: – Knowledge discovery (mining) in databases (KDD), knowledge extraction, data/pattern analysis, analysis data archeology, data dredging archeology dredging, information harvesting, etc. Data Mining © Jason Wang 3 Data Mining: A Multidisciplinary Field  Pattern Recognition  Machine Learning  Databases  St ti ti Statistics  Information Visualization Data Mining © Jason Wang 4 Data to be mined  Text databases  Web databases  Scientific and biological databases  Transactional databases Data Mining © Jason Wang 5 Knowledge to be discovered K l d t b di d  Association (correlation) ...

Words: 687 - Pages: 3

Free Essay

Syllabus

...| Syllabus School of Business ECO/561 Version 7 Economics | Copyright © 2012, 2011, 2010, 2009, 2008 by University of Phoenix. All rights reserved. Course Description This course applies economic concepts to make management decisions. Students employ the concepts of scarce resources and opportunity costs to perform economic analysis. Other topics include supply and demand, profit maximization, market structure, macroeconomic measurement, money, trade, and foreign exchange. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. The discussion question points are now combined with the participation points for each week. You, as the instructor, may create a separate line item for discussion question points if you choose. Please note that some assignment points may have changed. Course Materials Ball, L. M. (2009). Money, banking, and financial markets. New York, NY: Worth Publishers. McConnell...

Words: 5287 - Pages: 22