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Simulation Quasar Following an economic analysis on the company Quasar Computers, based in the computer industry to understand pricing strategies and market competitiveness. First, identify the pricing strategies and price in each market structures: monopoly, oligopoly, monopolistic competition and perfect competition. Second, we describe the relationship between technology, research, development and economic efficiency and then justify the investment in these areas to maximize the economic benefits in each of the market structures. Third, identify potential risks and negative consequences of the selected solutions in different markets.
Fourth, explain the global market will face more competition Quasar. And fifth, we discuss trade policy to understand how to keep Quasar Computers in a competitive market. Quasar Computers Quasar The company has pioneered Computers laptops “notebooks” in good condition.
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Quasar is evaluating a number of operational strategies of the business to expand the variety of conditions in each of the markets. Therefore, it has the backing of a dynamic team of senior executives of the company, which we will present below: • Robert Spencer: Vice-President of Marketing He wants “Quasar Computers” is a company focused on marketing their product. Jane Sarandon: Vice-President of Finance She is always looking for ways to reduce costs and increase the attractiveness of the company to shareholders. • David Pinto, Vice President of Technology A brilliant technician, he is the “brains” behind the three-member team that designed the optical equipment. It can be found in the lab working to improve its amazing creation. • Rajat Mehta: Marketing Consultant An independent consultant has been hired by the company to the extent of their knowledge of marketing in various industries.
Pricing Strategies and No Price MonopolyIn 2003, Quasar Computers has launched its first product fully optimal laptop “notebook” marks “Neutron” which is the result of innovative efforts. Processor and memory is a high-speed drivers using optimal high speed, which is almost five times faster than the existing “microchip” based on computers. The team “Neutron” uses energy saving technology and best rechargeable batteries can last up to three days of continuous use. Quasar has a patent on the best equipment which prevents others from copying their technology or access to its production and thus enjoys a monopoly market for the next three years.One of pricing strategies to maximize profit and ensure compliance with the rules of monopoly market MR = MC is the market to set a price.
Therefore, it was determined a price of $ 2. 550. Because you get more profit. Revenue would have a total of 13.
50 and 12. 18 Total Cost of Total Profit for a of 1. 29, yielding 5.
3 units. Then, in a journey to Europe to realize that 20 passengers have only a model “Neutron” and find that despite its exclusive product should invest in advertising. Therefore, you must set an advertising cost for 2004. 400 million advertising budget was increased to $ 600 million in costs for advertising, because it could produce as many units and in turn the gain would be greater.
There would be 7. 1 units with a Total Profit of 2. 53.
Investment in advertising campaign was a success and increased sales, the model “Neutron” began to be used by middle managers and above. The increased demand has not yet been optimized production processes. As for 2005, will focus on streamlining its manufacturing facilities to save costs. Because they have a problem of waste during the production process, which is increasing the cost of production.Therefore, it was determined to invest in improving our production process and machinery to reduce these losses to $ 2,200. Revenue would have a total of 20. 7 and a Total Cost of Total Profit 18.
53 for a of 2. 21, yielding 9. 4 units. As a result this will cause an overall reduction in unit costs and optimize our production capacity. He chose the optimal option for improving production processes and pricing to maximize profits. This is because although the market monopoly is a price setter, the cost can not be passed on to customers.
This due to the downward sloping curve facing the market, if the price down the demand.Therefore, to improve profits to invest in advertising, improve productivity and reduce costs. Oligopoly In 2006, the patent for optimal computer technology has expired. Orion Technologies Technologies has captured 50% of notebook market with a similar product. Therefore, Quasar Computers enters to compete in an oligopoly market. For the first time, Quasar Computers have to fight for market share considering the prices of laptops in view of competition in the market.
It will stabilize the market price to a level that can be obtained optimal gains and differentiate your product to the consumer.In this duopoly revenue, market share and profits depend on absolute prices and price in relation to the competitor. The price differential will determine its market share, revenue and profits. Quasar Technologies and Computers Orion are competing in the market setting prices subject to another. The profitability and survival depend on accurately predicting the reaction of competitors to price changes. The excessive reduction leads to falling prices in the industry, while the high prices resulting in decreased global demand.Therefore, both companies have to reach a stable price for which both gain reasonable profits.
It may not be the optimal solution individually, but to give stability to the market as a whole. Monopolistic Competition Monopolistic competition is a market structure in which many companies sell similar but not identical, because of this, vendors have some degree of control over the prices they charge to sell your product. In this market of monopolistic competition has the following features that distinguish it from other types of competition or market: 1.
There are many vendors (companies) who in turn compete for the same client group. 2. Each company offers a product that is at least somewhat different from others. 3.
There is freedom of entry and exit, firms can enter the market without restriction. 4. Difference in output prices, firms have some leeway to raise or lower prices, rather than a perfectly competitive market.
5. Buyers (which are many) to see the differences in products, so they are willing to pay different prices. In 2010 a competition monopolistic competition Quasar Computers has introduced to the market new models of laptops.
To differentiate the product from the competition Quasar have split $ 200 million for the development of a brand. This mark may be the series “Ceres”. Quasar has found it difficult to enjoy excellent profits because their presence in the market has declined. Introducing a new brand allows the company to increase its presence in the market. Ad spending on the brand “Neutron” will not be because it has reached maturity.
But if you invest in promoting the new “Ceres” this would be more profitable to target new market segments. Perfect CompetitionPerfect competition is a type or model of the market in which there are many sellers and buyers who are willing to sell or buy freely between them are homogeneous products or equal. In this perfectly competitive market characteristics are as follows: 1.
And there are many bidders (sellers) and purchasers (buyers) who are willing to sell or buy a certain product. 2. The products offered in this market are homogeneous or equal. 3. Sellers and buyers have no control over the sale price. 4.
Buyers and sellers are well informed because in this type of market information flows perfectly. . The bidders or sellers do not devote much time to develop a marketing strategy, or its related activities. 6. Sellers and buyers can buy or sell freely between them, so have freedom of movement (O) In 2013 we entered the perfect competition. Quasar realizes that the computer market has matured and portable optical market share and profit margins have stabilized.
In the semi-annual report the total investment was $ 20 million, this resulted in savings of $ 0. 25 per unit. Also a reduction in inventory resulted in $ 0. 10 per unit.Another injection of $ 20 million for the second half allowed Quasar gains were excellent due to cost cutting measures. In a perfect competition scenario cost reduction and the reduction in price or quantity is the area of ?? focus in decision-making.
The cost-cutting measures result in higher profits than competitors in the short term. The maturity of the market in terms of requirements and processes means that all manufacturers offer similar products. Any imperfections in the market either through cost reduction will be replicated by competitors.This will lead to reduced market prices and zero profits for all. Relationship between Technology, Research, Development and Economic Efficiency of Investment and Rationale for Maximizing Economic Benefits Market For economists, technological advances occur in a theoretical period called “very long run”, which can be as short as several months or as long as many years.
In the four market models, pure competition, monopolistic competition, oligopoly and monopoly, the “short run” is the period in which technology and plant and equipment are fixed.In the “long run” the technology is constant, but the firms can change the size of the facilities and are free to enter and exit the industry. In contrast, the “very long run” is a period where technology can change and in which firms can develop and offer completely new products. (McConnell & Brue, 2004) The basis of technological advances is the invention, the discovery of products or processes through the use of imagination, inventive thinking and experimentation and the first proof that it works.
Invention is a process and outcome of the process is also called invention. Inventions are usually based on scientific knowledge and is the product of individuals who work for themselves or members of corporate teams of research and development (R & D). (McConnell & Brue, 2004) Broadcasting is the distribution of innovation through imitation or copy.
To take advantage of new opportunities to smooth income or lower income, both new and existing firms emulate other successful innovations. (McConnell & Brue, 2004) The innovation comes directly from the invention.Although the invention is the discovery and the first test run, innovation is the first successful commercial introduction of a new product, the first use of a new method or creating a new business. There are two types of innovation: product innovation, new and improved products or services and process innovation, new and improved methods of production or distribution. (McConnell & Brue, 2004) Unlike inventions, innovations can not be patented. However, innovation is a big source of competition, because sometimes serves businesses to stay ahead of the competition by making products or processes of competition obsolete.
When it relates to business research and development, the term is used to include direct efforts towards the invention, innovation and diffusion. (McConnell & Brue, 2004) For decades many economists have said that technological advances are external to the economy, a random external force to which the economy adjusts. During different periods of time occurred fruitful advances in scientific knowledge and technology, paving the way for new products (cars and planes) and new production processes (assembly lines). Firms and industries, each at their wn pace, incorporate new technology into their products or processes to maximize and maintain their profits. Then, after making appropriate adjustments, they settled into their positions of long-term equilibrium. Although technological advances have been vitally important to the economy, economists believe that was the root of the independence of the advances in science, which is largely outside the market system.
(McConnell & Brue, 2004) Many modern economists have a different view of technological advances. They see capitalism as the guiding force behind technological advances.In his view, invention, innovation and diffusion occur in response to incentives within the economy, technological advances are internal to capitalism. Specifically, technological advances grow from the intense rivalry between individuals and firms who are motivated to seek and exploit new revenue opportunities or to expand existing opportunities. The rivalry occurs in both existing firms and between new and existing firms. Further, many advances in pure scientific knowledge are motivated in part by the prospect of commercial application and admission to come.In the modern environment, entrepreneurs and other innovators are at the heart of technological advances.
(McConnell & Brue, 2004) A technique that requires only a bit of resource inputs to produce a specific outcome can be highly inefficient in the market. Economic efficiency is achieved by obtaining a particular result with the minimum requirement of scarce resources when both resources and results are measured in dollars and cents. (McConnell & Brue, 2004) When it comes to technological advances is to study the different market structures to make decisions relevant to the business.When we speak of pure or perfect competition, the question is does a perfect competitor has a strong incentive and the ability to undergo research and development? On the positive side, strong competition provides a reason for firms to innovate, firms tend to be less competitive than the monopolistic complacency. If a pure competitor does not cling to the initiative, one or more rivals may introduce a new product or production technique that can cut costs out of the market. When it comes to short-term profit and survive long term, the pure competitor is under continuous pressure to improve products and reduce costs through innovation.In addition, where there are many competing firms, there is less chance that an idea to improve a product or process is overlooked by a single firm.
(McConnell & Brue, 2004) On the negative side, the “rate of return” of research and development can be low or even negative for a pure competitor. Because of its ease of entry, profits and innovation can be to compete for new or existing firms that also produce the new product or adopt the new technology. (McConnell & Brue, 2004) Like pure competitors, monopolistic competitors ueden not be complacent.
But unlike pure competitors, who sell standardized products, monopolistic competitors have an incentive to start strong gain in product innovation. (McConnell & Brue, 2004) Many of the characteristics of oligopoly are conducive to technological advances. First, the large size of the oligopolists allowed to finance major research and development costs associated with the innovation of new and great products or processes. In particular, the typical oligopoly economic gains made in addition to those retained. The undistributed income serves as a major source of low-cost funds for research and development.Further, the existence of barriers to entry oligopolistic gives some certainty that can keep any income they acquire from their innovation.
The pure oligopoly has the means and incentives to innovate. (McConnell & Brue, 2004) There is also a negative side of research and development in the oligopoly. In many cases, incentives to innovate are oligopolistic under which involve above, this because the oligopoly tends to be more accommodating. The oligopolist may reason that does not make much sense to introduce expensive new technology and produce new products when it is, today, winning a large financial gain without them.The oligopoly wants to maximize their profits by fully exploiting its capital assets.
(McConnell & Brue, 2004) In general, pure monopoly has little incentive to start research and development holds great revenue through the barriers that, in theory, are complete. The only incentive for the monopolist to exercise pure research and development is defensive: to reduce the risk that a new product or process destroy their monopoly. If this product is free to discover and be discovered, the monopolist has the incentive to find it.In general, economists agree that the pure monopoly market structure is less conducive to innovation. (McConnell & Brue, 2004) Dozens of studies have attempted to provide industry with the relationship between market structure and technological advances. Other things equal, the optimal market structure for technological progress seems to be an industry where there is a great mix of oligopolistic firms with several smaller firms, highly innovative.
(McConnell & Brue, 2004) Technological advances contribute significantly to economic efficiency.New and improved products and processes enable society to produce more results, like a mix of higher-value results. (McConnell & Brue, 2004) Risk Analysis Some of the risks you might face Quasar in selected alternatives in each of the markets is that either the investment in advertising and marketing, design and manufacture a new product to improve its quality, invest in production costs to modify the facilities and meet the demand or reduce disbursements costs represent new money to sustain and expand the product market.Therefore, the selected amount of money for advertising or production costs with the intention of increasing the demand and supply of the product depending on the structure of the market, must take into account the fixed costs for a profit greater or less fixed cost the cost of loss (loss mitigation). As customer demand increases and demand increases and supply the product, the company must take steps to respond to the request, either by expanding or modifying existing capacity to meet customer expectations and the market. Major Global Market Competition to QuasarQuasar has identified Sweden as one of the countries will face increased competition in the global market because it is a country that stands out for its level of innovation. Sweden is the country ranks first in the use of telecommunications technology and networks, mobile phones and computers.
This report says “Connectivity Scorecard” which measures the countries from dozens of indicators based on their technological capabilities and use of communications technology. (Laneros. com, 2011) Technology is an important factor in considering the development and competitive ability of a country.Quasar Trade Policy to Maintain Competitiveness Trade policies that protect the industries of computers, will vary depending on the type of market. The government creates tariffs, quotas, tariffs, taxes, legal barriers, etc.. as a way to protect themselves and protect their industries from competition in the market.
In addition to grant patents and licenses as a way of protecting the inventor and industry competitive position in a market. These will vary from country to country because each country will protect its industry with its trade policies.For Quasar can position and stay in this highly competitive computer industry, it will not be easy, because you have to be carried away by the market rate and what are their trade policies. Therefore have to find ways that your product is innovative, attractive and high quality.
In addition to product features, functions, technology, warranty and price are key factors for achieving success. It will also be of utmost importance so as to markets and promotes the product as this will attract the consumer to buy the product and can stay in the coming years in the computer industry.Conclusion In conclusion, based on the scenario Quasar Computers and surf the Web, you can determine which strategic decisions about pricing, maximizing profits and maintain market competitiveness varies with market structure, either monopoly, oligopoly, perfect competition or monopolistic competition. This is because there are different factors that influence supply and demand for the product. Know and understand the economic variables and how they relate to each other is critical and essential to maintain profitability as market structure to which it belongs.