Table of Contents
Pure Monopoly 2
Monopolistic Competition 4
Perfect Competition 4
Relation with Porter's Five Force Model 4
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 …show more content…
In this situation, the revenue, profit and market share depend on the price strategy of firm as well as that of competitors (McConnell & Brue, 2004). In order to optimize the profits and market share the price for Quasar was set at $1,950 with a market share of 44% that caused an increase in the profits for both the organizations. Total amount of profit for Quasar was $216 million. It stabilized the market where Quasar can earn optimal amount of profit (Tata Interactive Systems, n.d.).
An increase in number of competitors and less interdependence in the pricing policy reduced the market share of Quasar in year 2010. It created monopolistic market structure for the firm due to product differentiation. The brand development budget of $200 million would cause an increase in the production capacity and will provide a combined profit of $1,305 million (Tata Interactive Systems, n.d.). It will also reduce the cost due to economies of scale. The new brand will be effective to face competition from the other products and to increase the market share of Quasar. It will create a non-price competition in the market; the product differentiation will cause an increase in the market share (Stretton, 2000).
"It exists where there are many firms supplying an identical product with no restrictions on entry or exit" (Grant, 2008, p. 69). In year 2013, the market for Neutron has