Profit Retention Within Various Market Structures

Since 2003, Quasar Computers has been operating as a monopoly; insulated from competition. As our product line matures and others enter the market Quasar should pursue the following actions to prolong our profitability.

Prolonging our Products Profitability

Proactive Use of the Legal System

According to the simulation, our product patents are about to expire and we expect Orion Technology to launch a produce that will directly compete with ours. Team A views this moving towards an oligopoly market structure. Faced with this new competition, Quasar should take legal action to protect its assets. This should include protecting intellectual property rights through

non-competition agreements with employees, patent extensions, additional product patents, and protecting our existing copyrights and trademarks. Use of the legal system in this manner may it more difficult for competitors to enter the market, thereby preserving profits.

Differentiation of Products

Faced with increased competition, Quasar can prolong profitability through

product differentiation. We should position our products as being superior to any competitor. We invented the product and have more experience and expertise with it. We should actively market our superior expertise in our consumer advertising and within each individual sale. This constant message that we have superior expertise will send a clear message to customers and make it more difficult for new competitors to sell their products. For new market arrivals, the company should devote resources to developing anti-competitive tools for our sales teams so they can consistently defend our market share from our competition.

Use of purchasing power

Currently, Quasar is a monopoly and produces more than any other competitor in the market. New competition will have to take market share from us. Because we produce more product than new competitors, we purchase more raw materials than our competitors. It is important that we use the current economies of scale to reduce costs by purchasing raw materials in large quantities. Focusing on getting the lowest price for our raw materials will help preserve profits for this product.

Elimination of waste

Quasar should also attempt to eliminate the amount of waste generated in the production processes through

cost efficient equipment upgrades, process improvements and a recycling program

Reacting to Competitors Price and Production

In the face of new competition, Quasar should create the necessary infrastructure to monitor and measure competitors price and output. Such an infrastructure should consist of policies and procedures that