Monopolistic Market
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Quasar Evolvement into a Monopolistic Market Structure
As time progressed, in 2010 Quasar evolved into a monopolistic competition market based on the increase of competitors entering their market. “With multiple players offering differential products in the market, Quasar has found its market share depleted and difficult to sustain the margins that it previously enjoyed” (Market Structures Simulation, 2008). Therefore, Quasar modified their sales approach by differentiating their image, and introducing their new brand product. Quasar decided spending their budget on the old brand, “Neutron” would not give the company a high return; therefore, Quasar dedicated their budget to advertising the new brand called Ceres. This will give Quasar the opportunity to introduce its own variant in the market. The demand for the new brand by consumers eventually will increase Quasar’s market share and help sustain margins/profits for the company. Quasar decided to invest 200 million into Ceres. This investment returned the highest profit of 785 million as compared to 520 million that would have been achieved if invested in Neutron alone. Clearly, investing in Ceres was the correct decision. Investing in Quasar by using their budget for advertisement in a monopolistic market may be a great approach, because it has been determined that “strategic investment in oligopolistic industries is supported by our finding that these industries experience less entry and more exit than competitive or monopolisitc industries” (Akdogu & MacKay, 2008). Therefore, a monopolistic market may be more sustainable for investments in their product brand rather than in another market structure. Thus, Quasar transgressed into a Pure Competition market.
Reference:
Akdogu, E. & MacKay, P. (June, 2008). Investment and Competition. Journal of
Financial and Quantitative Analysis, Vol. 43, No.2, 299-330. Retrieved January 31, 2009 from Ebscohost Premiere Database.
University of Phoenix....
As time progressed, in 2010 Quasar evolved into a monopolistic competition market based on the increase of competitors entering their market. “With multiple players offering differential products in the market, Quasar has found its market share depleted and difficult to sustain the margins that it previously enjoyed” (Market Structures Simulation, 2008). Therefore, Quasar modified their sales approach by differentiating their image, and introducing their new brand product. Quasar decided spending their budget on the old brand, “Neutron” would not give the company a high return; therefore, Quasar dedicated their budget to advertising the new brand called Ceres. This will give Quasar the opportunity to introduce its own variant in the market. The demand for the new brand by consumers eventually will increase Quasar’s market share and help sustain margins/profits for the company. Quasar decided to invest 200 million into Ceres. This investment returned the highest profit of 785 million as compared to 520 million that would have been achieved if invested in Neutron alone. Clearly, investing in Ceres was the correct decision. Investing in Quasar by using their budget for advertisement in a monopolistic market may be a great approach, because it has been determined that “strategic investment in oligopolistic industries is supported by our finding that these industries experience less entry and more exit than competitive or monopolisitc industries” (Akdogu & MacKay, 2008). Therefore, a monopolistic market may be more sustainable for investments in their product brand rather than in another market structure. Thus, Quasar transgressed into a Pure Competition market.
Reference:
Akdogu, E. & MacKay, P. (June, 2008). Investment and Competition. Journal of
Financial and Quantitative Analysis, Vol. 43, No.2, 299-330. Retrieved January 31, 2009 from Ebscohost Premiere Database.
University of Phoenix....