Quasar Computers Scenario

Essay by joeadefUniversity, Master'sB+, June 2009

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MonopolyIn 2003 Quasar Computers launched the world's first all-optical notebook computer. The 'Neutron,' is the outcome of groundbreaking efforts. They have done very well as a monopoly for the first 2 years. Raising the advertising budget to $600 million and dropping the price $100 led to a 2004 total profit of $2.74 billion; a 212% increase! Demand has risen and given Quasar a comfortable source of revenue. Following the advice of the management, 2005 was a year of upgrading the production process to reduce waste. The early years for Quasar have been spent maximizing the role as sole provider of the optical technology in laptops (monopoly), as market demand and the cost of production have been dictated by market demand. For specifics, please see the charted information below.

Year 2003Price 2550Total Cost ($bn)12.18Total Revenue ($bn)13.5Total Profit ($bn)1.29Year 2004Price 2450Total Cost ($bn)16.06Total Revenue ($bn)18.8Total Profit ($bn)2.74Year 2005Price 2200Total Cost ($bn)18.53Total Revenue ($bn)20.7Total

Profit ($bn)2.21OligopolyIt appears Quasar Computers had entered into a market where they monopolized the market. Profits were starting to come in and the coming looked very viable until a competing company named Orion entered into the marketplace. Orion sold the same type of products and the competitive pricing struggle began. In order for Quasar to maintain a steady profit in the market they had to review their pricing structure. Quasar reinvented their marketing structure that involved pricing and non-pricing approaches. This stage is where the importance of forecasting your competitions strategies is the difference between survival and failure. Please see the information below that occurred when another competitor entered the marketplace.

Year 2006Scenario DataQuasar Computers Orion TechnologiesPrice ($)1800 1800Market Share (%)50 50Profit ($mn)135 -90Revenue ($mn)1200 1200Monopolistic CompetitionWith the optical notebook industry moving towards monopolistic competition, Quasar needed to differentiate itself from its competitors. They accomplished this by...