Industry Structure Simulation Game

The interactive Economics and Managerial Decision Making Market Structure Simulation game was based on the company Quasar that has invented an optical notebook computer. This game was design to help teach students the managerial decision making process as it related to the industry structure. As a player of this simulation game, I was the CEO of Quasar that had a team of Vice Presidents spearheading the success of the company and responsible for the losses and failures. This simulation game depicts the key decisions and their corresponding impacts through the market structures such as Monopoly, Oligopoly, Monopolistic competition, and Perfect competition.

Monopoly

The first simulation scenario in the game depicts the key decisions and their corresponding impacts through the market structures during a Monopoly. Since, this company is breaking new grounds in technology it is the sole supplier of this product. In this scenario, I was required to determine the price of the Neutron (brand name of the notebook) at product launch. According to Newman (2013), "The monopolist has pricing power. As a consequence, firm (and thus industry) profitability tend to be high". (p72). Also, in order to make the price determination, I considered Porter's Five Force Model and considered the threat of substitute product such as pre-existing notebook prices as a basis for establishing demand. Also, as a new company, profit is necessary to fulfill investment obligations. Therefore, It was determined that the price of the neutron be in the amount of $2,650.00, which will establish that the marginal revenues exceed marginal cost.

As a result, the simulation informed determined that the price was right, however, based on my decision there was a low demand for the product. Next, I was responsible for determining the advertising budget for the new year. I received advise from the VP of Finance to maintain a low budget. Also, I received advise from the VP of Marketing to maintain an increase the budget. According to Stegmann (2009), "predatory differentiation advertising is used in monopolies to enhance brand awareness" (pg 10). Therefore, the increase in advertising will help buyers to differentiate the Neutron Notebook from other notebooks. I made the determination to increase the budget to 500 million and lower the price to $2450, which was the lowest price point that retained a profit. A strong promotion should be accompanied with a corresponding discount. As a result, Neutron sell did well in the second year. However, production process improvement was needed to continue efficient quality operations.

The third scenario in the monopoly structure was based on determining the best proposal to improve production. Again, I was given advise from Vice president of Finance who proposed increasing the price of the notebook to offset the increasing cost of production inefficiencies and just identify areas of loss. Also, the Vice President of Technology proposed investing in upgraded production process and equipment to ensure cost per unit reductions. I decided to decrease the price of the notebook to $ 2,300 to maintain a consistent demand for the product. As well as, invest in production process improvements that derived profit and that the marginal revenues were more marginal cost. AS a result, I did not make optimal profits because I passed on charges to the customer. Although, I lowered the price the scenario did not take that into account.

Oligopoly

The second simulation scenario in the game depicts the key decisions and their corresponding impacts through the market structures during an Oligopoly. The market has change into an oligopoly because the patent on Neutron's optical