Market Model Patterns of Change Sir/Madam, Answers

Market Model Patterns of Change

Sir/Madam, answers attachment page. But write a APA format, citing quotations a APA format. answers fits 3 pages.

The operating system software industry that was dominated by Microsoft was a monopoly till quite some years back when other players came into the market and disrupted the monopoly. These players include Linux with their various operating system software such as Redhat and Ubuntu and Apple with their Macintosh operating system.

The general pattern of change in this particular market model was that of monopoly to oligopoly. There are several short-run and long-run behaviors in the monopoly and oligopoly market models. In monopoly, there is only one market player who has full control over the market. However, in oligopoly, there are several market players who hold different market shares depending on their marketing strategies, brand awareness, product specification, product diversification, etc. Soberman & Gatignon, 2005()

The short-run behavior in a change from monopoly to oligopoly is exponential in nature. This is where the change keeps changing. As the new companies were entering in the industry, they were taking the market share from Microsoft slowly with the percentage growth increasing over time.

The long-run behavior of the change from monopoly to oligopoly in this market was that it grows in waves that are driven by certain factors such as the release of new products, new marketing campaigns, security improvements, etc. These waves shift the market share toward the company instituting the change but when another company retaliates with another measure, the market share again tips towards the other company.

Transaction costs are the costs which are incurred when a new market player or an old one is participating in the particular market Brooks, 1995.

Transaction costs in this particular industry could come from research and bargaining. Research costs come about as the company is trying to find information on what is missing in the market and how that gap can be filled. Bargaining and those that arise when the parties involved in a transaction need to come with an acceptable agreement.

Another transaction cost is the policy and policy enforcement cost where the market players will want to institute policies to enable fair competition in the market as the player who previously had monopoly will resist the change at first. Transaction costs will also arise from patenting as the new market players may need to patent their product to prevent the player who had the monopoly from making their product similar to that from the new companies.

These transaction costs could lead to higher expenses from the company joining the market and this can be managed by the company raising enough capital to handle these costs. The company needs to run an aggressive marketing campaign in order to be able to handle these transaction costs and at the same time gain a strong market share.

Looking at the revenue data for Microsoft, the data can be modified in various ways to make it useable in decision making by the manager of the company that wishes to join the industry. First, looking at the sales volumes, these can be looked at to be as with the company having 100% market share. Therefore as the company designs its cash flow expectations and sales volumes expectations, they can use this data to find out the expected growth in sales as pertains to the exponential growth curve speculated for this pattern of market model change.

The degree of competitiveness of this industry is affected by several factors. First is the issue of pricing. The software industry is greatly influenced by pricing and in most circumstances it is the company with the lowest price that wins since it is a highly competitive industry and many of their customers are looking to make huge savings in terms of costs and expenses Chintagunta, 1996()