Currentmarket condition competitive analysis
Thisparticular analysis encompasses the aspect of the competitiveanalysis of current market conditions of Microsoft Corporationpersonal computers product. Competitive analysis is an appropriateposition that a firm intends so as to be more cost efficient that itscompetitors (Foster& Kaplan, 2011).Current market conditions competitive analysis encompassescommunicating an advanced perceptible value to a particular marketthat its competitors can offer to the customers. This aspect can beachieved through diverse prospects that comprise giving a bestquality product or services, prices decreased and increased in marketefforts. A feasible competitive advantage is usually keeping aconsiderate position over the long-term activities that can helpimproves the firms’ image in the whole market, assessment of thecompany and its future earnings perspective.
MicrosoftCorporation is considered to be an American worldwide technologyorganization that is situated in Washington, USA. The companymanufactures develops, licenses, sells and supports diverse computersoftwares, personal computers, and customers’ electronics.Microsoft Corporation was initiated in 1975 by Bill Gates where thecompany rose to dictate the personal computer and laptops operatingsystem market with Microsoft Windows. The firm designs develop andsell all consumer electronics, several computer softwares, personalcomputers and online services since the company cater to all thecomputer users. Microsoft Corporation is a successful company becauseit corporate culture Microsoft Corporation transition from a computerto a consumer electronics company is unique and extremely hard toduplicate (Fleisher & Bensoussan, 2015). The success of MicrosoftCorporation is majorly focused on Bill Gates incredible leadershipcapabilities, Microsoft Corporation highly skilled employees, and itselastic corporate culture.
Typeof market that personal computers will compete
Themarket type in which the personal computers product competes is theinformation and technology market. Information and technology marketis a market that includes all the types of technology that are usedto store exchange, create, and exploit diverse data in its diverseforms that include business conversations and data (Taplin,2012 pp 32).The company is well established and much profitable because of itswide market that made Microsoft Company the world leading informationtechnology firm by income and the globe biggest technology company bythe total existing assets. Provided with the opportunity of operatingwith our firm’s CEO so as to carry out the analysis of competitivemarket of the probable success of personal computers being theexisting product
Analysisof competitors and customers
Customersare usually the most important aspect in the success of a particularcompany because it is basically customers who usually purchased anyproduced goods and services by a company. Apple Inc. is considered tobe the main competitor to Microsoft Corporation because of itsbiggest interest in the computers and softwares services (Kumar,Jones, Venkatesan, & Leone, 2011 pp 17).Apple Inc. is a worldwide technology based company that is located inAmerica, and its headquarters is in Cupertino, California. Apple Inc.strength over the low-cost softwares deliberated computers aspectsthat they may furthermore be a more emerging, threatening, andsignificant rival to Microsoft Corporation. Microsoft Corporation hasa bigger customer’s base that the Apple Inc. usually contributes tothe revenue increase in the company. As compared to the Apple Inc,the company has approximately 2Million customers worldwide thatcomprise of diverse companies and governments that usually use Applecompany products in their day to day activities.
Analysisof comparative advantages and international trade opportunities
Theaspect of comparative advantage is perhaps the most vital concept ininternational trade theory. Normally, a company is considered to havea comparative advantage in the production of good it the company canproduce goods and services at a lower opportunity cost that anothercompany (Ailin, 2012). According to Microsoft Corporation, the firmarticulates the aspect of comparative advantage through its productof low-cost softwares and personal computers that are affordable todiverse customers in the world. The company has embraced the aspectof international trade opportunities through the provision of bothquality and durable goods and services that have no effect on theusers’ health. Microsoft Corporation has employed diverse,sophisticated strategies in its provision of goods and services so asto ensure that the produced goods such as softwares or computers meetthe customers’ requirements and that the goods results in highproductivity among the users.
Diversefactors that will affect price, supply and demand of personalcomputers
Demand,supply, and prices are factors that usually determine the customers’purchase of personal computers from the company. The factors thatwill affect demand include the income level of the customers becausewhen an individual incomes increases, their capability to buy thegoods increases and this will cause the demand to rise and when theincome falls, there will be a decline in the product demand. Thefactor that usually affects the supply of personal computers is theprices of related goods and input prices. The price of the relatedgoods such as laptops usually influences the supply of the personalcomputers because if the price of the personal computers increasesthen, the company production will go for the substitute productproduction that is a high price. Additionally, diverse factors affectthe prices of the personal computers such as technology because, inthe current business environment, the aspect of technology usuallyplays an effect in the price of a particular commodity (Foster& Kaplan, 2011).If the technology that was used so as to come up with the commodityis high, then the market price for that commodity such as a personalcomputer will be higher because of the market demand and supply.
Accordingto the graph, an increase in price usually leads to an increase indemand.
Fallin demand usually occur because of the lower income or any decreasein products popularity
Factorsthat affect total revenue in relation to price elasticity of demand.
Priceelasticity of demand heightens a measure that assesses therelationship of demand where there is a change in the price ofMicrosoft Inc. products. The Microsoft products would include thevarious versions of Microsoft Windows and Microsoft personalcomputers (Kumaret al. 2011).The products are characterized by a high market share despite intensecompetition from enterprises that seek to displace Windows operatingsystem. The relationship between price elasticity of demand andMicrosoft Inc. revenue, it can be described as follows
Wherethe demand is inelastic, it substantiates that a rise in the price ofthe enterprise products leads to a rise in total revenue. A decreasein the price where price elasticity of demand is inelasticaccentuates that the total revenue decreases. Where the demand iselastic, a fall in the price of Microsoft Inc. accentuates that thetotal revenue of the company products substantively increases. Anincrease in the price where the price elasticity of demand is elasticaccentuates that the total revenue for Microsoft Inc. decreases. Inthe scenario where the demand for Microsoft products is perfectlyinelastic, that is equal to zero, the change in the price of thecompany products accentuate that the revenue change will be the same. To substantively describe the price elasticity of demand along alinear demand curve, the diagrammatic representation can be shown asfollow
Tosubstantively explain the above diagram, the price elasticity ofdemand along the straight line will substantively vary as follows
Athigh prices, the reduction in price will heighten a response thatsignifies elastic price whereas at a lower price it causes totalrevenue to raise hence substantively a demand that is priceinelastic.
Productivityis an important element at Microsoft Inc. because it closely relatesto the work expended by the employees. Productivity describes theratio of what is produced by Microsoft Inc. and what is required toproduce it (Fleisher & Bensoussan, 2015). Labor is by far themost common of the factors that measure productivity because a largeproportion of a product or service is formed by the labor costs. Thefollowing heightens the description of factors that influenceproduction.
The availability of capital. This perspective heightens that the where the ratio of labor capital is higher at Microsoft Inc. the extra the employees are capable of converting a particular sum of time substantively into an output of quantity that is large. Hence, the higher the ratio derived from capital-labor at Microsoft Inc. the greater the ratio of output for every worker at the entity.
The availability of natural resources. When the employees at Microsoft Inc. have at their disposal more natural resources, it becomes easier to convert a particular proportion of time substantively into a large amount of output. Therefore, the perspective accentuates that a higher ratio natural resources about labor leads to an employee becoming more productive and subsequently it translates to more output that is produced in every hour.
Human capital influences the productivity. The perspective is described by the more skills the employees at Microsoft Inc. have, the further they can substantively transform a given amount of time into a large amount of output.
Lastly, technology is also an important factor that influences productivity. The better the overall level of knowledge on the use of technology at Microsoft Inc. the better the skills, the knowledge that has been accumulated on how to transform the inputs into outputs hence a higher level of productivity (Foster & Kaplan, 2011).
Variousmeasures of cost
Thecosts incurred in production at Microsoft Inc. are classified asfixed costs or variable costs and average and marginal costs
Thefixed costs are substantively described as those costs that do notvary with the quantity of products that Microsoft Inc. produces
Thevariable cost, on the other hand, describes the cost that varies withthe quantity of output that the enterprise produces.
Thecombination of the fixed costs and the variable costs is expressed asthe total costs. Hence, the formula is described as follows
TC=TFC + TVC
Plottingthe total variable cost, total cost, and total fixed cost is shown asfollows
MarginalCosts describes the increase in total cost that arises due to theproduction of an extra unit of Microsoft Inc. products (Taplin,2012 pp 32).The marginal cost substantively assists the management to come upwith an answer to the question of how much cost is incurred toproduce an additional unit of output. The Average Cost encapsulatesthe ratio of Microsoft Inc. total cost and the quantity of output theenterprise produces. The average cost, in other words, accentuatesthe cost of each typical unit of the product. The following diagramhighlights the marginal cost and average cost curves
Governmentpublic policy and the externalities and their impacts on cost andmarginal revenue
Externalitiesdescribe effects realized by Microsoft Inc. that is either beneficialor harmful. An external is a cost or benefit that is not reflected inthe price of the product. Externalities that are considered negativeresult into social costs that are usually higher than those actualcosts that Microsoft Inc. pays. The regulations by the governmentattempt to internalize the cost of such an enterprise henceproduction decisions that represent true resource costs. An exampleof such negative externalities is pollution (Fleisher &Bensoussan, 2015).
Theillustration describes a perfectly competitive market where MicrosoftInc. operates. The absence of externalities is represented byequilibrium level of output QE, and it corresponds to theintersection of the market demand and supply curves hencerepresenting an optimal output level. However, in the presence ofnegative externalities, the supply curve for the market is not arepresentative of the true production costs. In this scenario, thesocial cost of Microsoft Inc. is equal to the marginal curves thatare represented by the supply in the market together with themarginal cost of the negative externality (Foster& Kaplan, 2011).
Withthe assumptions that the demand curve remains constant, the marketsocial optimal level of output is presented by QS which correspondsto the intersection of the two curves with the similar price thatconsumer pat to cover the full cost is Ps. The purpose of thepolicies by the government is to reduce the market outputsubstantively from QE to an optimal social level Qs. To accomplishthis goal, the government internalizes the cost of the negativeexternalities of Microsoft Inc. and it’s attained through methodssuch as fines or higher taxes.
Irecommend that Microsoft Corporation should specialize in providingnew products based on the aspect of market segmentation which willembrace its production because specific products will be manufacturedbased on customers demographic factors. Production of new productsbased on the demographic factors such as age and location usuallyprovide a bigger platform that assists the company to increase itsproduction of a particular product such as personal computers becauseof the specialization concept applied by the company. In doing thisaspect, Microsoft Corporation may maximize the profits-makingpotentials and also raise their ultimate presence in the market whichis served by the personal computer product (Taplin,2012 pp 30).Basically, the main aim of a business entity is usually to maximizethe shareholders wealth as well as increasing its share price whichusually makes the company have higher investors who wish to be partof the company. The company can also capitalize on theirprofit-making potentials and also raise their existence in the marketthat is served by the personal computer through a production ofhigh-quality goods and services that meet the customers’ taste andpreferences. Therefore I recommend that the Microsoft Corporationshould ensure that the customers` tastes and preferences are met, andthe produced personal computers meet their ultimate preferences.
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