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Microsoft Corporation and Monopolistic Strategies Case Study

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Updated: Jul 21st, 2020

Introduction

In the scope of its definition, a monopolist firm is a unit that solely supplies a product or a service in the market. With regards this definition, a firm that is dominant in a properly developed market may exhibit monopolistic tendencies depending on its authority in such market. In contrast with the fallacious arguments by different groups consisting of software market critics and lawyers from South Korea, Europe and the US Justice Department, it is not palpable that a firm which is a market leader is undoubtedly a monopolist establishment. In the ideal, a monopolist firm has the potential and capital base to fully exploit the market through lowering quality, cost of inputs, and increasing the prices for its products in order to attract higher profits than other firms that operate in a perfectly competitive market.

Discussion

Reflectively, several firms in the software industry have same monopolistic power as is the case of Microsoft Corporation. However, Microsoft Corporation has unique operational strategies which cannot be equated to the ideals of monopolistic strategies that other firms in the same industry use. For instance, the company has consistently increased its production and diversification of products in the market instead of reducing output with intent of increasing prices. A critical review of the software market indicates that Microsoft’s products are readily and easily available as compared to those of its numerous competitors.

Notwithstanding, Microsoft Corporation has consistently improved the quality, operation and usability of its operating systems over the last three decades. The Windows OS has been developed from the simple Windows 1998 to the current powerful Windows 2008. From this strategy, it is apparent that the company’s commitment to quality assurance is above its competitors. Besides, the company has been in the forefront in technological innovation to constantly improve the value of its products at the same prices of the previous versions. Unlike a monopolistic firm that would manipulate the quality and prices for its products with intent of increasing its returns, Microsoft Corporation did not adopt this strategy. Instead, the company has maintained the prices for its products despite series of improvements and quality addition over the years.

The findings of analysis of the software industry indicate that Microsoft Corporation’s products are the most affordable. Despite having the opportunity to use its monopoly power to manipulate prices and quality of its products to increase the profits, Microsoft Corporation concentrated on product improvement through innovations.

Over the years, Microsoft Corporation has managed to dominate the software market despite competition. The dominance can be attributed to quality and affordability of its products rather than the monopolistic power. As a result, the company has heavily benefited from the lack of competition and economies of scale since the company is able to sell many units of its products within a short period of time. The main challenger of the Microsoft Corporation’s products is the Apple Company which controls less than 20% of the software market.

Conclusion

Since Microsoft Corporation operates in a dynamic industry that experiences constant technological innovations, it has channeled heavy capital investment in the product research and development. The economies of scale earned as a result of sales of many units of its products have made the capital intensive innovation and product improvement strategies possible for the Microsoft Corporation. Basically, it is apparent that the strategies and scope of operations at the Microsoft Corporation are not monopolistic. The company has the interest of the society and is ethical in its operational strategies.

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IvyPanda. (2020, July 21). Microsoft Corporation and Monopolistic Strategies. Retrieved from https://ivypanda.com/essays/microsoft-corporation-and-monopolistic-strategies/

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IvyPanda. "Microsoft Corporation and Monopolistic Strategies." July 21, 2020. https://ivypanda.com/essays/microsoft-corporation-and-monopolistic-strategies/.

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IvyPanda. 2020. "Microsoft Corporation and Monopolistic Strategies." July 21, 2020. https://ivypanda.com/essays/microsoft-corporation-and-monopolistic-strategies/.

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IvyPanda. (2020) 'Microsoft Corporation and Monopolistic Strategies'. 21 July.

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