Microsoft is the leading company specialized in computing devices and software. Innovation and unique entrepreneur ideas are the core of this business. At Microsoft, science and technology can be divided into three levels of hierarchy. First, high and new technologies are used to upgrade the level of traditional technologies; most of the innovation relies on this kind of technology. Second, high-tech is the hope of future prosperity. Hence high-tech does not receive full financial support but adequate funds. It would be helpful if this method of communication broke down stereotypical thinking patterns if it put innovation into a new context so old methods of thinking could not be used and private issues could not surface. For a decade, Microsoft obtains a monopolistic position in the market based on brand image, price, and technological innovations proposed to a wide customer base.
Monopoly is defined as: “market condition in which there is only one seller of a certain commodity; by virtue of the long-run control oversupply, such a seller is able to exert nearly total control over prices” (Bank 77). Although bigness is not illegal, it is associated with monopoly power. Yet bigness can lead to keen competition and economic efficiency. Horizontal and vertical integration produce economies of scale, the former often resulting in broader national and international markets, the latter in the coordination of various levels of marketing and manufacturing activities. Whereas big firms may be efficient and enjoy market power and advantage, they also have competitors and competition (Mckenzie 32). A major concern of government is whether mass distributors or mass producers now have sufficient power to act in a manner that endangers or tends to threaten our social and economic values — especially freedom of consumer choice, freedom of business entry, and competition. Market power is a necessary concomitant of mass markets, large-scale organization, and increasing economic dependence. Such power should be condemned when it lessens competition substantially or restrains trade. Although it is true that the existence of power is incompatible with perfect competition, to view market power in terms of perfect competition is misleading.
The economic situation in America and Europe is marked by low inflation rates and high income per capita. Thus, in Asia and Africa liberalization and a high level of investments can be considered as opportunities for the company to enter this country. American and Europe have a higher standard of living. For a company like Microsoft, there are also the necessities of making long-run capital commitments, meeting the requirements of joint ventures with nationals, and the imposition of special income taxes and import duties on necessities, as well as differences in social legislation, location considerations, protection of home products, governmental attitudes and control, laws affecting labels and standards, transportation and communications problems, and the risks of inflation, currency devaluation, and expropriation. All these create many additional uncertainties for those encountered in national marketing. The market share of Microsoft is 90% of the OS market. The revenue of Microsoft is about 58.437 billion (2009), its net income is 14.569 billion (2009) (Microsoft Home Page 2009).
Technological factors involve the Internet access and development of telecommunication infrastructure, new methods of doing business, and information availability. Such factors as continued economic growth, increased disposable income, vigorous domestic and foreign competition, accelerating technology, automation, population decentralization, expansion, and innovation will spur the appearance of this new marketing form. The application of computer technology and the use of new analytical techniques have added greatly to the efficacy of planning activities. The decision as to whether or not to enter this stage and pursue rapid growth may be influenced by the business leader wanting to make more money, desiring to lead a large business, or perhaps for the status. Alternatively, it could be driven by the demands of the customers who may want to put more trade with the business and who might take their trade elsewhere if the business cannot respond. As such, the Internet and PCs industry enables Microsoft to pursue a low-price strategy while maintaining profitability (Mckenzie 32). There are industries in which this is already proving possible: indeed, in some sectors, we are starting to see wholesale migration from physically-based methods of doing business to virtual methods. The reasons for such a rapid increase are obvious: the target market of the affluent young (often men) fits well with the demographics of the Internet; regular surfers on the Internet are highly likely also to hold stocks and shares. Finally, the speed with which the transaction can be completed is far quicker than that using the traditional methods. This creates new unlimited opportunities for Microsoft and its new products. The monopolistic position is created by such unique products as Windows, Internet Explorer, and Opera Software (Bank 29).
The main factors which help Microsoft to contain the monopolistic position are a strong brand image and expert system, excellent website, and customer support. Resource-based philosophy and innovations create new opportunities for market development and brand recognition. Customers’ loyalty can be achieved through the people who are employed by Microsoft. Creativity becomes the responsibility of R&D, which is staffed by specialists in visualizing and realizing marginal or major product changes. Microsoft makes an emphasis on people. To become more intrapreneurial, Microsoft teaches its managers how to promote organizational commitment and motivate employees to achieve the organization’s goals while at the same time giving them the freedom to be creative. In a sense, the culture breaks down the barriers between work and play so that employees gain an intrinsic reward (in the form of pleasure from actually doing work) rather than just extrinsic rewards (in the form of pay) (Microsoft Home Page 2008). Since markets are imperfect, businesses possess varying degrees of market power. Marketing strategies and innovation are, in fact, designed to build market power, albeit short-lived. Market power is evidenced in the share of the market, market leadership, and brand preference. The actual proof of such power, and intended use, is not a straightforward or clear-cut situation. Prices may also be established through research. Various prices may be tested in limited areas and the “best” price selected. Research of customers’ opinions and reactions to products is often sought as a basis for the price. Sometimes products are tailored to meet predetermined price points, and product quality is changed so that prices can be maintained and product-line requirements and distributors’ price points met. Markets are characterized in different ways. They focus on the structure and functioning of markets and pay particular attention to economic concentration and power. But market dimensions extend beyond economic boundaries, for markets are also social institutions. Economic models, although helpful, investigate “economic men” often from the point of view of the total economy, and not the individual. Thus they do not suffice for the study of market dimensions pertinent to behavioral scientists (Mckenzie 32).
In sum, the monopolistic position of Microsoft is explained by favorable and effective marketing strategies and really innovative solutions in product development. Such investigations may be more appropriate than economic models in aiding the understanding of the marketing of intangibles and non-commodity items (such as services), which will become increasingly significant in the coming decade.
Works Cited
Microsoft Home Page. 2008. Web.
Bank, D. Microsoft- Monopoly. Econ, 2005.
Mckenzie, R. B. Monopoly: A Game Economists Love to Play-Badly! Southern Economic Journal, 70 (2004), 32.
