Managerial Decision Making Research and Analysis

This is your last week of class and a Final Paper. If you will go to the bottom of the Course Material you will find a Course Outline. The Paper information is at the beginning prior to the Week 1 Assignment. Also, both Chapters 11 and 12 is all that is left. You have been a great class and good luck on your Final Paper. I realize that this was a tough class, but most of you did well. I would also like to thank-you for all of your hard-work this term I wish you only the best this year too. Dr. Steve

As we enter into Week 6 as our Last Week with a Final Report to do, I also appreciate all of your hard work thus far.  

In Week 5, we studied non-price competition and price competition in monopolistic competition, oligopolies, and sometimes monopolies. That is monopolies that are forward thinking rather than those that may typically, just do what they always have done, to just get by. Pricing seems to be an issue that most firms struggle with most of their product cycle. If you will remember the 4 stages of the product life cycle from beginning, growth, and acceptance, and finally market decline, most firms will have to change their prices within each of these cycles and add new products as it goes. One industry that it took years for firms to recognize these changes was the airline industry which allowed both Southwest and Jet Blue to dominate the airline industry, while the old standbys thinking they were still in a growth mode, lost a lot of market share.

Most situations here, if a firm goes into direct price retaliation, both firms will lose, so firms decided not to compete on price, but if they do compete, to compete on the other 3 P’s you will learn in marketing: Product, Place and Promotion. Therefore, it is the manager’s job to adjust the non-price variables such that the firm’s other 4 P’s as the superior value proposition to its target customer to gain market share on a competitor. Another variable that a firm might use that is in-cased in the price is its quality or branding (Ashford College follows this theme with using the reputation of its its long established Iowa campus) and service which all of these non-price strategic variables can create profits for the firm and take market share away from a competitor.

 We also will look at Game Theory where Oligopolies in particular will play games not using price, but using non pricing factors to gain edge over its completion which plays out to gaining market share, within the industry. You see this happening very much with Coke and Pepsi as well as in the Pharmaceutical industry. Also, some of these firms may even have barriers of entry where other firms cannot compete due to capital, resources, or some form of scarcity, causing such a firm a more monopoly position when other firms have not the resources or time to enter.

Earlier in the course we defined sustainable competitive advantage (SCA) in terms of the triple-bottom line outcomes chosen to be pursued by the firm’s stakeholders. Profit may be traded off for beneficial social or environmental outcomes. Like we discussed is how firms that are very GREEN oriented like IKEA, Toyota, and Ford etc. are creating huge gains over its competition.

Here are some other important negative influences on firms’ profits are also identified and analyzed, such as market power on the other side of the transaction, low barriers to entry, many substitutes, and rivalry in the marketplace. The resource-based view also considers physical, reputational, organizational, financial, intellectual, and technical resource characteristics that are important for firm profitability and sustainable competitive advantage. 

1. Chapter 11: Non-Price competition ~ This can comprise a strategy of using the other 4 P's of marketing other than price that oligopolies like Pharmaceuticals will use such as promotion, place and product. Watch any dinner time commercial and you will see so many pharmaceutical products for sale. These firms have an inelastic demand curve, many of which are oligopolies which can raise prices higher. However, generic drug companies from India, have been able to use the same chemical base and add some different additive properties to get around any legal entanglements, and produce a similar product with similar properties as the high marked up product for less money. So even pharmaceuticals are no longer protected from patent infringements as they once were. Many other industries are finding the same competition as we go global and firms in low wage countries produce what was produced in the US at higher prices.