Economics the Partnership Between Microsoft and Apple

Economics

The Partnership between Microsoft and Apple after Microsoft had faced tough anti-trust scrutiny is an example of monopolistic competition. Microsoft and Apple produce products that are not perfect substitutes of each other. In fact, the products are perceived to be different to all other brands products. Microsoft's products include Microsoft Office and the IE products. Apple on the other hand had MAC operating system (Kawamoto, Heskett & Ricciuti, 1997). Microsoft had to preserve competiveness in the industry to comply with antitrust laws and to ensure that there was no unfair competition in this industry as to limit consumers from making informed choices on what kind of products they should go for and at what prices. Microsoft wanted to develop and ship future versions of its MS Office, internet explorer, and development tools to Macintosh. In the event that Apple did not survive Microsoft would not have kept antitrust charges at bay because Apple was the only alternative to Microsoft Windows and Microsoft Intel (Kawamoto, Heskett & Ricciuti, 1997).

The only barrier to entry into Bulls Eye's market is the fact that it is the only department store that sells discounted clothing, shoes, and household items in the Show Low neighborhood. Otherwise Walmart and Target also sells similar products ad discounted prices but in different geographical location. In fact, the nearest discount retailer is Target that operates approximately 49 miles away in Eager. Bulls Eye basically enjoys market power in this market niche because it is the only retail store that sells clothing, shoes, and household items at discounted prices. Despite the fact that Bulls Eye is a monopoly in this neighbored it still suffers losses. This is not a peculiarity because monopolies also suffer losses. Being a monopoly in this niche, any proprietor would be tempted to increase prices to attain profitability. However, this may have far reaching implications to Bulls Eye. Bulls Eye does not enjoy barriers to entry like economies of scale, capital requirements, quality and cost advantages, product differentiation, control of resources, patents and copyrights, and strategic barriers. Besides, there is no high barrier to entry into this market niche bearing in mind that Bulls Eyes prospective competitors like Target and Walmart also retail the same products that Bulls Eye sells at discounted prices (Slide Share Inc., 2013). One of its competitors would definitely respond to Bulls Eyes dissatisfaction with the prices charged and open up a store in Show Low at prices lower than that charged by the Bulls Eye especially if they have the economies of scale. The ensuing prices wars may make Bulls Eye charge even lower prices. This may interfere with it profitability further. They may want to attain profitability by thinning their workforce in order to reduce the expenses incurred on operational costs. The price wars may eventually lead to closure of Bulls Eye especially when the competition becomes too intense. The resolve by the Bulls Eye to increase the prices of its products may also be advantageous to the retail store and to the local community where it operates incase no other firm enters into this market niche an introduce some element of competition. The profit accrued from price increment can be invested in Research and Development. Research and development may be crucial that only high quality clothing, shoes, and household goods that meet the demands of the local community are sold to them.