Simulation Analysis - Essay Example

Since Quasar is the sole participant in the marketplace they have just created for themselves a monopoly market structure. The first three rounds of the simulation discuss strategic decision during the first three years of operation. In 2003 the company needs to determine the optimum price for the product. As the CEO of the company I have a team of executive that is going to help me along in the process. My team is composed of four members in three functional areas: marketing, finance, technology, and outside marketing consultant.

Keeping the lines of communication open among a team of businesspeople is essential in order to manage an operation in an efficient manner (Kotler, 2002). The decision I made was to set the price of the Neutron computer at $2,550. At this price the volume of sales was 5.3 million units and the net profit of the company is $1.29 billion. If I increase the price from the optimum price point volume decreases as well as profits. On the hand if I decrease the price from my optimum price point of $2,550 volume increases a bit but profit go down.

My primary objective was to find the best mix that optimizes the profitability of the company. The second round of the simulation takes me to year 2004. The company I’m running is a monopoly player. In a monopoly the firm has control price, but it is not immune to the law of supply and demand (Varian, 2003). The demand curve is downward sloping which means at higher prices the demand of the product decreases. Two of my executive Robert (marketing vice-president) and Janet (Finance vice-president) have different perspective on how to achieve greater growth.

The issue was the marketing budget and whether an increase or decrease from the 2003 $400 million budget would affect the demand for the product. Janet suggested a low figure of $100- 200 million in marketing expenses. It seemed as if she was thinking like an accountant or