Nickole Krause(black)
Brandon Craven
Connie Fugate
Christopher Lemmons

Competitive Structure

(1)Personal computer software systems by definition are part of the consolidated industry. The consolidated industry is an industry made up of a small number of large companies, or in extreme cases, just one company which are in position to determine the industry’s prices. There are a small number of personal computer software systems such as Microsoft, which is a huge competitor for our company’s software system. Customers are always wanting more. They always want the new, big and better things which is why you constantly find technology products being upgraded or updated all the time. Customers will be satisfied with our product and will be willing to pay the switch over costs because of the upgrades this system has compared to Microsoft. Our system takes up less memory space on the hard drive, takes full advantage of the power of the personal computer’s microprocessor, and can run applications much faster than Windows. The software system is also much easier to install and has voice command with a 99.9% accuracy on top of the keyboard and mouse. I believe that the voice command will win our customers over because they are all about that voice command nowadays. To help us analyze the competitive structure in our market of personal computer operating systems we must take a customer-oriented view of the business. We must know what our industry boundaries are in order to stay ahead of the game. We must also know the opportunities available to us and any potential threats. We should incorporate Porter’s Five Forces Model to help us better analyze the competitive structure in our industry.
Some factors that might inhibit adoption of our operating systems would include: Our lack of name recognition compared to Microsoft. Although Microsoft has had its ups and downs over the years, they have got much more right than wrong. They obviously have brand loyal consumers that will be difficult if not impossible to steal. Microsofts’ absolute cost advantage will be a tough set back to tackle. Since we are still a new startup company, Microsoft will have a cost advantage over us, making it difficult for us to produce the product and get in into the consumer market at an affordable price. Switching costs are also something that may inhibit consumers from adopting our systems. If our prices are too high, and it is not worth the customers’ time and energy to switch to our product, they won’t.

(2) I’m not sure what the second part of this project is asking. Are we supposed to come up with our own strategy or one that the book lists?
Yea, I am a bit lost on this question too.
I think really a big chunk of our plan would have to include looking at customers basic needs in computer operating systems. If we can’t produce what the consumer wants than we are dead in the water. So our customers’ needs and expectations come first. We will need to look at cost production. If we cannot produce the product at a reasonable cost, then we won’t be able to sale the product for a lower price than Microsoft can. This is why I think it might be a good idea to team up with another company. It seems like it would be much easier for two smaller companies to compete together against Microsoft. Of course we would need to understand and use to our advantage the global, demographic and social forces to help us better understand the consumer market and help us set our strategic goals.
I’m not sure if any of you watch Shark Tank but one thing I’ve learned is, if you can, don’t fight for market share against a huge corporation like Microsoft. I believe the correct approach, in conjunction or alone, would be a licensing deal. Our small nothing company would get a chunk of cash and possible other benefits and Microsoft would take our software and use all or part of it in their system. Fighting against them would be a mistake; they would crush us like a bug. I have to assume that we are in business to get rich, so I think you should include this idea as though it were something we, as managers, are have meetings about. Another benefit to this deal would be that we can then go on to create other new software programs for the market, sell them and repeat. That’s how companies get rich without sales or distribution, which are VERY expensive.

This is what I have started so far. Please let me know if there is something I can improve or work on so I know what I did wrong. Let me know when you guys can work on it too so I know when to expect to hear back from everyone! Thank you
-Nickole

Chris’ revision below:
Based on my analysis of the market of personal computers and operating systems, it is my determination that Microsoft has a monopoly on the market. This monopoly would make it extremely difficult to gain entrance in. I have included some reasoning behind my investigation proving that Microsoft is a monopoly.
According to an article written on the Progress & Freedom Foundation’s website: http://www.pff.org/issues-pubs/books/000101microsoftremedies.html#_Toc473529487. * Microsoft's share of PC operating system sales has been above 90 percent every year for the last decade. For the last couple of years, its share has been above 95 percent. * Microsoft's operating system monopoly is protected by significant barriers to entry. * Microsoft's market share, combined with the absence of any new entry, means that there are no "realistic commercial alternatives" to Windows.
It is possible for a market to be competitive even if dominated by a single firm — if new entry is easy. But, this is clearly not the case in the market for PC operating systems.
Once a dominant firm, such as Microsoft, becomes established, the economics of software markets make entry difficult. Like many other software markets, the operating system market is characterized by demand-side economies of scale.
Certain challenges arise when dealing with a market highly-saturated with such a large presence. 1. Due to the large percentage of users, software developers are more likely to put their resources into the system interface with the larger number of users. This will make it difficult for competitors just entering the market to establish systems. 2. Even if application programs were available in supporting a new system, the costs would be great due to market demand. (User interface on Microsoft systems.)
A strategy strong enough to dethrone a giant like Microsoft, or even get a piece of the market, would have to be aggregated by the judicial system, in my opinion. The possibility of government funding through enterprise grants as well as the partnership of a well-funded organization may help in the entrance of this market. It comes down to money; Microsoft is so dominant in this market, that it would take a continuous financial injection with long-term financial implications of investing to overtake them.
Management and vision would play a huge role as well. Implementation and support of the vision would be critical to the success of a new presence in this market. A strong and consistent approach with valuable ideas could sway current Microsoft users to begin investing in your company. This vision would be generated through a successful marketing campaign. This campaign would be costly, the goal would be to infiltrate the current market by consistent message and a constant and relentless presence.
In summation, to even have a chance to overtake Microsoft would require: 1. Extreme funding. 2. Long-term investment 3. Lasting Partnership with an established presence. 4. Good management team 5. Visionary message 6. Willingness to invest in ever-changing technology.
Nickole, I would use some of Chris’s facts above, but not all. Too much would put too much focus on Microsoft, but we do need some to justify why we are choosing to market the way we are. I believe that a licensing deal is the way to go in this situation. “If you know you can’t beat them you befriend them.”
Nickole, also, just to help. Page 1 looks good, I like it. I would double space though, it’s hard to read.
Example: After the first page, read it all, then on the 2nd page start by saying that the “managers and engineers are having daily meeting to decide on the direction of this product. In knowing our chief competitor, Microsoft, very well, will be an advantage in future negotiations. (Talk about some key facts that Chris listed that will be strong points to our strategy). Tolbert won’t want to read a ton about Microsoft but he wants to see that we have done our research and are making the decisions with the product based on the facts of our competitor’s market advantage. Write the paper with this in mind, “we are businesspeople wanting to engineer awesome software and get rich using creative ways to get our products to the masses. That doesn’t always mean that our product sits on store shelves with our name on it. Microsoft may decide that that they just need a small part of our program to make them Billions. So they buy ours for millions. We can’t use any of it anymore but we are millionaires and are building the next best thing. That is being smart, sometimes in business you need to take the path of least resistance.
I’m really sure that got your brain grinding. Question #2 asks us to give him a strategy on how to “beat Microsoft”. That’s how we can beat them; by having them buy it and use it.
I think Tolbert will love it. But, still list “other Options” that we are talking about in meetings. You will need some paper filler. Lol. Brandon talked about an idea on page #2.
Nickole, please call me for clarification or just some inspiration…I’m working on homework all evening.

FYI: Save in RTF, that wasn’t done on our first paper. It’s a requirement.