The analysis of a corporation’s competitive analysis is of utmost importance, bearing in mind that strategic decisions should be aimed at enhancing competitive advantage. The competitive market analysis process compares the organization with similar organizations in the market, reveals its competitive position, and recommends ways of enhancing competitive advantage.
Microsoft Corp. has been ranked position 11 among the 2015 IndustryWeek 50 Best U.S. Manufacturers. The organization operates in the computers and other electronic products industry (IndustryWeek, 2016). This analysis present Microsoft’s competitive market situation.
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Type of market in which the Xbox will compete
The Xbox One S is a gaming console that was released in August 2016, a smaller version of other Xbox gaming consoles that have been introduced by the company. It has an internal storage size of up to 2 TB, and its HD experience is superior to those provided by others in the market. One of the most visible features of the Xbox One S is that it has the 4k Ultra HD Blu-ray, which provides clear visual content.
Assignment Help analysed that the product contains a wireless controller that will enhance the users’ gaming experience as they will not be limited by cords and wires. The Xbox is a gaming device, and as a result, it will compete in the gaming market. The gaming market is an emerging market, and technology companies have introduced gaming consoles that will appeal to the market.
Competitive Products
Other companies that have introduced their products in the gaming market are Apple, Google, and Sony. The Apple TV, Google TV, and Sony PS4. However, the Xbox One S has competitive advantage over the other products as it contains advanced features that are not provided by the products provided by its competitors.
Comparative advantages and international trade opportunities
Microsoft’s comparative advantage lies in its advanced technology that enables it to produce highly innovative products at lower prices. Levchenko and Zhang (2016) define comparative advantage as the ability to produce a product at a lower marginal cost than other producers. The presence of advanced technology and highly skilled workers enables the firm to manufacture the Xbox One S at lower prices.
The company can present highly-innovative products at lower prices. The Xbox one was advertised as an all-in-one entertainment system, as it contains features associated with digital media players. Other companies have been unable to produce gaming consoles that contain superior features at pocket-friendly prices.
Microsoft can utilize international trade opportunities associated with cheaper labor and raw materials. Some of the product components are sourced from China, which sells them at lower prices compared to U.S. firms that manufacture such components. Additionally, the availability of subsidized labor from developing countries can be exploited as a means of reducing production costs.
Factors that will affect demand, supply, and prices of Xbox
The demand of a product will be affected by the extent to which it satisfies a need in the market, the extent to which it solves a void in the market, and the provision of other better products by competitors. The Xbox One S will be affected by the need for such a product in the market.
Present Situation
Currently, the gaming market has been growing, as users are on the look-out for gaming products that will present them with a superior user experience. Currently, the gaming consoles that have been produces by Microsoft and other technology organizations have failed in providing user satisfaction.
Inferior Visuals
In particular, consumers have complained about the inferior visuals provided by the existing gaming consoles. As a way of solving the customers’ concerns, the Xbox One S has introduced 4K resolution visuals, which will be effective in providing high-quality visuals. Supply is affected by changes in the costs of production and changes in technology. In manufacturing companies, the costs associated with the production of various items determines the volume of productions.
Cost of Production
When the costs of productions increase, the number of products reduces. On the other hand, a reduction in the costs of production results in an increase in supply of the product. Xbox One S will be affected by changes in the costs of production, particularly costs associated with the product components and changes in the wages paid to workers. The company can outsource its production functions to other countries where the materials are readily available, therefore reducing transportation costs.
Shift in Manufacturing Base
A number of manufacturing firms have shifted their production facilities to Asian countries such as China and India in order to reduce the costs of the materials. Labor is also a factor of production, and changes in employment laws regarding the minimum wage and working conditions could affect the cost of labor. If the government increases minimum wage, then the firm will be forced to pay higher salaries to its workers, a factor that will increase the costs of production. There will be a reduction in the quantities of Xbox One S that will be available in the market as the firm attempts to reduce costs of production.
Factors Affecting The Product
A product is affected by both internal and external factors. The internal factors include the costs of production, while the external factors include the demand for the product, the prices for similar products in the market, and competition. The price for the Xbox One S will be affected by its demand. Currently, the product is offered at a price of $299.
Competitive Products
In contrast, Apple TV is priced at $149, and the Sony OS4 and Google TV are available at much lower prices. This indicates that the pricing of the product will also be based on its marketing strategy, which will aim at taking advantage of the first market entry position to charge higher prices for products before a competitor can release a similar product. Government regulations affecting taxes, wages, environmental compliance, and corporate sustainability could also affect the pricing of the product if the costs of production are increased or reduced.
