All entries for Thursday 22 October 2009
October 22, 2009
Your business is bringing out a new product which adds on to an existing product, that you already produce. You are keen to ensure that the take up of the add-on product is high, but your manager needs to be assured that you are aware and mindful of anticompetitive practices. Set out the arguments you would give to your manager concerning what the business can and cannot do in this context.
Competition and antitrust laws have increased in importance in most economies and could provoke several limitations in the company strategy. In order to give an opinion about this issue is important to consider the laws that governed in the country's development activity and the environment in which it operates. International agreements like GATT let that the governments of different countries will be coordinated.
Some articles of the law has the intention of void agreements which enable monopolistic behaviours although there are several exception when the target of the initiatives are focused in aspect like enhance efficiency or promote the innovation.
To determinate if the new product can fall in anticompetitive practices is important to study external factors related with the impact in the market, suppliers, consumers and competitors. Also the internal factors as the profit can be a very influence factor if with the launch of the new product the company can increase its profit due to raise prices inordinately.
In the other hand any company has many responsibilities with its stakeholders and even its employees. And those are reasons to fight or even be on the boundaries of the law or the interpretation of laws.
I would like to mention an example of monopolistic behaviour as are the case of Microsoft and its well know browser called Internet Explorer. This product is given away with purchase of the operating system avoiding that the customers can acquire other browser. In this case the dominant position of Microsoft in the operating system market is used to prevent competition entry in the market by ensuring the monopoly of market.
Te argument to follow ahead with the new product is that in the market there are others products with similar characteristics, so the company does not practice monopolistic position in the market. The launch of this product is a bet based on the use of technology and innovation in order to get important levels of profit in free competition.
Andrew Burke (2009). ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.