Q3. (extra question, 8 marks) Market power may change over time as firms increas

Question

Q3. (extra question, 8 marks) Market power may change over time as firms increasingly experience fiercer competition from other competitors in the market. One key element to keep a firms' edge in the market is by creating new products or services. Give only one actual example of a firm that struggled to keep its market power. Who were the competitors? What products did this company introduce to regain some market power? Did it succeed or fail? Why, in your opinion? (please find an example that was not discussed in class)

Explanation / Answer

A very good example of this would be Apple. Apple was initially set up as a personal computer brand for old version personal computers. It initially held substantial market power being virtually the only player in the market. Over time new firms came in like microsoft and Oracle which produced better products and took market share away from Apple. This hampered Apple greatly. In response to this over time Apple introduced the iphone, the ipad and several other products and enterred the phone and communication space. This allowed it to regain its competitive ability and also to regain its market share. This has been a tremendous success. Apple diversified its product base so as to raise its competitive ability.

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