1

Introduction

Academic writing is clear, concise, focused, structured and backed up by evidence. Its

purpose is to aid the reader’s understanding. It has a formal tone and style, but it is not complex

and does not require the use of long sentences and complicated vocabulary. Each subject

discipline will have certain writing conventions, vocabulary and types of discourse that you will

become familiar with over the course of your degree. However, there are some general

characteristics of academic writing that are relevant across all disciplines. Is generally a

quite formal, objective (impersonal), and technical.

An academic text is formal by avoiding casual or conversational language such as

contractions or informal vocabulary. It uses appropriate language and tenses, and is clear,

concise and balanced. It is impersonal at the same time objective because it avoids direct

reference to people or feelings instead it emphasizes objects, facts, and ideas. It well focuses on

the idea rather than the people or emotion that being portrayed. A text is technical by using

vocabulary wordings and references used has a clear focus on the issue. It also includes accurate

word choice.

The six general classifications of Academic Texts are:

 Essays – is generally the preformat for all analytical compositions.

 Concept Papers – defines an idea or concept and clarifies its “witness”

 Reaction Papers – is generally an informed and insightful perspective on art, popular

culture and technical topic.

 Position Papers – asserts an argument

 Reports (Educational) – retells data, incident, or event.

 Research Papers – are a highly formal kind of report.

In the following pages you will be able to see the different example of each six general

classifications of Academic Texts.

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ESSAY: Discuss why assignment essays are common assessment tasks in

undergraduate tertiary coursework, and evaluate the effectiveness of assignments

as an avenue for learning.

Introduction

Assignment essays are developed from set questions that give students a period of time to

research a topic and produce their answer with references to their sources of information. While

there are some disadvantages with using assignment essays as an assessment tool, there are

sound educational purposes underpinning this practice. This essay examines the reasons why

assignment essays are beneficial for student learning and considers some of the problems with

this method of assessment.

Body paragraph 1

Assignment essay tasks are set to assist students to develop mastery of their study

subject. Firstly, assignment tasks enhance understandings about subject matter. Yang and Baker

(2005) reason that “to master your learning materials and extend your understandings, you need

to write about the meanings you gain from your research” (p. 1). Secondly, research (Jinx, 2004;

Zapper, 2006) clearly demonstrates that students learn the writing conventions of a subject area

while they are researching, reading and writing in their discipline. This activity helps them to “crack

the code” of the discipline (Bloggs, 2003, p. 44). Thus, students are learning subject matter and

how to write in that disciplinary area by researching and writing assignment essays.

Body paragraph 2

Using assignment essays for assessment supports student learning better than the

traditional examination system. It is considered that course-work assignment essays can lessen

the extreme stress experienced by some students over ‘sudden-death’ end of semester

examinations:

If we insist that all students write about everything they have learned in their study courses

at the same time and in the same place (e.g. in examinations), we are not giving all of our
 3

students equal opportunities. Some students are not daunted by the exam experience while

others suffer ‘exam nerves’ and perform at the lowest level of their capabilities. (Wonderland

University, 2006, p. 4)

Additionally, Jones et al. (2004, pp. 36-37) propose that assignment essays can be used to

assess student learning mid-course and so provide them with helpful feedback before they are

subjected to the exam experience. Exams only provide students with a mark rather than specific

feedback on their progress. Therefore, setting assignment essays for a substantial part of student

assessment is a much fairer approach than one-off examination testing.

Body paragraph 3

As an assessment tool, assignment essays have some disadvantages for lecturers and

students. It has been found that assignment essays consume a great deal of staff time and money

to mark and student time to prepare (Sankey & Liger, 2005, p. 192). A consequence of these

problems is that feedback to students is frequently delayed, and this is much less useful to

students than rapid feedback (p. 294). It is partly because of these disadvantages of time and

expense that other assessments such as multiple-choice tests and short answer questions have

an enduring place in the tertiary learning environment.

Conclusion

To conclude, it seems that assignment essays continue to have a prominent role in tertiary

education as an assessment tool. This is mainly because they are very effective in developing

knowledge and writing skills for subject areas. Also, assignment essays can be less stressful than

examinations as they allow students to show their understanding of content in less pressured

circumstances. On the other hand, the time consuming nature of writing and marking essays

points to some disadvantages that also need to be considered. The weight of evidence, however,

supports the writing of assignment essays for student assessment because this approach has

such positive and proven effects for improved student learning.

References

Bloggs, J. (2003). Linking teaching, learning and succeeding in higher education. London:

Bookworld.
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Jinx, J.M. (2004). Student essay writing. Journal of Research in University Education, 9(2), 114-

125.

Jones, J., Smith, P.L., Brown, K., Zong J., Thompson, K., & Fung, P.A. (2004). Helpline: Essays

and the university student. Tokyo: Courtyard Printers.

Sankey, J.M., & Liger, T.U. (2003). Learning to write essays [CD-ROM]. Sydney: Wonderland

University.

Taylor, G. (1989). The student’s writing guide for the arts and social sciences. Cambridge:

Cambridge University Press.

Wonderland University. (2006). Attributes of a university graduate. doi:10.1098/063-112

Yang, S., & Baker, O.E. (2005). Essay writing and the tertiary student. Melbourne: Diamond

Press.

Zapper, Y. (2006). Learning essay writing. In F.T. Fax & Y. Phoney (Eds.), Learning Experiences

at University (pp. 55-70). Calcutta: Academic Scholar Press.

 5

REACTION PAPER: Man's Search for Meaning

Topic sentence Dr. Viktor Frankl's book Man's Search for Meaning (New York: Washington
for reaction
Square Press, 1966) is both an autobiographical account of his years as a prisoner
paper
in Nazi concentration camps and a presentation of his ideas about the meaning of

life. The three years of deprivation and suffering he spent at Auschwitz and other

Nazi camps led to the development of his theory of Logotherapy, which, very

briefly, states that the primary force in human beings is "a striving to find a meaning

in one's life" (154). Without a meaning in life, Frankl feels, we experience emptiness

and loneliness that lead to apathy and despair. This need for meaning was

demonstrated to Frankl time and again with both himself and other prisoners who

were faced with the horrors of camp existence. Frankl was able to sustain himself

partly through the love he felt for his wife. In a moment of spiritual insight, he

realized that his love was stronger and more meaningful than death, and would be

a real and sustaining force within him even if he knew his wife was dead. Frankl's

comrades also had reasons to live that gave them strength. One had a child waiting

for him; another was a scientist who was working on a series of books that needed

to be finished. Finally, Frankl and his friends found meaning through their decision

to accept and bear their fate with courage. He says that the words of Dostoevsky

came frequently to mind: "There is one thing that I dread: not to be worthy of my

suffering."  When Frankl's prison experience was over and he returned to his

profession of psychiatry, he found that his theory of meaning held true not only for

the prisoners but for all people. He has since had great success in working with

patients by helping them locate in their own lives meanings of love, work, and

suffering.

Reaction

Introduction One of my reactions to the book was the relationship I saw between the

“Capos” and ideas about anxiety, standards, and aggression discussed in our

psychology class. The Capos were prisoners who acted as trustees, and Frankl
 6

says they acted more cruelly toward the prisoners than the guards or the SS men.

Several psychological factors help explain this cruelty. The Capos must have been

suppressing intense anxiety about “selling themselves out” to the Nazis in return for

small favors. Frankl and other prisoners must have been a constant reminder to the

Capos of the courage and integrity they themselves lacked. When our behaviors

and values are threatened by someone else acting in a different way, one way we

may react is with anger and aggression. The Capos are an extreme example of

how, if the situation is right, we may be capable of great cruelty to those whose

actions threaten our standards.       

I think that Frankl’s idea that meaning is the most important force in human
Body
beings helps explain some of the disorder and discontent in the world today. Many

people are unhappy because they are caught in jobs where they have no

responsibility and creativity; their work lacks meaning. Many are also unhappy

because our culture seems to stress sexual technique in social relationships rather

than human caring. People buy popular books that may help them become better

partners in bed, but that may not make them more sensitive to each other’s human

needs. Where there is no real care, there is no meaning. To hide the inner

emptiness that results from impersonal work and sex, people busy themselves with

the accumulation of material things. With television sets, stereos, cars, expensive

clothes, and the like, they try to forget that their lives lack true meaning instead of

working or going to school to get a meaningful job, or trying to be decent human

beings.

I have also found that Frankl’s idea that suffering can have meaning helps

me understand the behavior of people I know. I have a friend named Jim who was

always poor and did not have much of a family—only a stepmother who never

cared for him as much as for her own children. What Jim did have, though, was

determination. He worked two jobs to save money to go to school, and then worked

and went to school at the same time. The fact that his life was hard seemed to

make him bear down all the more. On the other hand, I can think of a man in my

neighborhood who for all the years I've known him has done nothing with his life.
 7

He spends whole days smoking and looking at cars going by. He is a burned-out

case. Somewhere in the past his problems must have become too much for him,

and he gave up. He could have found meaning in his life by deciding to fight his

troubles like Jim, but he didn't, and now he is a sad shadow of a man. Without

determination and the desire to face his hardships, he lost his chance to make his

life meaningful.

In conclusion, I would strongly recommend Frankl’s book to persons who

  Conclusion

care about why they are alive, and who want to truly think about the purpose and

meaning of their lives

 8

CONCEPT PAPER: “SKILLS AND LIVELIHOOD SEMINAR”

1. Introduction

Every one of us used to live a normal life, families living happily together, our

parents working for our future, studying in a well-known school, earning enough money for our

daily needs. But due to fast economic growth, calamities and disasters and financial problems we

can see a big difference of growing numbers of family who suffers poverty due to different reasons

and situations. As we’ve seen on televisions and social media many people suffer from poverty

because they chose to give up on life and let poverty itself pull them down and many of them lose

hope and they don’t know how to start again.

Being a concerned citizen and student of this generation. We aim to help in our own little

ways to give this poor people a hope that after all the problems that came to their life that causes

them to fall down, there will still be a way for them to get back up and start a new life again. Those

people living in the streets, those children who begs for food, and those people who can’t afford

education. By giving them a little hope, we know that our help might be small but we know that this

will give them a glimpse of hope what will help them to rebuild their life and start over again.

We the students of Don Bosco Tarlac are planning to think of a way to help this poor

people and give them a chance to start again. This program not only aims to help them but also to

inspire other people to come up with their own ideas to help this people and maybe together we

can all help each other to have a meaningful life again.

1. Purpose

The purpose of this project is to help the poor people especially those who didn’t finish their

education and teach them basic skills about different livelihood works like basic car repairing,

soap making, basic housekeeping skills, furniture making, handicrafts etc. This livelihood skills will

somehow help them to overcome such poverty because they can use this skills to start up a small
 9

business and little by little may this skills that we teach them can help them to live a better life than

before.

We also aim to remind other people that we the youth of today is concern of what is

happening in our society today especially when it comes to poverty. That even at our age it is

possible for us to make a change for a better future for us

 Product Description

1. Objectives

Below are the objectives of our program:

 To teach the poor people some basic skills about different livelihood skills.

 To help the poor people to start over again through this basic skills that they will learn.

 To raise awareness to the society on how the youth is concerned about giving solution to

poverty.

 To give this people a skill which they can use to start a small business or even go to work.

 To somehow help reduce the number of people who suffer from poverty in every barangays

through this skills that they will learn.

1. Methodology

SKILLS AND LIVELIHOOD SEMINAR

The program/seminar wherein each people who suffer from poverty in every barangays

would participate in this skills and livelihood seminar, this would be done twice a week (every

Friday and Saturday). But only 50 people who are poor will be allowed to participate every

seminar so that our seminar mentors can accommodate all of the needs and questions of the

participants. Through the help of our sponsors, at the end of the seminar we will give the

participants some products and basic equipment they can use to start a small business of their

own if they want.

1. Project Needs
 10

For this project to be successful, we are in need of sponsors to fund this seminars and

programs, an amount that will range from 8,000-15,000 also a location to be used for the said

seminar/program that we believe the barangays will provide us one, spaces such as Seminar

Halls or Basketball Court in their own barangays and a projector with white screen for the

instructions and information that our mentors will share. A total amount of 20,000 we think will

provide all the needs for this seminar to be successful.

Detailed Budgetary Requirements

Business experts, Agriculture and livelihood experts that will teach the sponsored people

some basic skills about different livelihood living.

Equipment and Products that will be given in each participants                               16,000

at the end of every seminar

Food and Meriendas for the participants                                                                   2, 500

Participation certificate given at the end of every seminar                                          1,000

 Timetable

 This would serve as an weekly routine for every people who are poor in every barangay,

we are going to give a special commendation or special reward for the barangay with the most

number of participators every week, and at the end of every month will receive a certificate of

appreciation and certificate of award for being the most active participants for every seminars.
 11

POSITION PAPER: Helping those in need: How can we really help the poor across

the ocean

DoSomething reports that around 3 billion people worldwide live on $2.5 a day while 1.3

billion have even less – about $1.25 a day. Poverty leads to malnutrition which  kills over 22.000

children every day.

750 million do not have clean drinking water, and as a result, around 2.300 people die of

diarrhea or poor sanitation every single day.

As you read these statements, real people with real lives died after struggling with horrible

living conditions. They could not win this fight on their own; they just don’t have the power for it.

People like me and you born in a country where provisions of light are seen as a lawful

right, and not a blessing have only a slight idea of what poverty really is. No wonder we don’t rush

to help the developing countries.

The problem, as I see it, lies in our understanding of what this concept truly means.

Poverty is not just about having a less comfortable life than what you are used to. It is

definitely not about having fewer luxuries in our lives. And I want to make it clear that the poor in

the developing countries do not have the privilege of having a roof over their head, clean water,

and plain food.

Poverty those 3 billion people are facing daily is about having little to no access to clean

water, food supplies, or medicine to keep them up and running. They do not have discounts and

privileges. They are striving to survive!

So, it’s high time we saw the reality and stood up to help those needing our help!

The question is how exactly we as students can help people living in poverty?

I have gathered several good options which you can consider with me to make a difference.
 12

How to help the poor when you are a student

1. Volunteer at an international organization.

You can make a difference in someone’s life by joining a program that makes lives

people living in poverty better.

For instance, an organization called Global Crossroad can be a good choice for you. They

are organizing trips for young people from all over the world to the corners of the globe

where their help is most needed. Thus, you can help kids living on the streets in Peru, feed

the poor at a food stand in Uganda, teach English to underprivileged kids in Argentina, or

work at an orphanage in India. Your impact there will be truly priceless.

There are tons of other organization doing the same good thing all over the world. Join

them, and you won’t regret it! This experience will indeed change your life and make you

into a brand-new person!

2. Support a volunteer.

If you do not have an opportunity to go somewhere, support someone financially. If

you have the heart for the poor or want to help your heart grow, donate money to a

volunteer who is willing to go to a different part of the world to help the poor.

Your investment is valuable, so don’t hesitate!

3. Donate money.

As a student, you might have a pretty busy schedule, so going places can be a

tough call. But you can always donate money to trustworthy organizations for them

to take care of those who are now struggling with all sorts of hardships in life.

Even a few dollars can make a huge difference, and we all know that we can give

more than that!

4. Help the locals.

Even though the word “poverty” is quite stretched, there are still people that need

help around you. So, look for organizations taking care of such people and join them

in their effort to make a world a better place.

For instance, DoSomething has recently run a campaign called “Teens for Jeans.”

They collected gently-worn jeans for teens that could not afford to get a pair of new
 13

ones. There are dozens of other opportunities to help the poor in your community, so

maybe start there and then consider going overseas to help!

We cannot stay indifferent to the problem of poverty: sympathy is what makes us humans.

So, I hope the facts mentioned above will persuade you that the problem is real and much more

significant than we thought while the suggestions of how to help and solve this problem will give

you a right direction and push you toward the goal.

We find this position essay rather powerful. The author not only presents his ideas clearly

but also leaves the readers with a clear call-to-action.

Another good point is that the author used statistical data from reliable sources to

demonstrate that his position is supported by facts and not just emotions. Besides, the paper is

well-structured and organized in an easy to scan manner making it easy for the audience to

familiarize themselves with the arguments.

However, it might be hard to grasp the idea of a position essay from just one essay. So,

here is another example of position paper for your consideration.

 14

REPORT: Evolution and Interpretation of Government Power

Political voting in America has declined today since the level of elite and mass

political behaviour changed. However, this has not always been the case in American politics.

For most of the voters, the physical sense of casting a ballot was the juncture of an

extended period of campaign activity. Election Day was a day of excitement during which

American voters participated in countless political meetings, parades, and bonfires. The

American sense of public-minded self-government emerged when people felt dominated by

government officials. In that epoch, voting was openly defended while placing a premium on

the practice of independent citizenship. This sense of independence implied the right to

serve in the militia with a consequence of the corollary of 'voting alone' in the military

service deep-rooted in the public's mind. In 1791, criticism began on the national

government's prolonged debates over the whole question of exemptions from military

service (Cultice 17). This practice, if adopted, would mean that apprentices and miners

should be debarred from the privilege of bearing arms in defence of their country. The

selection of officers was conducted as it had been done during the American Revolution,

and various governors were induced to appoint those who would do well in the next

election. The importance of elections outweighed all other considerations to such an extent

that the rulers succeeded in forcing the government to let the military men get back home

to vote. However, a common person at that time felt alone in the voting booth, for the

army and officials were engaged in a war.

The sense of public mindedness can be recaptured if people are given the freedom

to politicize or control the uncertainty in American politics. This uncertainty arises when the

same President is reelected, as well as with respect to the President's ability to achieve

public policy goals. One of the political problems facing the nation was the fact that too
 15

many members of Congress became impatient when something they wanted to be done

was not achieved at once. To get an instant action, they sought ways to circumvent the

Constitution. They were convinced that the proposal sent by Senator Kennedy to each

member of the Senate was a clear evasion of the Constitution. Getting away from the

constitutional government was just like opening the door to the loss of individual liberty.

Therefore, government frame-setters created a representative system in order to protect

individual democracy not limited to the government but to the public-minded character. In

the course of creation, the government later realized that through this fragmentation the

power only shifted from the frame-setters to the office-holders. Therefore, a reflection of

more fundamental transformations in economic structures and social relationships began to

shape up the pivotal arena where the battles over the future of the republic started. The

representative system they created draw distinct lines between the defenders of equality

and injustice and the forces of privilege and self-interest, which means between moral

democracy and dishonest politicians. However, this picture dominated accounts of the

political history of the old age where parliamentary and presidential systems supported

autocracy. American government powers had never been as corrupted as they were at that

stage, and reformers, professional administrators, and technical experts always had

significant authority and impact on decision-making processes (Goebel 25). Hence, the party

mobilization and the fragmentation provided efficient but dominant means for developing and

institutionalizing democracy, after which it became evident that fiscal and economic policies

conducted by machine politicians and upper-class officials did not substantially differ from

each other.

The fragmentation of the government framework led divisions and uncertainty in the

American politics but remained unable immediately to form political parties. However, the

exercise of public power by the end of the eighteenth century emerged in political

differences concerned with the Federal role of the Government. Thus, by 1800, the first

national parties, the Federalists and Republicans, were formed in Congress (Lees et al.

70). The politicians who organized those parties realized that being democratic, the
 16

Constitution fragmented political power within and among the institutions as a mechanism

for controlling political choices.

By fragmenting the government structure, the framers of our Government initiated a

new transformation that was hindered by the executive and judicial power. This

transformation profoundly disoriented formerly successful party leaders and activists

entrenched in the “old” politics and acting under the rules of the old electoral order (Libey

50). It should have been proven disastrous, shunned by leaders and voters alike, but

instead, through these strategies, it was gained a place on the Democratic ticket. At first

being dismissed by some people as anomalies, these achievements became models for the

future American politics. Thus, the world of American elections changed.

Nowadays, our youth are so much fatigued by the contemporary political scenario

and, in the name of democracy, are no longer alone in the voting booth. What we witness

is the governmental interest supporting elections. Besides, every new election has its

economic benefits. Representative elites argue that the federal courts are also capable of

threatening the individual's liberties. However, Congress and the President have ample

disciplinary powers over the Federal Judiciary. Thus, the American political system

represents a careful balance between democratic norms and constitutional limitations on

authoritarian impulses. Rather than existing as a deviant institution, the federal courts appear

to be an essential element in the liberal democracy. Even a due process does not

guarantee an access to a federal court in order to vindicate constitutional claims (Keynes and

Miller 7). Thus, the legislation that alters or threatens the delicate balance of governmental

power is constitutionally suspect.

We have been in a deadlock where recapturing the sense of public mindedness is

challenging but not impossible. The political corruption for which we have witnessed has not

only focused on fraudulent acts that distorted election results but also on electioneering

techniques, such as campaign expenditures, vote buying, and so on. These campaign

practices are responsible for distorting the image in public eyes because these practices

have offended observers who thought that voters should cast their vote strictly based on the
 17

issues involved in a campaign. There is a need to regain public confidence in seeing a

thriving democracy but an impartial judiciary stands ready to enforce the rules of the

political game and restore equilibrium to the political system.

Works Cited

Cultice, Wendel W. Youth's Battle for the Ballot: A History of Voting Age in America.

reenwood Press, 1992.

Goebel, Thomas. A Government by the People: Direct Democracy in America, 18901940.

U of North Carolina P, 2002.

Keynes, Edward, and Randall Miller. The Court vs. Congress: Prayer, Busing, and Abortion.

Duke UP, 1989.

Lees, John David, et al. American Politics Today. Manchester UP, 1985.

Libey, David Menefee. The Triumph of Campaign-centered Politics. CQ Press, 1996

 18

The Analysis of “Microsoft's Aggressive New Pricing Strategy” Using Microeconomic

Theory

Student Name

University
 19

Outline

I. Introduction

II. The review of the article “Microsoft's Aggressive New Pricing Strategy” in terms of

microeconomic theory

A. Microsoft as a monopolist in software industry

B. Google as the main company’s competitor in the software market

C. Strategies taken by Microsoft to regain the competitive power

III. Conclusion
 20

The Analysis of “Microsoft's Aggressive New Pricing Strategy” Using Microeconomic

Theory

I. Introduction

Monopolistic power is a profit earner for many companies. Monopolism still prevails

despite the presence of government regulations against the formation of monopolistic power

in the market, which brings deformities into the competitive scenarios. One of the vivid

examples of the monopolistic dominance is Microsoft (Burrows, 2009). The article

“Microsoft's Aggressive New Pricing Strategy” demonstrates how a monopolist can charge

whatever price it deems to, but it is not in their power to set the quantity of the product

demanded. Therefore, a monopolist must increase prices to gain market share. Further, a

monopolist sets different prices in different places. This price discrimination depends on the

demand of the product among various subgroups of the target customers.

This essay is a review of the article “Microsoft's Aggressive New Pricing Strategy”,

which was published on July 16, 2009 in BusinessWeek regarding the new strategy that

Microsoft has adopted to reduce the prices of its products. Microsoft has a history of

gaining the monopolistic power and bringing in deformities into the market. However, with the

economic recession there has been a decline in demand for the products of Microsoft, so it

took a strategic decision to reduce the prices of its chief revenue earners, such as the

Office software and Windows operating system (OS). The article “Microsoft's Aggressive New

Pricing Strategy” relates the strategies taken by Microsoft to regain its competitive power
 21

and combat the global financial recession. The paper will analyse the events mentioned in

the article in terms of microeconomic theories.

II. The review of the article “Microsoft's Aggressive New Pricing Strategy” in

terms of microeconomic theory

A. Microsoft as a monopolist in software industry

The article “Microsoft’s Aggressive New Pricing Strategy” written by Peter Burrows

(2009) first refers to Microsoft’s pricing strategy as a monopolist. It states that Microsoft had

“enjoyed Olympian profit margins, using its monopoly power to maintain prices on its

software” (Burrows, 2009). The company used its power as a monopoly to price its

products high and gained market share through other measures. A monopoly is a market

condition wherein there is only one seller.

Microsoft has long been accused to be a monopolist due to its dominating share of

the software market, in particular with its Windows OS and Office software. Microsoft gained

a lot of power as a monopolist and enjoyed pricing its products in order to gain maximum

profit. Thus, as a monopolist, Microsoft was in a position to influence the price of the

products and the buyers had no power against the price set by the company.

The article informs that Microsoft enjoyed monopoly power throughout its history.

However, with the advent of financial recession in the global economy, there has been

pressure on the company to meet its revenue targets. The article states that Microsoft used

its “monopoly power” to keep high prices for its software even during “tough times”

(Burrows, 2009). However, the company has been facing competition from other software

giants like Google, and with the economic downturn found itself in a position wherein it

could not use its monopoly power to sustain high prices for its products. Therefore, the

company was forced to decrease the prices of its products, from high end OS Windows

and Office products to even the newly launched internet. products.

The primary objective of the company was to reduce prices and increase sales

volume, which would rejuvenate their low-profit margins. The CEO of Microsoft, Steve

Ballmer, intended to get into the growth opportunities such as entering very lucrative and

quickly emerging markets in Europe and Asia (Burrows, 2009). Microsoft has concentrated
 22

more on gaining corporate buyers for its software and reducing prices for individual

customers. The primary intent of the price reduction was to increase sales of original

software, mainly to those who would use the pirated software otherwise.

Apart from reducing the prices of the products, it has also altered its revenue model.

As in the case of newly showcased Office 2010, Microsoft has two versions – one is

supposed to be bought, and the other is a less powerful free online version which is

supported by advertisements (Burrows, 2009). The company has also shifted its sale more

through online transactions, which effectively reduced its price and increased profit by

almost three times. The article then provides information on how Microsoft has launched its

new OS, Windows 7, and informs that the price of this product is almost $40 less than the

price of the earlier OS, Windows Vista (Burrows, 2009). This is the first time when Microsoft

has charged a lower price on its product than the price of its earlier counterpart.

B. Google as the main company’s competitor in the software market

Microsoft enjoyed monopoly power with its OS and Office software. However, with

the increasing pressure from competitors like Google, Microsoft is facing the market which

has become oligopolistic (rather duopolistic) in nature. This has brought in the competition

for Microsoft. Thus, the increased competition has forced Microsoft to aim at the market,

which it had so far neglected and had continued to charge high prices for its products.

However, with the advent of competition, Microsoft is forced to look forward to markets,

which are emerging and have not been penetrated into. That is the reason for the

company’s promotional pricing in countries like China and India.

The present software market is oligopolistic in nature where there are two major

players in the Office software industry – Google and Microsoft. Google follows a different

business model. It does not charge any price for the software but allows consumers to use

their products and earns revenue through advertisements, while Microsoft believes in

“traditional” pricing of the products. This creates more demand for Google’s word processor

and spreadsheet software as they are free, especially in a market where price elasticity is

relatively high. A company in an oligopolistic market establishes a so-called “Nash

equilibrium”. Nash equilibrium is a concept that states that a firm will attain equilibrium when
 23

it adopts the best possible alternative given the competitor’s actions (Pindyck & Rubinfeld,

2009).

The article reports that in China, the company has sold its Office at $29 with other

versions like Word, Excel, and others free to counter competition from Google (Burrows,

2009). Further, with loads of promotional offers available, the effective price of Office in

countries like Brazil and India decreases from $150 to $100. Using price reduction as a

tool, the company has reported increasing its sales figure by 4155 in the second half of

2008 (Burrows, 2009). In the countries where the use of pirated software is especially

common, like China – where it is was reported to be 95% - Microsoft introduced a price

reduction. That move has effectively increased sales of Office in China by 800%. This has

heavily crippled the pirated software industry in China as the trial version cost only $29

(Burrows, 2009). Office was so successful that Microsoft has decided to keep the prices at

this level permanently.

D. Strategies taken by Microsoft to regain the competitive power

In a more innovative marketing strategy, Microsoft has made a decision to have the

CDs for Windows 7 loaded with different versions. People who buy the cheapest version

will just have to upgrade to the premium versions by paying an extra surcharge. However,

Microsoft is still facing competition from companies like Google who are willing to provide

similar features at a cheaper rate.

It is clear from this article that Microsoft faces a downward-sloping demand curve for

its products. As there is an increase in price, the quantity demanded declines and vice

versa, provided ceteris paribus assumption holds true (Pindyck & Rubinfeld, 2009). Now, as

there is a change in the external environment of the market, the demand curve shifts. Due

to an economic downturn, cash crunch was created in economies, reducing the income of

people. This shifted the demand curve to the left.

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Figure 1. Excess profit earned by Microsoft

Figure 1 shows that initially, the demand curve faced by Microsoft was D1 which now

moves leftward due to changes in economic condition to D2. Initially, when Microsoft faced

the demand curve D1, its marginal revenue curve was MR1. Given marginal cost MC, the

profit maximizing price and quantity were P1 and Q1. Assuming that Microsoft used to

price its products at a profit maximizing price, the company earns a producer’s surplus

equal to the region colored in orange, light blue, and yellow. With a shift in the demand

curve to D2, the marginal revenue curve becomes MR2 too. The profit-maximizing price

increases from P1 to P2 and quantity demanded reduces by Q1 to Q2. However, due to

excess competition from the industry, Microsoft decides to price its products at a lower rate

(P*). At this price, the quantity demanded increases from Q2 to Q*. The producer’s

surplus reduces drastically to only the yellow region. However, it sells more products. Thus,

Microsoft foregoes to its surplus in order to gain market share and increase sales.

From Figure 1, it is seen that at price P, the company still enjoys producer surplus,

even though it is less than the profit-maximizing case. Further, due to the downward sloping

demand curve of Microsoft products, the price reduction is accompanied by an increase in

sales of the products, which is the same as the one experienced by Microsoft in the cases

of China, India, and Brazil.

 25

The pricing strategy that has been applied by Microsoft also provides monopolistic

power to the company. The company charges different prices in different geographic

locations. For instance, Office in India costs $100 while in China, it costs $29. There is a

$71 difference in the prices of Office in those countries (Burrows, 2009). This is a third-

degree price discrimination practiced by the company. Here, Microsoft has divided the

consumers of China and India depending on the demand curves and price elasticity of the

consumer demands.

As Chinese consumers have many alternatives in terms of cheap pirate versions of

the software, a switch from the pirated version to the original one cannot be induced

without reducing the prices to almost the same level as the pirated versions of the software.

In China, the demand for Office is highly price elastic as there are pirated versions of the

software that are sold at a very low price. Thus, pricing has to be kept low in the country

to gain higher sales volume. In India, the price elasticity of demand for the software is less

elastic than that of Chinese consumers. Therefore, prices can be kept higher than in China.

Further, in China Microsoft Office faces the competition from pirated versions of the

software, whereas in India, this competition is comparatively lower.

Figure 2. Third-degree discrimination followed by Microsoft

Figure 2 shows the third-degree discrimination followed by Microsoft. Here D1 is the

market of India with the less elastic demand curve, and D2 is the highly elastic demand

curve of China. As a necessary condition for profit maximization in the case of third-degree

discrimination, the marginal revenue earned from both markets must be equal to the
 26

marginal cost. It can be deduced that the altered MR curve is MR2’. The price at which the

product is offered in China is much lower (P1) than that offered in India (P2). However, in

one market, the company earns a supernormal profit and in the other, it does not, but the

company maximizes the profit earned in both markets.

In the case of its new OS launch, Microsoft has decided to price it lower than the

initial launch price of Windows Vista (Pindyck & Rubinfeld, 2009). There were two main

reasons for that: (1) decreased demand for the product due to an economic recession, and

(2) advent of competitors and increasing competition pressure. In Chinese market, Microsoft

competes with pirated versions, which are sold at a cheaper rate. The demand for the

products depends on the price they set and on the price set by the competitors. In the

case of Microsoft, it chooses $29 for the Chinese market, assuming a price that will be set

for the pirated versions (Burrows, 2009). In this case, the product sold is the same product

as both Microsoft and black market companies sell Office.

The Bertrand model of oligopolies in the case of homogeneous products can be

considered. The companies assume they will treat the price of their competitor as fixed

and they simultaneously decide what price they should charge for the product. Usually, in

such a situation Nash equilibrium is reached when both firms set the price equal to

marginal cost (Pindyck & Rubinfeld, 2009). Thus, in order to bring the market into

equilibrium, Microsoft has tried to price its product closer to marginal cost. In the given

circumstances, profit tends towards zero.

III. Conclusion

The article demonstrates two conditions wherein the Microsoft acts both as a

monopolist and as a company in oligopolistic market facing competition. Initially, being a

monopolist, Microsoft priced its products high. However, with the increased competition and

the need to keep their overall profit intact, the company reduced its price drastically. The

article describes this aspect of the company’s pricing strategy. In the oligopolistic market,

Microsoft has to reduce the price in order to face a competitor with the very low prices.

Consequently, the company has decided to follow the revenue generation model of the

pirating companies and to price its products low.

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References

Burrows, P. (2009). Microsoft's aggressive new pricing strategy. BusinessWeek, 4140, 51.

Pindyck, R. S., & Rubinfeld, D. (2009). Microeconomics (7th ed.). New York, NY: Prentice

Hall.