We’ve been talking about low cost and differentiation as business strategies but we haven’t really touched on the roll of monopolies. Monopolies can be effective in bringing in income if you have the new idea, but there are many problems with them. Consumers complain that prices get raised too high and that innovation disappears because firms have no need to compete for market share. That being said, companys who compete still jack up the prices, customers are just happier about it.

We’ve all seen the “I’m a Mac, and I’m a PC” ads and we remember them because they created such a personal connection with the brand. Apple effectively disrupted the PC market and created its own elite group of fanboys who will do anything for their product effectively giving them monopoly-like powers.

I want to see a new company come in and then create its own competition. As an entrepreneur begin by selling a new product; once you establish your product, develop a second version. Rather than releasing Product 2.0 you create Brand 2.0, instead. At the same time the original company secretly introduces a second company to separate the market while controlling competition. From here they can engage in a variety of cost leadership, differentiation, and entry barrier techniques to raise demand and further restrict new partners. The key to this is it must remain a secret: that way the person at the top can effectively have monopoly-like power without government intervention.

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