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Oligopoly is a market structure characterized by a small number of relatively large firms that dominate an industry (Oligopoly, 2000). It can contain 2 to 20 firms that dominate it. As the number of firms increase, it becomes monopolistic competition where dominance is controlled by one firm. An oligopolistic firm is relatively large compared to the overall market, has a substantial degree of market control, and has significantly greater capital than a monopolistically competitive firm.
Key features of an oligopolistic firm include relative size and extent of market control of interdependence among industry firms, the actions of one firm depends on and influences actions among others, and it tends to be a prime source of innovation that promotes technological advances and economic growth. The three major characteristics are a small number of large firms, identical or differentiated products, and barriers to entry where the market is controlled through barriers to…… [Read More]
One of the important characteristic of oligopoly is the interdependence of one firm on the others. When faced with touch economic problems or government regulations, the only way for the industry to survive is by innovation. When one firm innovates, it benefits the other firms in the industry in a big way and this can lead to co-operations and mergers. In most cases, consumers benefit a lot from innovation in terms of the products and services they enjoy and this is likely to bring more business and profits to the industry as a whole. This is why other firms may be willing to lend resources to benefit the common good. When one company innovates, it benefits the industry as a whole and this can act as a booster to the other firms as well. An example is the five banks that rule the UK banking industry. When they…… [Read More]
hereas in monopolistic competition it is expected that competitors will match innovations in the long run, that is not necessarily the case in an oligopoly. The firm against which you are competing might not be able to match your innovation capabilities, and that would result in your firm being able to earn profits in the long-run from innovation. If, however, there are low barriers to entry, then new firms could enter the market and match your innovation. Therefore, only when the oligopoly is protected is there an incentive to invest in innovation for long-run economic profit. It is expected that the other firm will attempt to match the innovation, because firms in oligopolies respond to each other's moves, but that firm may be incapable of doing so, and would eventually lose market share as a result.
The reason that innovation flourishes in oligopolies is that the firms in oligopoly industries…… [Read More]
Ice Cream and Oligopoly
The concept of an oligopoly market in economics means that there are few top sellers of a certain product, as opposed to many competitive companies. These sellers are generally in high competition with each other, but have tremendous power in pushing their products to consumers. Because there are few sellers in the market, they tend to be hyper- aware of each other and have a high level of interactivity, and therefore require the necessity of strategic planning. When one seller makes a change, it will directly affect the others in the market, thereby affecting the competition in some noticeable way. This can be likened to a water balloon- when you push one side in, the other sides expand to accompany the change and maintain homeostasis. Similarly, all sellers in an oligopoly market are directly affected when one makes a strategic change.
In this article, an oligopoly…… [Read More]
Oligopoly and a Monopoly: Viewed in Light of the AT& T. And SBC Prospective Merger
Since the Gilded age of the robber barons ended with the enforcement of the Sherman Anti-Trust Act, corporate monopolies have had a bad name in American commerce. However, a monopoly is not synonymous with the abuse of consumer welfare. A monopoly is simply is the exclusive control by one group, often a company, of the means of producing or selling a commodity or service, although it arises frequently from government support or from collusive agreements among individuals, in the words of Milton Friedman. ("Monopoly," Answers.com, 2005) Sometimes, monopolies are conferred, often in the case of limited natural resources such as oil, or in industries with difficulty physical or economic barriers to enter the market. This was previously true of the telephone communications industry. The monopolistic right to dominate the industry was granted by the government,…… [Read More]
monopoly and an oligopoly. In addition the merger of SBC and ATT ramifications will be discussed.
Difference Between Monopoly and Oligopoly
The Difference Between a Monopoly and an Oligopoly:
The term monopoly is used to define a market situation where there is only one provider of a type of product or service. This market situation is typified by a lack of competition, within the marketplace. In addition, there is typically a lack of viable substitute goods ("Monopoly," 2005).
In contrast, an oligopoly defines a market situation where the market is dominated by a small number of sellers. Interactivity is a key character of an oligopolistic market, as the handful of major competitors are quite aware of each other's actions. Strategic planning, for these organizations, takes into consideration the likely responses of the other major market shareholders. The four-firm concentration ratio is used to determine if an oligopoly exists. If the…… [Read More]
Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly
The subject of competition is an interesting one. The general idea in economics seems to be, the more competition the better. "Good competition" results in a greater likelihood in overall efficiency and low prices.
There are several main types of competition, these include, perfect competition, the most competitive market possible (and, presumably, the one of greatest value to the consumer), monopoly, the least competitive market (and the one of greatest value to the monopolistic producer), monopolistic competition, a market characterized by the presence of some amount of competition between a relatively small group of companies/producers, and, finally, oligopoly, the market condition when a few companies form, through a kind of collusion, a kind of pseudo-monopoly.
The first type of competition is perfect competition. Although touted and wished for by many as the perfect economic system, its existence, much like the existence of "a…… [Read More]
Part 1) One proposed merger is Omnicare's bid to purchase Pharmerica (FTC, 2012). The FTC has defined the industry as "long-term care pharmacy" and these are the two largest firms in that industry. The FTC has sued to block this proposed takeover. Pharmerica is the only national competitor for Omnicare. Firms in this industry work with institutions to provide pharmacy services. The industry has some fragmentation, but there are only two national players in Omnicare and Pharmerica. The FTC feels that the combined entity would have such strong bargaining power that consumers would not have adequate choice, prices would rise and suppliers would also suffer from this extreme leverage.
From Omnicare's point-of-view, the merger would give it a dominant position in its industry. Pharmerica is resisting the takeover, as this is a hostile takeover. Pharmerica would likely be absorbed into Omnicare to the detriment of its own operations. Suppliers…… [Read More]
In perfect competition, only normal profits are made in the long run and monopolistic competition trends towards a relatively equal distribution of income (Hartzenberg, 2005). This relationship implies that the further the market is from perfect competition, the further the distribution of income will be from equal. An oligopoly, therefore, will not deliver equal distribution of income.
In perfect competition, distribution of income is equal because all factors of production are earning their opportunity costs. An oligopoly sees adjustments to barriers to entry and exit, as well as a constriction of information. This reduces buyer power. If buyers have a lower degree of pricing power, the seller will take more of the income. Income distribution, therefore, is tilted in favor of the firms in the oligopoly.
Sakai, Y. & Yamato, T. (1989). Oligopoly, information and welfare. Journal of Economics. Vol. 49, 1, 3-24.
Hartzenberg, T. (2005). Economics:…… [Read More]
market structures and the pricing strategies which are specifically related to each of them. The introductory section of the paper gives an overview of the four major types of market structures and explains the main features which draw distinguishing lines between them. These major types of market structures are perfect competition, monopolistic competition, monopoly, and oligopoly. The second section discusses the pricing strategies which are used by competitors in each of these market structures in order to compete with the other competitors or operate in a profitable and competitive fashion. A case study has also been included which gives a real life example of the market structure and pricing strategies of a specific company. The paper concludes by giving summary and key findings from the whole discussion.
Introduction to Market Structures
Market structure refers to the number of competitors operating in a particular industry and the level or intensity of…… [Read More]
One industry that has seen a shift in the market model is the smartphone industry. During the mid-2000s, this industry was an oligopoly, populated basically by two firms that emerged from the old PDA market. Palm and RIM (Blackberry) operated as a duopoly, catering primarily to business customers with early smartphones. Apple joined the industry with the iPhone, and was quickly followed by a number of other players. The organization of the industry is somewhat unique, as some firms are vertically integrated providers with operating systems and hardware integrated (Blackberry, Apple) and other firms have a number of hardware manufacturers working in conjunction with operating systems makers. Thus in operating systems there remains almost an oligopoly with two or three major firms and a couple of other minor ones, whereas on the hardware side the industry is fully in a state of monopolistic competition.
Short Run and Long…… [Read More]
One industry that has shifted in the past few years in terms of its structure is the smartphone operating system market. A few years ago, most of the early smartphones were based around proprietary operating systems. Palm and Blackberry dominated the market. Apple joined the industry with the introduction of the iPhone, but more recently other firms have entered the market as well, including Google (Android), indows, Symbian and other systems. The market has moved from a stable oligopoly of four firms basically between two firms into a market that is much closer to monopolistic competition. However, there is the risk that as operating systems shake out, the market could return to an oligopoly of just three operating systems (est & Mace, 2007).
In the short-run, firms in this industry will seek to gain market share through differentiation. The products are slightly differentiated from each other -- they…… [Read More]
firm concentration ratios for the following industries are: fluid milk (311511), women's and girl's cut & sew dresses (315233), envelopes (322232), electronic computers (334111). The industries that are characterized by a high level of competition include clothing, which is a dominant industry in this country. The high level of competition and the many small business type clothing stores, in competition with larger chain stores, makes the competition widespread (Case et. Al, 2009).
Another industry that has a high level of competition is that of car sales and auto parts. Again, cars are a modern necessity and not necessarily a luxury item. Transportation is a necessity for many individuals. This means that car sales as well as auto parts are items that are sold often, and thus have a high level of output. Agricultural and farming products are also highly competitive. Food is obviously a necessity for everybody, and there are…… [Read More]
Five forces' analysis (Porter 1980)
Five Forces Analysis of Competitive Structure
Michael Porters Five Forces Analysis of Competitive Structure is a paradigm for competitive position, which states that overall a company's profitability may be determined as a measure of the industry it is competing in and its strategic position within that industry (Strategy4u, 2004). According to the model some industries by nature will have a higher profit potential than others, primarily because they have a stronger competitive position and are placed within a more profitable industry.
Porter's Model also suggests that profitability is assessed via several factors, including the following: buyers/customers power, supplier's power, and rivalry among competitors, threat of new entrants into the market, and the threat of substitute products (Strategy4u, 2004). The company or industry will have a greater profit potential the less influential each of these items are. For example, if a company sells a product for…… [Read More]
Market Model Patterns of Change
Sir/Madam, answers attachment page. But write a APA format, citing quotations a APA format. answers fits 3 pages.
The operating system software industry that was dominated by Microsoft was a monopoly till quite some years back when other players came into the market and disrupted the monopoly. These players include Linux with their various operating system software such as edhat and Ubuntu and Apple with their Macintosh operating system.
The general pattern of change in this particular market model was that of monopoly to oligopoly. There are several short-run and long-run behaviors in the monopoly and oligopoly market models. In monopoly, there is only one market player who has full control over the market. However, in oligopoly, there are several market players who hold different market shares depending on their marketing strategies, brand awareness, product specification, product diversification, etc. Soberman & Gatignon, 2005()
The short-run…… [Read More]
Economics usiness' (Micro Economics) required write assignment response question: Compare contrast ' forces' analysis competitive structure S-C-P (Structure Conduct Performance) models perfect competition, monopoly oligopoly.
Five Forces vs. SCP model
The SCP model of market development suggests that there are three basic market structures which exist, that of perfect competition, monopoly and oligopoly. In a model of perfect competition, consumers are extremely powerful. "Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. Perfect competition means there are few, if any, barriers to entry for new companies, and prices are determined by supply and demand" (Monopolies, oligopolies, and perfect competition, 2012, Investopedia). It is very easy for new firms to enter the marketplace, and very easy for consumers to shift their purchasing power to other entities that offer them a better deal. There is little advantage to operating…… [Read More]
He also asserts that government participation in the arts beyond its role as a consumer can pose significant hindrances to the artistic processes. He claims that politics tends to "seek stability, compromise, and consensus," and as a result avoids supporting art that may "offend majority opinion or go over its head" (38). The market, on the other hand, has "liberated artists…from the potential tyranny of mainstream market taste" (23).
Is Government Funding Necessary or Appropriate?
There are many who disagree with Cowen, claiming that public funding for the arts is crucial to maintaining a vibrant, diverse, and forward-thinking creative community. These arguments are generally characterized by the theory that, while art as a market commodity is a healthy and valuable part of the artistic culture, there must also be a forum for art as a public good. This forum cannot be trusted to the market, which may or may not…… [Read More]
In the present day and age, several market structures are existent in the global economy. Each and every market structure is distinct in its way of being run and the power that it has over market prices, trend setting and demand. The key element that helps in distinguishing between different market structures is mainly the amount of competition present between several producers of a single type of product. In this paper, the characteristics and means of maximizing profits alongside the barriers to enter the market will be seen and the role of each structure in an economy will be explained.
Markets in which there is a high amount of competition (mostly referred to as competitive markets) are such that no single producer or consumer has the ability to alone influence the price of products in them. This means that if a producer tries to exploit consumers by raising…… [Read More]
The study includes an analysis of market structures. The paper discusses the market type which Amazon operates in and the effects on their business of the market structure. Amazon is operating in an oligopoly market structure which is discussed in the study.
The role that the market plays in an economy is a crucial aspect of how businesses make their strategies and perform. There are different kinds of market structures; there are competitive markets, oligopolies and monopolies. In a competitive market the market has many sellers and buyers who are trading the same products which make the each seller and buyer a price taker. In such competitive markets each seller and buyer has to accept the predetermined price of the good. The cost is determined by the willingness of the buyers to pay for a product and the seller to sell the product. Another significant characteristic of a competitive…… [Read More]
It is too early to gauge the results of this initiative, although early results of 1 million downloads in two weeks are positive (Kharif, 2009).
Another competitor is Internet radio. This industry is fragmented, with hundreds if not thousands of operators. It has many of the same content advantages of satellite radio, including the ability to offer a wide range of formats. It is at a content disadvantage, however, because few if any Internet radio stations can afford the high-end talent that satellite radio has established. However, their cost structures are much lower as well, meaning that they can offer their product for free. As of 2006, an estimated 30 million Americans listened to Internet radio each week (Prince, 2006). The industry is at a disadvantage, however, in terms of its ability to measure its listenership. This in turn makes it difficult for Internet radio providers to compete for advertising…… [Read More]
The effect of all of this is to drive away those who actually worked the land because they loved it, replacing them with hired hands running machinery, neither of which is likely to be kind to the land.
Perhaps the most familiar form of business except for perfect competition, monopoly situations result when there are many potential buyers for a product or service, but only one seller.
In the Grapes of rath, a monopoly situation is created as the banks decide to remove tenant farmers, preferring to sell the land to a single large conglomerate of landowners or even a single corporation.
Steinbeck could hardly have painted a harsher picture of this monopoly-in-progress, with scenes of huge bulldozers razing all evidence of the tenant farmers from the land. However, he also notes that the 'monopolization' of the Great Plains was seemingly an event bigger even than those landowners who…… [Read More]
intra-industry international trade within the standard international trade classification SITC6, which represents manufactured foods classified chiefly by material. The scope of this paper is limited to processed foods, and includes analytical frameworks from the gravity model, and classic approaches to product differentiation, product commoditization, pricing, and market structure.
eferences to market structures in the literature typically oversimplify the dynamics influencing the development of market types -- perfect competition, monopolistic competition, oligopoly, and monopoly -- and this tendency is exacerbated when the focus is on intra-industry trade. Further, the distinctions become considerably more obfuscated when companies that are in the same trade do business in both domestic and international markets. A global manufacturing strategy is the goal of most multinational companies, and rationalizing manufacturing strategies is an objective for nations, as well (Lee, 1984). For instance, assume that a country has the industrial infrastructure to produce canned beverages, but there are…… [Read More]
market structures in detail and analyses the pricing strategies that the firms have to undertake when they operate in different regimes. The case study on Toyota is considered next, which indicates that firms competing in various structures does not only have to focus on price and quantity ceteris paribus, they also have to consider external and internal variables that have a bearing on these decisions.
Introduction to Market Structures
Market structures are important parts of economic theory as they model market behavior that can help economists explain activities in industry with ease. Market structures, hence are basically models that define market behavior with respect to certain criteria so that it becomes simpler to compare events in real life to the postulated scenario as described in theory in order to be able to determine casualties and to define optimal strategies that firms operating in different market structures can use.
There are…… [Read More]
e. In Spain or Italy) Larson's products will be cheaper on global markets. Under this scenario, Larson would be forced to finance its operations entirely from ongoing cash flow. It would also see a slump in the strength of the battery industry. If the industry slumps, this may bring about the oligopoly scenario from Milestone 2. At present, however, a credit crunch would simply limit the amount of R&D that Larson could conduct, and would prohibit the offshoring of production in order to cut costs. Larson would still be able to follow the core cost leadership strategy, which was always the most reasonable option on the table given the industry characteristics.
Larson is faced with an uncertain future in that each of these three different scenarios delivers slightly different characteristics with regards to the nature of competition and the opportunities that exist in the marketplace. Some of the options presented…… [Read More]
Online AntiTrust Issues
Antitrust law is a United States legal code that helps to maintain market competition by regulating anti-competition actions by organizations. The Sherman Act of 1890 was one of the first attempts to restrict large companies who fixed price, output and then manipulated demand to maximize their products. Standard Oil was one of the prime early examples of a company that controlled markets to the point that the government felt was detrimental to the entry of other competitors (Bork, 1993). In our current example, companies like Facebook and Google are being investigated, similar to Microsoft and AT&T, for controlling the Internet search process and/or network effects. This does not stop with Facebook and Google, but moves into many of the giant e-tailers (Amazon, EBay, etc.) that often use predatory or collusive practices to force customers into either advertising on their site, pricing to their scale, or in the…… [Read More]
Antitrust Practices and Market Power: Google Antitrust Behavior
Economic theory expresses that competition contributes substantially to the efficient operations of markets, and hence to the improvement of a nation's wealth status. Antitrust laws seek to foster competition in the marketplace and to consequently ensure that the welfare of consumers is maximized through the provision of low-priced high-quality products. This the laws do by preventing the emergence of cartels and monopolies, which impede on competition by creating barriers to entry, with the help of which they are able to obtain market power and consequently drive market prices to favor them. Although monopolies may result from either government action or natural reasons, in which case they are referred to as government and natural monopolies respectively, most monopolies are formed through exclusivity contract arrangements, mergers, acquisitions, and collusion. Antitrust laws work at limiting these.
The Costs of Antitrust Behavior
A number of companies…… [Read More]
When unemployment is high, companies may decide to delay the release of their new updated phone as a means to maximize profit. By withholding the release of the phone, not only does demand build but the ability of more consumers to enter into the market to purchase the phone does occur. At this point, the profit maximization curve peaks earlier and is likely to have a prolonged parabola at the top of the curve which is a short-term profit maximization curve.
With a low employment rate, the likelihood of the smart phone market to do very well is limited by the low employment rate and is subject to constraints when considering the smart phone market and the consumer's ability to pay.
Supply & Demand
Law of demand and substitutes how the demand of these phones are very high. Which again ties back to scarcity but how substitutes are so readily…… [Read More]
McDonald's Market Structure
McDonald's (2010) is one of the most recognizable brands around the world. It is the world's largest food chain and has more than 32,000 locations in more than 110 countries. Operating it's own brand, McDonald's franchises its brand to local business people; approximately 70% of McDonald's restaurants are franchised. As of 2009, 80% of McDonald's restaurants were franchised business with the remaining 20% being were company-operated. McDonald's serves more than 47 million customers on a daily basis and employs upwards of 1.5 million people. The chain has adapted to cultural regions and offers items such as the Teriyaki Mac in Japan, substitutes lamb for beef in India, and offers variants of the Filet-O-Fish in China ("Fast Food Market Share," 2011).
McDonald's functions as an oligopoly in the burger themed fast food franchise industry. An oligopoly occurs when few firms dominate the market. For example, in the Spanish…… [Read More]
Shell's Global Positioning
Shell's Global Positioning
Shell is one of the world leading energy and petrochemical company that operates in more than 90 different countries (shell.com, 2010). Shell's main business strategy is to reinforce their position as a leader in the gas and oil market, to maintain a competitive edge and increase shareholder wealth. The company is also interested in meeting the global demand for energy in a responsible and safe manner. Shell's mission is "to enhance profitability through innovative management strategies while ensuring cost effectiveness and harnessing creative ideas" (Shell.com, 2010). Shell shares the values of safety and protecting the environment. The organization continues to invest money into making their product safer for the environment and everyone involved with the product. In 2010 Shell invested $1 billion in investment and research, to create a better product. The main value of the organization is to "be the market…… [Read More]
Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing. In addition to this, through Obamacare, the government has set requirements for healthcare insurers which have significantly reduced their medical loss ratio Dinan 396.
The second factor that affects the degree of competitiveness of the industry is the number of companies operating in the industry. This has been the major reason for the hundreds of mergers in the industry since this is the major driving factor for changes in market share. The last factor is government-provided health insurance. The government provides insurance plans which create significant competition for the private companies Vanness and olfe 101()
The productivity measures that can be developed are the number of health insurance consumers, average cost of providing medical cover and price of health insurance premiums. The…… [Read More]
For the government and the companies involved, the resultant lack of competition is easily controlled in terms of what is broadcast. The government can then more easily dictate what the public is to receive via the airwaves. For the companies involved, increased growth means increased revenue and success.
For the public, the most obvious disadvantage of the lack of competition means a probably lack of objectivity in broadcasting. This has implications for the ideals of freedom of the press and the public right for accurate information. On the other hand, an advantage is an increase of choice in terms of products offered by the large broadcast networks. Some for example have begun to offer Internet broadcasting stations, providing users with a wider variety of listening choices.
According to ret a. Fausett (2003), the FCC's new directive towards FM radio during the 1960s stimulated healthy competition and experimentation. New audiences were…… [Read More]
March 2006. On the Internet at http://www.prdomain.com/companies/S/Siemens/newsreleases/20063229659.htm.Last retrieved on February 5, 2007
4. Ishii, Jun. Technology Adoption and Regulatory Regimes: Gas Turbine Electricity Generators from 1980 to 2001. Center for the Study of Energy Markets. March 2004
5. MINERAL RESOURCE SITUATION of HUNGARY. Hungarian Geological Survey - 2002. On the Internet at http://www.mgsz.hu/english/mineral/mineral_3.html.Last retrieved on February 5, 2007
Alcoa's Hungary operation ships first order of turbine airfoils. 2006. On the Internet at http://www.thefreelibrary.com/Alcoa's+Hungary+operation+ships+first+order+of+turbine+airfoils-a0153762888.Last retrieved on February 5, 2007
Alcoa's Hungary Operation Ships First Order of Turbine Airfoils. usiness Wire. August 29, 2006. On the Internet at http://www.alcoa.com/global/en/news/news_detail.asp?newsYear=2006&pageID=20060829005060en.Last retrieved on February 5, 2007
Siemens to supply turbomachinery equipment for the oil and gas industry. March 2006. On the Internet at http://www.prdomain.com/companies/S/Siemens/newsreleases/20063229659.htm.Last retrieved on February 5, 2007
Ishii, Jun. Technology Adoption and Regulatory Regimes: Gas Turbine Electricity Generators from 1980 to 2001. Center for the Study of Energy Markets. March 2004
MINERAL…… [Read More]
From the perspective of the firm, Pfizer and Wyeth can combine their diverse strengths and capabilities, and merge their talents and skills thus enabling them to become more profitable and lucrative. Doing so, they will be able to reach more clients, solidify their already existent client base, and, possibly, expand into other areas whilst establishing themselves in other states and/or in other parts of the globe.
More specifically, advantages to the firm include the fact that:
Quality staff, or additional skills, non-existent in one's own firm, can be acquired
That additional knowledge of the industry or sector can be gained;
That the business intelligence of other firm (or each particular company) can add to current experiences and knowledge;
That there is enhanced access to asses for new products and business development;
That the larger company can now gain a wider customer base, therefore increasing market share;
That there is…… [Read More]
Intra-Industry International Trade
Standard trade theory and its deviations
The classical theory of international trade can be traced back to the founding father of capitalism Adam Smith: Smith's 1776 Wealth of Nations theorized that free trade would be beneficial to all nations. Smith stated that much like merchants, nations should specialize in the particular goods and services which they could produce most efficiently and trade with other nations who could produce alternate goods and services equally efficiently. Thus free trade resulted in advantages for both trading parties. Smith's theory was later fleshed out by David icardo in his Principles of Economics. iccardo stated that free trade could optimize efficiency for every country on a global level by reducing the inefficiencies generated by the excess resources involved in producing the goods and services the nation was not suited to produce (Sen 2010: 2).
This common wisdom remained relatively consistent…… [Read More]
However the restaurants collectively are considered to be a luxury good to those within the market. We feel that our brand is a normal good in this market as our cuisine is specific to the taste of the clientele represented by the demographic. Additionally, our decor and quality distinguish our establishment from what are deemed to be the lower quality establishments in the area that would normally represent the 'competition'.
The additional features of our establishment also yield a luxury restaurant as the market deems the bathroom as an important feature in distinguishing a market friendly and luxurious restaurant experience. In many countries it is that way, the food itself does not distinguish the restaurant, as one can ostensibly obtain a great, world-class meal from many restaurants. Indeed, the restroom experience is what qualifies a restaurant as being luxurious or not luxurious.
The market structure that best characterizes the industry…… [Read More]
Managing a New Product Launch
This paper discusses Keurig at home gourmet single-serve coffee product launch. Keurig is an established business attempting to break into the at-home single-serve product industry. It attempts to distinguish itself as a key player by offering gourmet coffee services. Coffee continues to be a booming product, with many opportunities. While coffee consumption continues to grow, there are many potential obstacles that Keurig may face. For example, there have always been many competitors in the market. There are two-serve and even single-serve vendors already in the market. The manner in which Keurig at home single-serve will attempt to distinguish its product successful is by promoting itself as an upscale provider to young, primarily male coffee drinkers interested in buying a high quality product with lots of variety. The odds are the company will do well if it markets its product to vendors that already…… [Read More]
FedEx is a logistics company that "provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services." The company offers "integrated business applications through operating companies competing collectively and managed collaboratively" (FedEx.com, 2013). The company has a number of different units, including Express, Ground, Office, Customs Critical and other smaller businesses related to its core delivery businesses. The company has experienced a long-term rising trend in its revenues, mostly tied to the business cycle, but its net income has been more volatile over the past five years (MSN Moneycentral, 2013). FedEx has long been considered to be a bellwether firm for the economy, since it has a diversified corporate customer base and its stock price closely tracks industrial output (Goldstein, 2013).
Pattern of Change
FedEx has a relatively slow pace of change. The core technologies of the logistics business are transportation equipment, which has…… [Read More]
In developing countries, consumers are more affected for two reasons. One is that consumers are more likely to buy raw ingredients. ithout manufacturing entities to absorb some of the commodity price increases, consumers are left to absorb almost all of the increase (Ibid.). As a result, food prices have increased more in the developing world than in the developed world. Additionally, consumers in these countries already expend a significantly higher percentage of their income on food than do consumers in estern nations. Thus, demand for food in the developing world is price elastic and consumers suffer because they are unable to meet their food needs.
In the developed world, increased food prices suppress demand in other sectors of the economy, which can cause minor shocks in employment and investment in some businesses and industries. In the developing world, food price shocks can result in starvation and civil unrest. The recent…… [Read More]
Over the last few years, it is evident that the airline industry in the U.S. has been experiencing long standing as well as novel challenges (The American Antitrust Institute, 2012). These includes the increase in the price of fuel, slowing demand for air travel and pressures to expand globally. Consolidation among various airlines across the country is the most common remedy that most of the airline firms are applying.
In April 2012, the U.S. Airways made an announcement to move and take over the American Airlines. American airline is the fourth largest airline in the United States while U.S. Airways is the fifth (Plane Buzz, 2013). This merger, therefore, will make the U.S. Airways- American the largest in the United States with a combined share of more than 21% (The American Antitrust Institute, 2012).
The merger is worth 11 billion U.S. dollars and will turn America into the largest…… [Read More]
Role of Government in Healthcare/How Government Influence Sunnydale
Similarities between Monopoly, Perfect Competition and Oligopoly
Importance of Government Involvement with Health Care Entities at the Local, State, and Federal Levels
Structure, Conduct, and Performance Paradigm As It Relates o Health Care
Implications of the Sherman Antitrust Act on Sunnydale Care
Overview of the Structure and Operation of Medicare and Medicaid
Services hat Each Cover
Benefits and challenges of government involvement at Sunnydale Care
Similarities between Monopoly, Perfect Competition and Oligopoly
Monopoly and perfect competition
Both perfect competition firms and monopolies face similar production and cost factors. Both also are in the business of maximizing profit. Both have the potential of earning super-profits but in the long-term they would only achieve normal profits (Boundless, 2015).
Perfect Competition and Oligopoly
In both these is more than one firm in the market competing with the others and no single…… [Read More]
Instead, IM began to falter after a series of product failures. As a result, many companies gained market share against IM with some even over taking it; an efficient market took care of the issue.
Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or so companies controlled 90% of U.S. travel. Airlines such as American mostly enjoyed high profits until 2000, taking advantage of limited competition and their ability to price discriminate to increase profit margins for those customers who were willing and able to pay higher prices. eginning in 2000, everything came crashing down for the airlines (pardon the pun). American airlines lost money from 2000 until it finally reaped a small net profit in 2005. The oligopoly market structure that once fueled…… [Read More]
There will be a few different consequences of a few large airlines or networks dominating global air service -- some good for consumers and some bad. Some of the advantages that have emerged thus far include better coordination of connections to improve service, and different tactics to improve marketing such as code-sharing. These changes are generally beneficial to both the customers and to the airlines as well. The reason these changes are beneficial is in part because the formation of these networks has been driven by competitive demands. The airline industry is in a state of monopolistic competition, but with a commoditized base service. Airlines are seeking ways to differentiate without competing on price or altering the base service. For the foreseeable future, these networks are likely to result in improved operating profits for airlines and improved services for consumers, as the airlines are still in a state of…… [Read More]
With the news of an office supply chain merger of historical proportions making headlines every day, Staples' CEO on Sargent has been forced to publically clarify the company's resource management strategy (Detar, 2003). Combing through his public statements since news of the merger's pending approval was first publicized, it may be possible to refine and improve the firm's future adaptations to such shifting market conditions.
In order to anticipate the multitude to probable threats posed by a merger between its two main competitors, Sargent and the executive management of Staples must engage in a proactive process of risk management. The likelihood of a combined Office Depot/OfficeMax entity slashing prices to force Staples into counterproductive economic strategies should be considered of paramount importance. Adjusting to the market conditions of an oligopoly, as imposed by the planned merger, will require a comprehensive risk management appraisal that includes the formulation of multiple contingencies.…… [Read More]
Market Structure and Managerial Decision Making
The objective of this paper is to discuss the concept game theory in the competitive market environment where there are two or more firms competing against one another. The paper cites the examples of Nash equilibrium, prisoner dilemma, and dominant strategy. Moreover, the paper discusses the theory of perfect competition, monopoly, monopolistic market and theory of oligopoly. (Bhat, and au, 2008).
The game theory is a type of situation where the rewards or payoff given to any player depends on the action of the other players. The interdependence between two or more firms is referred as a game theory, and the rewards earned by a firm is known as a payoff, and the payoff matrix assists in analyzing the interdependence between firms. A duopoly is an interdependence between two players that may result in a game theory. However, a relationship between two…… [Read More]
For both debt ratios, the lower their values are the more conservative the company is, choosing to finance its operations/investments from internal sources. However, such a company may miss out on growth and investment opportunities.
It is recommended for companies not to finance more than 50% of their capital via external debt. The debt-to-equity is superior to the recommended values, indication a much higher proportion of equity financing via external debt. The debt-to-asset is also higher to the recommended values, but much closer indicating that the assets are around 80%financed by external debt.
The two indicators suggest that the group is heavily financing its capital/assets from external debt, which is explained by the group's expansion strategy. However, FFS's values are not as justified because the company didn't expand as fast as the group, yet the debts were proportional to those of the group. At both levels, group and company, the…… [Read More]
Collusion, therefore, has the impact of delivering higher prices to consumers than they would otherwise experience. In the long-run, this keeps all firms in the industry in business but in the short-run it is detrimental to consumers, so most forms of collusion are not allowed by regulators. The irony is that regulators are needed to maintain the "free" nature of the market -- to keep prices competitive. This is necessary when barriers to entry are high, as few new firms will enter an oligopolistic industry that is engaging in dangerous price wars.
There are examples of collusion in the world, however. OPEC is probably the biggest one. The cartel sets its output (around 1/3 of global oil output) in order to manage the level of total global output. This has the effect of managing the prices, as long as non-OPEC nations do not change their output levels to counterbalance OPEC's…… [Read More]
Market growth in wheelchairs is favorable for a few reasons. The growth in the industry is concentrated in higher-priced segments, with 12-15% each. This means that the relevance of the standard wheelchair is declining, despite that segment remaining the highest volume wheelchair at around 208,000 units or 61.3% by volume and 31.4% of dollar sales. Projecting current growth rates out five years, the industry will looks as follows:
1998 Wheelchair Market
1998 unit share
1998 $ share
Standard wheelchairs are going to lose unit share and are going to decline significantly in dollar share as well. The other three categories are going to increase in importance, so it is important for firms to capture a share of these markets. ight now, the power market is not served by Sunrise, so the company is essentially competing for what will be 38-39% of the total…… [Read More]
Adidas was formed in Herzogenaurach, a town in Mittelfranken, north of Nürnberg, not far from Erlangen, and remains headquartered there today. The company was founded by Adi and Rudolf Dassler. The brothers eventually had a falling out, with Rudolph founding Puma. Adidas has grown to become one of the leading designers and marketers of sports apparel, footballs, and other related items. The company operates globally, has revenues of nearly €20 billion, and profits of €0.72 billion in 2015 (Adidas 2015 Annual Report).
Adidas competes against Nike, Reebok, Puma, and several other brands in this space. Major product lines include footwear, apparel, and footballs. Adidas sponsors a lot of athletes and athletic clubs as part of its marketing. Ultimately, this industry is characterized by incremental changes to basic product designs, a strategic emphasis on marketing spending, and distribution, and companies that utilize a global strategy, selling the same way…… [Read More]
2.0 Strategic Situation Analysis
In order to understand the nature of aircraft manufacture at Boeing, it is important to have a clear vision of how outsourcing plays into the manufacture of aircraft. Let us use the example of Boeing's Dreamliner. The following illustration explains how outsourcing plays a key role in Boeing's business strategy. These represent TIER 1 suppliers.
From here, the parts go to the plant in Everett and are assembled by TIER 2 suppliers as follows:
These two illustrations clearly help to develop an understanding of the relationship between TIER 1 and TIER 2 suppliers at Boeing.
2.1 SOT Analysis:
SOT analysis is a planning method used to evaluate a company's strengths, weaknesses, opportunities and threats. In a business analysis, all of these factors are analyzed for the company under study and their competitors. This analysis allows the researcher to see both…… [Read More]
By the turn of the century, though, these low-costs carriers had become profitable or at least had significantly reduced their losses due in large part to concomitant increases by major carriers that were increasing their prices in response to decreasing yields and higher energy prices (Doganis 2001).
By and large, passenger traffic across the board increased significantly prior to September 11, 2001 and all signs indicated it was continue to increase for the foreseeable future. For example, according to Janda, Flouris and Oum (2005), global air passenger traffic increased from 1.573 trillion revenue-passenger-kilometers (RPK) in 1985 to 3.394 trillion in 2000, representing a 116% increase during this decade-and-a-half period, or an average annual compounded growth of 5.26%. Furthermore, between 1985 and 2000, air freight traffic grew at even faster rate than passenger traffic (Janda et al. 2005). These authors also emphasize airlines are directly affected by the larger economy in…… [Read More]
The company is permanently spending considerable amounts on &D to innovate its products and on advertising to maintain the brands awareness high. Shareholders are more satisfied than ever after Procter's recovery in the late 1990s, early 2000. But they did not encourage much the recovery process because it took almost two years and they were expecting a fast recovery process.
Currently there are over 100 Pantene products. Pantene shampoo has 25 products in the supermarket shelves to cover all types of customer needs. In terms of sales, the brand has had a "blockbuster" evolution. It was introduced in the market about 10 years ago and it has been reinvented since maintaining a top market share. Pantene, the shampoo is actually the leader in this market, followed by Elseve from L'oreal. Overall, Elseve product line is better positioned in the market, having a larger market share for all hair care…… [Read More]
In assessing which of these models of a market would be most beneficial to the interest of a business, the most obvious choice is a pure monopoly. Although this model does not necessarily provide the best option for operations in terms of many aspects regarding society as a whole, in terms of business sense, it is the most beneficial and profitable model for a firm to operate in. As a business owner, if the product or service provided by a firm does not face competition from any other firm, the costs of providing the product can be lowered, supply can be determined at the full discretion of the firm, and pricing can also be fully left up to the firm.
Additionally, in some industries, a pure monopoly serves the purpose of providing stability and uniform standards. The Microsoft case is one in which this is a strong argument, as…… [Read More]
Collapse of the Big Three
America was once the leader and pioneer in the auto industry, a title that the country had for decades and a title that was so dear to America's heart that it was unfathomable to think that title might ever be lost. It's commonly misconstrued that America invented the automobile, when in reality that honor goes to German Karl Benz in 1885 (ozema, 2010). "Americans did, however, industrialize the love of the automobile. America loves big, fast cars, and for many decades American car companies shared the biggest slice of the auto industry pie" (ozema, 2010). America made having a car and the business of making cars firmly entrenched in American culture. This was a fact which kept the economy stimulated and which provided a consistent level of financial stability for the nation and the civilians within it. However the decade of the eighties marked the…… [Read More]
International Energy Law
International Energy Arbitration
This paper will examine the role of arbitration in the international energy sector over the past 50 years. Discussion is organized around the five decades leading up to the current state of affairs in the international energy sector. In each section, major arbitrations are identified and tied to the categorical intention of arbitrations of that period. For instance, arbitration awards that occurred during a period of substantive concession agreements -- termed the first generation of concession agreements by Kosheri (n.d.) -- include the Abu Dhabi award of 1951, the Qatar award of 1953, and the Aramco award of 1958.
The next period, which occurred roughly in the 1960s and 1970s, was characterized by arbitration awards that evidenced a climate of confrontation, during which host nations took the position of abstaining from participation in arbitration proceedings. These nations were unilaterally interested in bringing the earlier…… [Read More]
Economies of scale reflects a situation where the cost of something declines when more is produced. With larger quantities, bargaining power increase, and there are opportunities for greater systems efficiency. Economies of scope reflects a cost saving when a company produces two or more goods (The Economist, 2008). For example, if McDonalds only produced Big Macs, it would be inefficient because there is not enough demand for those to keep the restaurant busy. By adding other products, the restaurant can become more efficient because it is working closer to capacity and there are always customers.
Transaction costs are the costs associated with a transaction. In some cases, there are fees and commissions that have to be paid in order to do something. Those costs do not add any value in themselves, but they are costs that are necessary to doing the transaction.
Economic Value Added (EVA) is basically the…… [Read More]
Human societies within the context of civilization most always are organized into deference periods. The Constitution is a product of worldviews developed within such a limited paradigm, as paradigms tend to be, whether individuals -- including the Founders -- were and are aware of it. This condition, in part, touches on what Heilbroner frames as "The Unresolved Problem of Economic Power." He accepts that the wonderful free market system of Adam Smith is tainted by "giant oligopoly." The logic positing the market economy "as the servant of the consumer," therefore, might as well be null-and-void, but, still, "the emergence of these new attributes," Heilbroner argues, "can be seen as new functional mechanisms for the support of that system." (Heilbroner 18)
To make natural the influence of "giant oligopolies" to the free-market economy, Heilbroner borrows examples from the world of advertising and the manipulation of consumer wants. He admits…… [Read More]
Additionally, another imbalance is generated by the reduced bargaining power of the employees, who are no longer able to switch jobs. Additionally, when a monopoly is formed, the employees are rarely presented with the opportunity / possibility of forming or joining unions.
In an oligopoly situation, the situation is similar to a monopoly, with the specification that the employees are better able to negotiate terms and conditions as they have the ability to switch employers. An oligopoly is formed when the employment power -- or the demand for labor force -- is held by two or more organizations which joined forces on the market and an example is offered by the American automobile industry. Here however, other forces include the disequilibrium, such as more and more popular outsourcing operations or the search for hi-tech technicians. The annexed table reveals the market equilibrium for the auto industry in various contexts.
Finally,…… [Read More]
c) Mutual Interdependence: This assumption is based on the relationship between two or more individuals where one person depends upon the other for economic interest or benefit. When making a decision one has to consider the effect of his or her decision to the partner. This is common in the Perfect competition -- pure market phenomenon.
With the assumptions above the game theory helps in developing a perfect competition among the consumers.
Goal theory in perfect competition market
It tends to describe market structure based on assumptions which are non-existent, most market systems are imperfect, however the long run and short run situations can help in holding the assumption to be true based on the equilibrium, price and output.
Basic assumptions required for conditions of pure competition to exist as below;
Many small firms: Each producer producing a significant percentage in the total output in the market hence has no…… [Read More]
Both of these moves broke the monopoly. The Canadian government broke Bayer's monopoly and the second company moved into the market, creating a temporary oligopoly. The influx of Cipro from Mexico represented a substitute product, thereby breaking Cipro's American monopoly. This lowered the price of the drug until demand subsided -- note that it was demand that subsided and not supply. This despite the fact that the monopoly-granting patent protection was affirmed in U.S. courts (Bayer, 2002).
Eventually, the market for Cipro returned to equilibrium once the crises was over. By seeing how the market changed when introduced to different stimuli, we can better understand the characteristics of this market.
The market for Cipro -- and in general all patent-protected medicines -- began as a monopoly in equilibrium. Bayer enjoyed substantial pricing power and demand stayed at or near the demand floor as a result. hen demand began to price,…… [Read More]
There is limited risk from technological change, however, as it is unlikely that the beer production process will be radically altered by technological development.
The global trade environment also has an impact. The lowering of trade barriers allows a-B to enter more markets. They were able to build a brewery in China, for example. The reduction in trade barriers has also brought more imports into the United States. Rapid growth in the import segment has eroded a-B's market share. Foreign direct investment rules allowed InBev, a Belgian company, to buy a-B.
A-B is also subject to shifts in the global economy. In China, for example, increasing wealth has made a-B's products affordable for more Chinese. In the domestic market, not only is beer consumption affected by the state of the economy, but the types of beers consumed are also affected. As a low-cost provider of beer, Anheuser-Busch tends to benefit…… [Read More]