Question

Identify a specific industry where there has been (or you predict there will be) a significant change with regard to the degree of competition in the market. In other words, identify an industry that has gone from a monopoly to a competitive market, or from competitive to oligopolistic, etc. There’s no one way for an industry to go, but basically, it either goes from little/no competition to more competition or the other way around.

1. Describe the industry and explain the general pattern of change by identifying the major factor(s) that have led (or you think will lead) to a change in the degree of competitiveness. Explain why and how this industry is evolving.
2. Discuss how this change is likely to impact business operations (e.g., impact on pricing, advertising, labor markets, etc).

Answer 1

Though there are continuous changes happening in all sectors and all industries, one specifc industry which has seen drastic change in the levels of competition is the publishing industry.

This includes a variety of products such as newspapers, magazines, books, journals and so on.

This industry has moved a major part of its production from paper-based to electronic.

This transition to electronic media has changed the nature of competition. Now, many more sellers have entered the market. What was once close to an oligopoly, is now more of monopolistically competitve, or even highly competitive in certain areas.

For instance, if we look at newspapers today, most of them have shifted to electronic mode. Many major companies have already announced discontinuation of hard copy papers. Paperback magazines have been largely replaced by blogs and e-magazines. Books have moved to e-books, and most journals are now online.

The reasons for these drastic changes are:

the economies of scale associated with electronic media;

the scarcity of paper;

tastes and preferences of consumers;

ability to reach a global market

While electronic media has a much lower marginal cost of production, globally there is a shortage of paper. Environmental concerns about paper are also quite prevalent. Most consumers have shifted completely to phones and tablets, and thus now we can reach a target market of billions.

As far as pricing is concerned, a much lower price can be kept for e-media. A subscription based model is quite common, and distribution costs are close to zero.

Advertising has also become much more competitive due to this transition. Most advertising is now on electronic media, such as social networks, leading websites, emails and so on. Cost of advertising has gone down, as compared to the reach.

Labor demand for manual labor has gone down significantly. Now, more skilled labor is required - writers, bloggers, programmers, artists - who may contribute to the electronic content.

Thus, a complete shift of the market has taken place.