Question

Find any article from within the last two years (providing the link) that describes a successful or unsuccessful company from one of the four market models, be specific about how the market characteristics describes in the chapter apply to the article. Provide your opinon as to why there was the a success or failure,using the terminology from the chapter.

Answer 1

There are generally four market models: perfect competition, oligopoly, duopoly and monopolistic competition. All firms run their business in any one of the four markets. The success or failure of any firm largely depends on market demand, cost of production, government policy and many other factors. Hindustan Unilever Limited (HUL) is one of the renowned consumer durable companies in India and is a subsidiary of the British Dutch company Unilever. Unilever is the leading manufacturers and suppliers of food and beverage products, soaps, detergents and other products. HUL enjoyed monopoly power in India for many years and was sole producers of FMCG goods till 1980s. After that period, there was transition phase in FMCG market in India with many new entrants such as Nestle India, ITC, Britannia and others. To cope with the emerging market challenges, HUL has adopted Unilever Sustainable living plan (USLP) that integrates each Unilever product such as Lifebuoy, Kissan Jam and Sauces, Brooke Bond with social and environmental causes. According to HUL chairman Sanjiv Mehta, ULSP is based on responsible growth model that states that only responsible business that fulfills the dynamic expectation of society, will succeed in the long run. HUL chairman further stated that population growth and scarce natural resources has forced society to think about the social benefits of businesses and HUL has transformed its business in accordance to the expectations of society. Currently HUL brands are still in high demand among consumers in spite of stiff competitions from other firms. The sales of HUL products has been continuously growing at 6% annually. Recently HUL has acquired some leading companies such as Aditya milk to expand its food business in the country. To face the growing competition of Patanjali Ayurvedic limited, HUL has also started production of cost effective Ayurvedic products under the brand name Ayush and achieved tremendous success in its branding effort.

The success or failure of a business mostly depends on marketing strategy, branding and pricing of products. HUL that started its business in 1933, was sole producer and seller of consumer durable brands for many years and following entry of new firms in the market, it diversified its brand range and adopted new marketing strategy that addressed the broad needs of consumers and society. While in monopolistic competition, firms ensure that maximum profits by producing differentiated products and therefore do not face much change in the consumer demand in the short run. However, in a perfectly competitive market, there are several competitive firms producing identical or nearly same products and therefore, they have to adopt different production, sales and marketing strategies for maintaining their competitive edge. Hindustan Unilever has been largely successful in connecting its business with environmental benefits to society plus its continuous efforts to diversify its brands also helped it in maintaining high sales volume in consumer durable market.

URLs: economictimes.indiatimes.com/industry/cons-products/fmcg/responsible-growth-is-the-only-model-that-will-succeed-huls-sanjiv-mehta/articleshow/66645435.cms

hindustantimes.com/business-news/threatened-by-patanjali-hul-goes-mass-market-with-ayurvedic-products/story-5OxYxEisGXoOluxm3xcnyN.html