Question

HootSuite

1. Identify the relevant market. What is the good or service that we are analyzing?
2. Market Structure. What market structure best characterizes this market? Provide evidence of your assertion. What strategies do firms in this type of market need to employ?   
3. Market conditions / competitive environment. Discuss the dynamics of the market - its players, how they interact, what exogenous shocks are impacting the market. Are there any exogenous shocks or are all the dynamics internal? Basically, what's going on that is making the HootSuite management have to decide on strategy.
4. What advantages does HootSuite have over its rivals in its customer base?
5. Are Hootsuite’s tactics and ideas about future strategy theoretically consistent with how a firm operating in the market structure you suggest in #1 above and facing the issues in #2 above should act? Defend your assertion with theory and support from #3 above.
6. HootSuite is evaluating pricing options. Do you think these are consistent with theory? Which option would you suggest and why? Defend your suggestion with economic arguments.

Answer 1

Answer -

Relevant Market -

Defining the relevant market usually requires large-scale and detailed economic analyses. This usually proves to be a challenge for the competition authorities, given the huge variety of markets and economic activities. Therefore, it is usually not possible to reach a definite conclusion easily.

Analysis which used to defined relevant market -

Competition authorities usually apply a two-fold analysis to define the relevant market: (i) defining the relevant product (or services) market, and (ii) defining the geographical market. While thescale and comprehensive economic studies are typically needed to identify the appropriate sector. Given the vast variety of markets and economic activities, this typically proves to be a problem for the competition authorities. It is, therefore, generally not possible to quickly draw a definitive conclusion.

In order to identify the relevant market, antitrust regulators typically use a two-fold analysis:

(i) identifying the relevant market for goods (or services) and (ii) identifying the regional market. While the analysis covers the time factor as well, the more fundamental two-dimensional analysis fuses this component of the applicable sector.

There are four types of economic structure: perfect competition , monopolistic competition, oligopoly , and monopoly. Due to the following features, the categories differ: many producers are in perfect and monopolistic rivalry, few in oligopoly, and one in monopoly.