Question

1. Provide an example of any two leading companies from the same industry which are competing directly for marketshare. Give a short profile (300-500 words) for each (provide references for your answers).

2. If you are the manager of one of these companies, what pricing policy do you adopt to be in the first position? Why? (100-200 words)

3. When the whole sector of the market is occupied by the little number of big corporations who share the leadership, what do we call this type of market structure? Explain in details the benefit of this market for the leading company and the disadvange of such situation on final consumers (300-500 words)

Use your own words

Answer 1

1) SOME COMPANY WOULD TALK ABOUT MAKING A HIGH QUALITY PRODUCT ,OTHERS TALK ABOUT BUSINESS GROWTH, OTHERS TALK ABOUT MARKET SHARE, OTHERS ABOUT THE JOB SATISFACTION OF THEIR WORK FORCE.ALL OF THESE GOALS MIGHT BE PURSUED , BUT THEY ARE NOT FUNDAMENTAL GOAL. THEY ARE MEANS A DEEPER GOAL.

EXAMPLE FOR 2 COMPANIES LIKE AS, COKE AND PEPSI .THESE COMPANY ARE PRODUCED SAME PRODUCT. THAT IS COLD DRINKS AND THEY HAVE USED THEIR OWN POLICY, OWN PRODUCTIVITY , ETC.

MARKET INCLUDING CERTAIN SUM COMPETITION . THE MARKET SHARE IN WHICH FIRMS OPERATE VARY A GREAT DEAL.SOME ARE HIGHLY COMPETITIVE , AND PROFITS IN THESE MARKETS ARE HARD TO COME BY. SOME APPEAR ALMOST FREE FROM COMPETITIONS, AND FIRMS IN THESE MARKETS EARN HUGE PROFITS.

A COMPANY OR A FIRM CONDUCT COMPETITIVE ANALYSIS :

FIRSTLY COMPANIES ARE CATEGORIZE HIS COMPETITORS .THEN EXAMINE THE COMPETITORS WEBSITE,THEN IDENTIFY MARKET POSITIONING ,THEN THESE COMPANIES TAKE THEIR PRICE AT PEEK. AFTER THAT IF ANY PROBLEM IN OUR COMPANY ,SOLVE THOSE PROBLEMS, THEN USE OF SOCIAL MEDIA LIKE TV , FACEBOOK ETC.AT THE SAME TIME THEY ARE MAKING ADVERTISING OF THE COMPANY IN NEWSPAPER, TV ETC.

COMPANIES INCLUDES FEW STEPS TO CONDUCTING COMPETITIVE INTELLIGENCE : FIRSTLY IDENTIFY ALL YOUR CURRENT AND POTENTIAL BRAND , PRODUCT ,TOTAL BUDGET OF COMPETITORS.THEN FOCUS ON KEY COMPETITORS BY ASSESSING SIZE , GROWTH, PRICE , PROFITABILITY ,OBJECTIVES OF THE PRODUCT.AND MAKE STRATEGIES AND TARGET MARKETS OF EACH ONE.

2) WHEN PRICE LEVEL ARE STABLE , THE PROBLEM IS TO PREVENT INFLATION FROM BREAKING OUT.WHEN INFLATION IS ALREADY PRESENT, THE PROBLEM IS TO REDUCE ITS RATE AND RESTORE PRICE LEVEL WHILE DOING LEAST POSSIBLE DAMAGE TO REAL GROWTH .

MANY DIFFERENT MONETARY POLICY REGIMES PRICE LEVEL :

1 FIXED RULE POLICIES

2 FEEDBACK POLICIES

3 DISCRETIONARY POLICIES

A COMPANY ACHIEVE ITS GOAL , FIRM WILL MAXIMIZE ITS PROFIT THROUGH PRICE OF THE PRODUCT.A FIRM MEASURING FIRM PROFIT AS TWO TYPES.LIKE AS,

1 OPPORTUNITY COST : A FIRM OPPORTUNITY COST INCLUDES ,

A .EXPLICIT COST :THESE COST ARE PAID IN MONEY . THE AMOUNT PAID FOR A RESOURCE COULD HAVE BEEN SPENT ON SOME THING ELSE .

B .IMPLICIT COST :A FIRM INCURS THESE COST WHEN IT FORGOES AN ALTERNATIVE ACTION , BUT DOES NOT MAKE A PAYMENT .A FIRM INCURS ,

1 USES ITS OWN CAPITAL

2 USES ITS OWNERS TIME OR FINANCIAL RESOURCES

3) IN A MARKET STRUCTURE INVOLVING COMPETITIVE ENVIRONMENT , IT CAN IDENTIFY FOUR TYPES,THEY ARE,

1. PERFECT COMPETITION :WHEN THERE ARE MANY FIRMS , EACH SELLING AN IDENTICAL PRODUCT ,MANY BUYERS AND NO RESTRICTIONS ON THE ENTRY OF NEW FIRMS INTO THE INDUSTRY .THE WORLD WIDE MARKETS FOR CORN, RICE , AND , OTHER GRAIN  ARE EXAMPLE OF PERFECT COMPETITION.

2. MONOPOLISTIC COMPETITION : THIS IS MARKET STRUCTURE IN WHICH A LARGE NUMBER OF FIRMS COMPARE BY MAKING SIMILAR BUT SLIGHTLY DIFFERENT PRODUCT . FOR EXAMPLE DIFFERENT BRANDS OF ASPIRIN AND CHEMICALLY IDENTICAL AND DIFFER ONLY IN THEIR PACKAGING.

3. OLIGOPOLY:IT IS A MARKET STRUCTURE IN WHICH A SMALL NUMBER OF FIRMS COMPETE. COMPUTER SOFTWARE, AIRPLANE MANUFACTURING , ARE EXAMPLE FOR OLIGOPOLISTIC INDUSTRIES.

4.)MONOPOLY : IT ARISES WHEN THERE IS ONE FIRM , WHICH PRODUCES A GOOD OR SERVICES THAT HAS NO CLOSE SUBSTITUTES AND IN WHICH THE FIRM IS PROTECTED BY A BARRIER PREVENTING THE ENTRY OF NEW FIREMS.

MEASURES OF CONCENTRATION

1. THE FOUR FIRM CONCENTRATION

2. THE HERFINDAHL- HIRSCHMAN INDEX

LIMITATIONS OF CONCENTRATION

1. THE GEOGRAPHICAL SCOPE OF MARKET

2 BARRIERS TO ENTRY AND FIRM TURNOVER

3 THE CORRESPONDENCE BETWEEN A MARKET AND AN INDUSTRY