Question
A firm, ABC Company, is operating in a ______ market is struggling to think of strategies to capture a bigger share in the market which
A firm, ABC Company, is operating in a ______ market is struggling to think of strategies to capture a bigger share in the market which was previously controlled by two mega-corporations. While ABC has no big problems in finances or capital requirement, capacity, expertise, and legal or regulatory requirements needed to battle it out with the other two, getting a bigger share in the market remains a challenge. Answer the following:
a.Prior the entry of ABC, what is the market structure?
b.With the entry of ABC, what is the current market structure now?
c.How you address the ultimate objective of the firm in this case? Provide at least 5 strategies that can be recommended in light of your answer in item b. and explain each, including its advantages and disadvantages.
Particular Strategy:
Explanation(What is it? How can it be done?) :
Advantages:
Disadvantages:
I. COMPREHENSIVE DISCUSSION OF THE THEORIES INVOLVED (40%)
Market structures are defined as the organizational and competitive characteristics of markets, describing the nature of competition and pricing policy followed in the market. It is the classification of various firms or businesses regarding how they process, how they decide, any interventions and control, and anything concerning the overall operation and system.
These structures vary in numerous types namely monopoly, perfect competition, monopolistic competition, and oligopoly. In this question, we will be tackling oligopoly and its special cases when practiced in real scenarios. But first, what is Oligopoly? It is a market structure characterized by 2 or more large sellers which dominate the industry and compete with one another. They sell identical or differentiated products, depending on the decision of a firm to follow the actions initiated by the other firm. With this, products have the chance to become identical because some firms will tend to copy or create prototype of what the other firm sells if that specific product regulates more revenue. Burger King, McDonald's, and Wendy's are some of the examples of large corporations under Oligopoly. There are significant barriers to entry in Oligopoly since large firms are able to gain significant market power which prevents the smaller competitors to enter the market. This will later result in a high possibility of profit-making because even though the production of outputs is restricted, firms under Oligopoly are "price-makers", meaning that they have enough market power to influence the prices and still make their business profitable despite the low number of outputs produced.
Another theory involved is duopoly which is also considered a kind of an oligopolistic
market structure wherein only a few firms control the majority of the market
share. Duopoly is a special case of oligopoly wherein the market shares are controlled by two firms. There is an existing relationship between the two firms that every action and reaction that each of them makes will affect their profitability. There's a strong barrier to entry in a duopoly market such as brand loyalty and significant economies of scale which are suitable for a small number of firms.
II. ISSUES TO BE RESOLVED (main problem) (40%)
A firm, ABC Company, is operating in a __oligopolistic____ market is struggling to think of strategies to capture a bigger share in the market which was previously controlled by two mega-corporations. While ABC has no big problems in finances or capital requirement, capacity, expertise, and legal or regulatory requirements needed to battle it out with the other two, getting a bigger share in the market remains a challenge.
A. Sub-Header 1 (sub-problem 1)
The market structure before the entry of ABC firm in the market is oligopolistic market to be specific, it is a duopoly a special type of oligopoly because as stated that the majority of the market which is previously regulated by two mega-corporations.
B. Sub-Header 2 (sub-problem 2)
The market structure when the ABC enters will still be considered as duopoly. Although the ABC entered the market, it is also stated that the ABC firmis having a hard time getting a bigger share in the market. That tells us that the criterion to control a major part of market share is still not met therefore ABC cannot be considered a price maker of the market structure.
C. Sub-Header X (sub-problem X)
II. CONCLUSION
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