Business Overview

City M has a population of 7.7 million people and 281,000 businesses. The region's GDP in 2013 was approximately $560 billion (US), making it one of the largest economies in North America, with impressive innovation and tech hubs. The business community in City M is diverse and robust, with some of the biggest knowledge-based industries in Canada. These sectors include advanced manufacturing, financial services, information and communications technology, life sciences, smart logistics, etc.

City M is a rapidly expanding municipality comprising well-established and newly developed communities. Over the past two decades, there have been significant changes in City M's families and children. The city has a relatively young population, with 16% children, one of Ontario's highest percentages. City M's total population was 103,425 aged 0-12 years, expected to grow by 10% between 2016 and 2026. Research shows that public investment in early years and child care can drive regional economic development. The need for child care has increased due to the rise in dual-income earner families over the past three decades. Access to child care is an economic driver that allows more people, especially women, to participate in the workforce or attend school, increasing Gross Domestic Product and income from taxes.

The service that I am proposing for City M would be assisting parents in finding reliable childcare for parents outside of daytime hours. There are various options available to parents during the day, such as drop-ins and traditional daycare, but those services typically close around 6:00 pm with strict policies around being late. In City M, the only options for childcare in the evenings would be a nanny, babysitters, or family and friends. People do not always want to impose on their families; nannies and babysitters can be expensive. Parents can also feel uneasy about not knowing if the people they leave their children with are good caretakers.According to city statistics, only 63% of the demand for care for children under four is being met, which is a cause for concern for families. This suggests a strong consumer base for a solution to this issue. Access to a wider and more flexible range of programs, including extended hours and weekend care, is needed. However, parents often need help finding suitable programs that meet their needs. To address this issue, this business aims to provide local parents with the best evening care solution.

The main concept of the business is that it would offer those who currently work in daycare the opportunity to work evenings and weekends watching children. They could be known entities to parents if they were proven resources for daycares. If not, then they would at least be viewed as more reliable. The workers could set their prices, and the parents could decide if they could abide by them. Therefore, the elasticity of demand for some daycare workers could be more than for others. When the business first launches and fewer workers are available, higher prices could be dictated as the supply would likely be lower than the demand. However, the goal would be that with more available daycare workers, the cost would eventually regulate depending on their experience. They would have the option to change their prices depending on whether people are contacting them for work. They may need to adjust depending on their desire to work additional hours. The parents would only see the bill rates, including the markup for business operations and the rate to the worker. As the business continues its operations, we will track workers' rates. We would eventually use this data to advise new workers on what rates they could dictate based on their experience and when they can work. This system would only support workers who have been confirmed to work at a daycare facility currently. Potential customers would be parents seeking evening child care, whether the children attend daycare or have already started school to expand the demand. We would look to partner with local daycares and schools to advertise the service, which is likely to be successful should their workers choose to leverage the opportunity. As we would target the local population, it is less likely to make commuting an issue unless demand outweighs supply at a given time and a worker is willing to travel.

Given the recent inflation in the market, daycare workers may be more open to an easy way to increase their income. In general, 85% of Canadians worry that their earnings do not match the growing cost of living. Therefore, it makes sense that 63% of gig workers have opted for a side job in 2023 due to the surging costs and inflation. While workers could inform parents about the offering, having a daycare advertise the service would help parents with the peace of mind that their children would be in good hands. It also has the benefit for the daycare that they are supporting their workers in taking on additional hours if they choose to do so.

Having dependable child care during evenings and weekends can be a luxury for some but a necessity for others. It is difficult for those working in some industries to work those hours to find affordable child care. While this service would not qualify for subsidies as it is not a licensed daycare, there may be opportunities where a discount could be discussed between the worker and the parents if it were a regular job. However, it would be at the discretion of the worker.

The business would not have a brick-and-mortar location but would operate solely via phone and a phone application (app) to save operational costs. Payments would also be completed via the app, allowing workers and parents to review each other to promote accountability. While some parties may be tempted to circumvent the business, it could lead to avoidable negative tax implications.

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The market type that most closely approximates this business in the childcare industry is monopolistic competition. Monopolistic competition is characterized by many companies operating in the market, each offering differentiated products or services("Monopolistic Competition," 2023). In this case, the business would provide a unique service of assisting parents in finding reliable childcare during evening and weekend hours, which traditional daycare centers do not commonly offer. The following characteristics support the identification of monopolistic competition:

1. Product Differentiation: The business aims to offer a distinct service by providing childcare outside traditional daycare hours, catering to parents who require evening and weekend care. This differentiation sets it apart from existing daycare options in the market.
2. Many Sellers and Buyers: While there may be direct competitors offering different services, there are likely to be multiple options available to parents for evening and weekend childcare, such as nannies, babysitters, and relying on family and friends. Although the business seeks a more reliable and convenient alternative, it still operates in a competitive environment.
3. Independent Pricing: The workers in the business would have the freedom to set their prices, which suggests a level of independence in pricing decisions. Each worker could have different rates based on their experience and availability. Parents would then decide if they could abide by them.

The market type suggests that the pricing and output strategy would differentiate the business from other childcare providers by offering a unique service that is not widely available. With many daycare workers providing their services, pricing would likely be competitive, but there could be rate variations due to product (experience) differentiation. Daycare workers may adjust their rates based on demand and experience level. The uniqueness of the services they offer could give them some pricing power. Providers may differentiate themselves through pricing strategies such as offering competitive rates or discounts for regular customers. The business would look to advise workers on pricing based on their experience and demand, but ultimately, they would have the flexibility to set their rates.

Regarding the business' output strategy, it would aim to differentiate itself from competitors through product/service features. In this case, the business could focus on ensuring high-quality care, reliable workers, and convenient access to evening and weekend childcare options. It would aim to attract as many daycare workers as possible to cater to the diverse needs of parents seeking evening childcare. The emphasis would be on providing a unique and valuable service to attract and retain customers. As the number of available workers increases, the business can ensure better coverage and flexibility for parents.

Monopolistic competition implies the existence of numerous companies in the market, each offering slightly differentiated services. While the business may be the first to target evening and weekend childcare specifically, other companies may be providing alternative options for parents, such as nannies, babysitters, or even innovative solutions in the future. Monitoring and understanding the competition will be important to maintain a competitive edge.Competition would exist, but emphasizing differentiation and convenience can help the business stand out.

Given the presence of multiple competitors in the market, advertising is essential to make awareness and promote the unique benefits of the service. Partnering with local daycares and schools can effectively reach the target audience: daycare workers to bring supply and parents for the demand. Advertising would highlight the service's convenience, reliability, and peace of mind.Advertising would be essential to differentiate the business from other childcare options. The focus would be on promoting the unique features of evening childcare services and building a solid brand reputation.

Considering the market type of monopolistic competition, the business would also consider factors such as customer reviews and feedback, as they play a crucial role in reputation and customer acquisition. Additionally, staying responsive to evolving customer needs and preferences will be necessary for long-term success in the competitive market. Another consideration because of the market type is the need to innovate and differentiate the business to remain competitive constantly. The business would also need to navigate any relevant regulations and ensure compliance with local laws concerning childcare services, even if it operates via an app. Given the importance of trust and reliability in childcare, the presence of reviews and ratings on the app for both the app and individual workers would be crucial for daycare workers and parents. Staying responsive to evolving customer needs and preferences will be essential for long-term success in this competitive market. Lastly, demand for evening childcare may vary based on seasonality, events, and parents' work schedules. The business would be prepared to manage fluctuations in demand and supply accordingly. Since the business operates through an app, ensuring a robust and user-friendly technological platform would be vital for its success.

We agree that childcare is closest to monopolistic competition, as shown here (though at the day care center level, possibly oligopoly). We need clear, correct economic reasoning to defend this conclusion.Explain why regular childcare would be an oligopoly. Please further defend why this particular business model (evening childcare) is closest to monopolistic competition and reason through the implications of this particular market structure regarding pricing and advertising strategy.

Also, any other advice on how to make this stronger? Thank you!!