Differentiating Between Market Structures Research Paper
Differentiating Between Market Structures
ECO 365
April 6, 2014
Differentiating Between Market Structures
Market structure is the state of the market with respect to its competition. There are several different market structures such as perfect competition, monopolies, and oligopoly. An industry consists of all firms making similar or identical products. Economists assume that there are a number of different buyers and sellers in the marketplace (Heakal, 2014). In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service, the producer(s) can control price, meaning that a consumer does not have choice, cannot maximize his or her total utility and has have very little influence over the price of goods. This will lead to a competition in the market, which allows price to change in response to changes in supply and demand. For almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead (Heakal, 2014). According to the Fortune Global 500 list Walmart is the biggest private employer in the world with over two million employees. It remains a family owned business controlled by the Walton family, who own over 50 percent of Walmart. …show more content…
Walmart is a very large organization that everyone has heard of. They are an oligopoly, market structure. Their market structure is very strong and they are very competitive. They make sure that they beat all the other stores by giving you a price guarantee. Walmart guarantees that if you bring in the other companies flyer with the same item they will give it to you for the same price if their price is more. This is the type of marketing strategy that will keep them on top of the business world. They are known for the way that they do their business.
Walmart provides many jobs for the economy. They are not in the retail pricing business. They are a company that aggressively works to obtain the market share of its competitors. While the current share of the challenger is less than that of the market leaders who current account for the majority of the sales made in that market, an up-and-coming business will intentionally compete with and show signs of capturing more clients from those leaders over a period of time (April, 2014). Walmart has been a major competitor and have remained a top company to work for.
Supply chain operations focus on demand planning, forecasting, and inventory management. Walmart estimate customer demand for a particular product during a specific period of time based on historical data, external drivers such as upcoming sales and promotions, and any changes in trends or competition (Walmart, 2014). They have been able to assume market leadership position primarily due to it efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components; vendor partnerships, cross docking and distribution management, technology, and integration.
Market Structures
Perfect competition exist when products are homogenous, and there are many firms to small to have any influence on the market price, and firms can easily enter and exit the industry. Perfect competition is often viewed as a theoretical model, because every industry or market operates in some form of imperfect competition.
Monopolistic competition exists when many producers of slightly differentiated products are able to sell them at well above their marginal cost. As long as competition exists in markets no one producer or group of producers can afford to abuse power by charging too much or by selling bad goods, for fear that consumers may turn to the next producers for their needs.
The monopoly market producer can fix an artificial price. A monopolistic market favors companies to the detriment of consumers. There are several groups and trade organizations, such as the FCC, WTO and EU governing council, which ensure that monopolistic markets do not form and also create legal ramifications for companies that pursue market-cornering policies.
Oligopoly competition there are only a few firms that make up an industry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a result of market forces. Walmart and Target are two companies that compete for consumers with the same items. They sale the same products but in order to stay on top Walmart will continue to meet the price of any other retail store to keep its customers. The goods and services produced by this organization are not uncommon with others in the same category. Walmart has hundreds of locations to cover over the United States.
The price elasticity of demand which is a measure of the relationship between changes in the quantity demanded of a particular good and a change in its price. Price elasticity of demand is a term in economics often used when discussing price sensitivity. In this form Walmart has a customary way of dropping the prices as low as they can to get buyers in their location. Changing prices by dropping to low but not too low that they won’t make a profit is what’s keeping them on top of the game. October 2005 Walmart announced it would implement several environmental measures to increase energy efficiency. This was a primary goal to included spending $500 million a year to increase fuel efficiency in Walmart’s truck fleet by 25 percent over three years and double it within ten, reduce greenhouse gas emissions by 30 percent in seven years. They continue to make strives to “Save Money Live Better”. They have continued to build on that by building the Walmart Supercenter, (A One Stop Shopping). Sam’s Club is a chain of warehouse clubs which sell groceries and general merchandise at large quantities, which is owned and operated by Walmart. Walmat’s operations are organized into three divisions; Walmart Stores US, Sam’s Club, and Walmart International. Distributors applaud changes that result in differentiated prices. Being as large of an organization as they are, they have many distributors that will do business with them at any time. Walmart is known by their name and has been around for many years.
Many firms may have several different sub-stores that they may operate, but Walmart shows that you can have many different underline manufacturers and sell at low prices.
References
Heakal, R. (2014, May). Economics Basics: Monopolies, Oligopolies and Perfect Competition. Retrieved from http://www.investopedia.com/university/economics/economics6.asp
Walmart: Keys to Successful Supply Chain Management. (2014, April). Retrieved from http://www.usanfranonline.com/resources/supply-chain-management/walmart-keys-to-successful-supply-chain-management/#.U0SQTvldWSo
What is a Market Challenger. (April, 2014). Retrieved from
http://www.wisegeek.com/what-is-a-market-challenger.htm
ECO 365
April 6, 2014
Differentiating Between Market Structures
Market structure is the state of the market with respect to its competition. There are several different market structures such as perfect competition, monopolies, and oligopoly. An industry consists of all firms making similar or identical products. Economists assume that there are a number of different buyers and sellers in the marketplace (Heakal, 2014). In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service, the producer(s) can control price, meaning that a consumer does not have choice, cannot maximize his or her total utility and has have very little influence over the price of goods. This will lead to a competition in the market, which allows price to change in response to changes in supply and demand. For almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead (Heakal, 2014). According to the Fortune Global 500 list Walmart is the biggest private employer in the world with over two million employees. It remains a family owned business controlled by the Walton family, who own over 50 percent of Walmart. …show more content…
Walmart is a very large organization that everyone has heard of. They are an oligopoly, market structure. Their market structure is very strong and they are very competitive. They make sure that they beat all the other stores by giving you a price guarantee. Walmart guarantees that if you bring in the other companies flyer with the same item they will give it to you for the same price if their price is more. This is the type of marketing strategy that will keep them on top of the business world. They are known for the way that they do their business.
Walmart provides many jobs for the economy. They are not in the retail pricing business. They are a company that aggressively works to obtain the market share of its competitors. While the current share of the challenger is less than that of the market leaders who current account for the majority of the sales made in that market, an up-and-coming business will intentionally compete with and show signs of capturing more clients from those leaders over a period of time (April, 2014). Walmart has been a major competitor and have remained a top company to work for.
Supply chain operations focus on demand planning, forecasting, and inventory management. Walmart estimate customer demand for a particular product during a specific period of time based on historical data, external drivers such as upcoming sales and promotions, and any changes in trends or competition (Walmart, 2014). They have been able to assume market leadership position primarily due to it efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components; vendor partnerships, cross docking and distribution management, technology, and integration.
Market Structures
Perfect competition exist when products are homogenous, and there are many firms to small to have any influence on the market price, and firms can easily enter and exit the industry. Perfect competition is often viewed as a theoretical model, because every industry or market operates in some form of imperfect competition.
Monopolistic competition exists when many producers of slightly differentiated products are able to sell them at well above their marginal cost. As long as competition exists in markets no one producer or group of producers can afford to abuse power by charging too much or by selling bad goods, for fear that consumers may turn to the next producers for their needs.
The monopoly market producer can fix an artificial price. A monopolistic market favors companies to the detriment of consumers. There are several groups and trade organizations, such as the FCC, WTO and EU governing council, which ensure that monopolistic markets do not form and also create legal ramifications for companies that pursue market-cornering policies.
Oligopoly competition there are only a few firms that make up an industry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a result of market forces. Walmart and Target are two companies that compete for consumers with the same items. They sale the same products but in order to stay on top Walmart will continue to meet the price of any other retail store to keep its customers. The goods and services produced by this organization are not uncommon with others in the same category. Walmart has hundreds of locations to cover over the United States.
The price elasticity of demand which is a measure of the relationship between changes in the quantity demanded of a particular good and a change in its price. Price elasticity of demand is a term in economics often used when discussing price sensitivity. In this form Walmart has a customary way of dropping the prices as low as they can to get buyers in their location. Changing prices by dropping to low but not too low that they won’t make a profit is what’s keeping them on top of the game. October 2005 Walmart announced it would implement several environmental measures to increase energy efficiency. This was a primary goal to included spending $500 million a year to increase fuel efficiency in Walmart’s truck fleet by 25 percent over three years and double it within ten, reduce greenhouse gas emissions by 30 percent in seven years. They continue to make strives to “Save Money Live Better”. They have continued to build on that by building the Walmart Supercenter, (A One Stop Shopping). Sam’s Club is a chain of warehouse clubs which sell groceries and general merchandise at large quantities, which is owned and operated by Walmart. Walmat’s operations are organized into three divisions; Walmart Stores US, Sam’s Club, and Walmart International. Distributors applaud changes that result in differentiated prices. Being as large of an organization as they are, they have many distributors that will do business with them at any time. Walmart is known by their name and has been around for many years.
Many firms may have several different sub-stores that they may operate, but Walmart shows that you can have many different underline manufacturers and sell at low prices.
References
Heakal, R. (2014, May). Economics Basics: Monopolies, Oligopolies and Perfect Competition. Retrieved from http://www.investopedia.com/university/economics/economics6.asp
Walmart: Keys to Successful Supply Chain Management. (2014, April). Retrieved from http://www.usanfranonline.com/resources/supply-chain-management/walmart-keys-to-successful-supply-chain-management/#.U0SQTvldWSo
What is a Market Challenger. (April, 2014). Retrieved from
http://www.wisegeek.com/what-is-a-market-challenger.htm