The article “Airlines and the Oligopoly Market Structure” describes a situation in which American-based airline companies are receiving both criticism and accolades for their current operating efforts as it relates to their new business strategies in the face of deregulation…
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These advantages are witnessed in service pricing, destination services, marketing, and promotion, as well as the established hub philosophy that drives either point-to-point destination services or major hub development. Much of these competitive advantages come from establishing a market-oriented culture, defined as “delivering superior value to customers” (Narver, Slater & Tietje 1998, p.242). It is about aligning the business model based on three dimensions, having a customer orientation, a competitor orientation, and the ability to coordinate all business units with an inter-functional, systems-based philosophy and structure (Gauzente 1999, p.2). The majority of the airlines identified in the research article have established a market-oriented business model and internal culture, that provides both competitive advantages over other airlines in this oligopoly as well as a strong brand in the consumer market. A market orientation strategy “is a powerful competitive advantage, because it is an invisible asset that takes a long time to establish and one that is difficult to imitate” (Johnson & Verayangkura 2001, p.2). ...
a market structure, constant environmental scanning occurs to witness the competitive behaviors of rival firms to avoid market share losses or loss of brand reputation in consumer markets. Nickels, McHugh & McHugh (2005) identify a competitive advantage as better development of core competencies. These are “functions that the organization can do as well or better than any other organization in the world” (Nickels, et al., p.257). In the article “the joys of oligopoly”, it is identified that the core competencies of Southwest Airlines, as one example, is the ability of the firm to structure its scheduling, labor, and point-to-point destination services to provide low-cost, no-frills service that continues to bring the business significant revenues from satisfied customers. While larger competitors with more market presence continue to provide customers better in-flight services that require a higher pricing model, Southwest is able to manage its services effectively and with limited perks for the more frugal consumer. Southwest is also able to follow an A to B flight philosophy which fills more seats daily rather than waiting at a regional hub for connecting traffic that allows for almost instantaneous departure after a flight has arrived at the airport (Associated Press 2001). The core competencies of Southwest are labor-related, flight capacity scheduling, and independence from hub philosophy. However, other airlines that do utilize a hub philosophy consider this a competitive advantage in this market structure as it provides “greater frequency, more destinations and lower fares than customers could expect without it” (Associated Press, p.3).
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These describe the main aspects of markets such as the products sold, the number of firms, and ease of entry and exit. The different market structures include: perfect competition, monopoly, monopolistic competition, and oligopoly. A perfectly competitive market is characterized by various features which in most cases are not found in a real world but are used as benchmarks for other markets.
The article is specifically about the Apple Inc- one of the leading consumer electronics companies in the world producing MP3 Players, tablet computers, desktops and other computers and consumer electronics goods. Though the strategy of the Apple has been discussed as the one which is based upon platform strategy however, the article focuses on how this industry or market works and who are the key players, how external events are affecting the firms and how prices are set up.
This however, does not mean that every product they introduce will increase the expected profits. Spangles were one candy type that unfortunately was taken off the shelf for underperformance. Marketing and bringing it back as a profitable product line will be accomplished through identifying different market segments, developing a set of marketing objectives, and proposing a marketing plan for the products revival.
An excludable good is a good whereby a person can be prevented from using it (Mankiw 2004). Private goods are both excludable and rival while public goods are non-excludable and non-rival. Common resources are goods that are non-excludable but are rival goods.
The airline services are sold in a market structure that follows an oligopolistic nature, which is characterized by barriers to entry and delivery of a similar product, but differentiated in other aspects as an additional advantage over others. The competition for the market share in providing the service is always high and the competitors prefer non price competition to attract the demand for their flight services.
Perfect Competition: A market is said to be in perfect competition when there are a large number of buyers and sellers perfectly aware of the market prices, and no firm is large enough to have any economic power over the industry (“Dewett, 1983”). The two main characteristics of a perfect market are low barriers to entry and exit, i.e.
In addition, this paper will tell Oligopoly theory gives us a rather confused picture of the relationship between economic profits and market structure" Has empirical investigation of this relationship helped us to clarify the picture? Why might it be argued that it takes only a few rivals competing in the same market to achieve an outcome very close to that of large numbers 'perfect' competition? Does it make much difference if the rivals can cooperate with one another?
Economics helps people to understand the politics and business aspects among others. At the same time, it also helps to understand the needs and demands and along with that it helps to choose the best allocation of the resources from various
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