StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Companies - Essay Example

Comments (0) Cite this document
Summary
The industry is monopolistic in nature as the few large firms account for merely 30 percent of the market share.
There are relatively…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER98.1% of users find it useful
Companies
Read Text Preview

Extract of sample "Companies"

Companies The Concentration Ratio (CR) of 30 percent in the industry A with 20 firms signifies that there is ‘low concentration’ in the industry. Theindustry is monopolistic in nature as the few large firms account for merely 30 percent of the market share.
There are relatively large number of sellers in this industry type each holding a small portion of the market share. There are no entry barriers or exit costs and therefore firms may choose to enter the industry to earn a profit or may exit to end losses.
In the monopolistic form of competition, a firm survives and thrives on the basis of product differentiation. Thus non-price competition prevails in the market and it is up to a particular firm to convince consumers that its product is superior. Only then can it charge a higher price vis-à-vis rivals. Given a large number of sellers, collusion is practically impossible
In the event of an increase in demand, leading to an increase in price, the firms in the industry may earn higher profits in the short run. However, over time, the existing firms in the market will increase their production capacity or new firms will enter the industry to take advantage of the higher price. Either way, the supply demand mismatch would vanish and the firms will earn normal profit only.
The assumption of symmetry in monopolistic competition, which states that when a new firm enters the industry it draws customers equally from all firms, will lead to negligible change in the CR of the industry.
The aforesaid discussion suggests that if J’s Assistant Living is to start operations, the company will have to offer a differentiated product. The company will not be able to compete on the price plank and will earn normal profits in the long run. In case J’s Assistant Living does not succeed, it will be able to exit the industry easily.
The Concentration Ratio (CR) of 80 percent in industry B with 20 firms signifies that there is ‘high concentration’ in the industry. The industry is oligopoly as the few largest firms account for 80 percent of the market share.
In an oligopoly, the market dominated by a relatively small number of large firms. These firms have considerable market power and may either sell standardized products or differentiated products. Each firm realizes that any move that it makes would be taken note of by competitors. As such, the decisions that a firm takes is strategic in nature as it invariably elicits a response from the rivals. The main characteristics of this industry type include barriers to entry and exit by way of huge initial investment, information costs and economies of scale. The government intervention and control is high to protect the interests of the consumers.
In the real world, firms operating in an oligopoly connive with each other, either openly or implicitly. Formation of such a group enables them to take decisions that maximize their joint profits.
Oligopolies are normally found in capital intensive industries like automobile manufacturing, aircraft manufacturing. Entry into these kinds of business requires a lot of money, which only few players can afford. Patents and limited access to natural resources may also render entry of many players infeasible. It is for these reasons that the CR in this industry tends to be higher vis-à-vis the CR in monopolistic competition.
Small firms do co-exist with the big players in an oligopoly but their chances of earning high profits are low. The reasons are not too far to seek. In order to grab a larger chunk of the market share, these small firms could lower the price of their product. This strategy may not always be feasible since the firms have to cover their high costs. Furthermore the big firms enjoy higher economies of scale and have the potency to match the low price. Alternatively, the small firms could differentiate their products and create a niche for themselves. Invariably, when such a strategy works, the big fish in the industry acquire the successful small firm and becomes more dominant.
J’s Transportation has to have deep pockets in case it intends to enter the industry. If it chooses to do so, it should identify a specific set of customers whose needs are not being fully met by the existing players and should cater to them.

References
Kang, K. (2004). Market structures and competition in system markets. University of Maryland, College Park). ProQuest Dissertations and Theses, Retrieved from http://search.proquest.com/docview/305177745?accountid=133056
Lipsey, Richard G. Chrystal K. Alec. (2007). Economics, New York, NY: Oxford University Press.
Ruffin, R. J. (2009). Oligopoly. Princeton: Princeton University Press. Retrieved from http://search.proquest.com/docview/189251609?accountid=133056
http://essays24.com/print/Concentration-Ratio/40466.html
http://welkerswikinomics.wetpaint.com/page/Characteristics+of+Monopolistic+Competition
http://www.oppapers.com/subjects/industry-a-has-20-firms-and-a-concentration-ratio-cr-of-20-page1.html
http://www.brainmass.com/homework-help/economics/other/155311
The concentration ratio stands for the percentage of the market share that is controlled by the biggest x firms in the industry, where x could assume any value, say 2,3,4..10. However the most commonly used values are 4 and 8. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Companies Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1579466-companies
(Companies Essay Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/macro-microeconomics/1579466-companies.
“Companies Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/macro-microeconomics/1579466-companies.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Companies

Multinational companies

... is dependent on the compliance of local regulations prevalent in the regions it is operating in. The products that McDonalds offer range from Hamburgers to Ice creams and coffee. Another Example of a multinational corporation is Pizza Hut. The specialty of Pizza Hut, as its name portrays, is Pizza/ The other products it offers are Salads, Drinks, Cheese Cake, and Sandwiches and so on. The Governments of various countries are giving much priority to the health concerns of high-fat and ‘junk’ food. The advertisement campaigns and awareness about the nutritional facts are somehow important for the local residents and the government. Licensing is one of the issues that companies have to deal with when opening a new business or a new franchise...
2 Pages (500 words) Essay

Companies Research

Total Asset Turnover has been on the high for Kroger and Wall-Mart with 3.487 and 2.335 respectively. Eaton has failed to maintain a high ratio; its turnover ratio stands at 0.795. Eaton Corporation has struggled in this regard as well, which is evident by its last position in the industry with respect to earnings produced with each dollar spent on an asset. Total Debt to equity ratio has been high for all four organizations but Kroger Co. crosses all boundaries with a ratio of 141.81:1. Wall-Mart stands second with 81.39, and Eaton is third with a ratio of 46. Chevron is a relatively low leveraged firm, which is indicated by the minimal interest payments it has to make. Chevron, being the most profitable company, leads the chart...
8 Pages (2000 words) Essay

Evolution of multinational companies (telecommunication companies)

... countries the government did not allow private telecom companies, but privatization has crept in every country in this sector (Kirkman, 2002). The traditional markets of telecommunication has gone and like the seamless telecom connections, the companies in this in industry are doing flawless business, which is not bound to border of the countries. The telecom segment is a profit-oriented business segment, so companies are attracted towards income investments, as this type of investments assist in providing steady growth and dividends, and also generate cash flow even after the payment of dividends. However, all the telecom companies around the world do not function on similar strategies. It differs on the basis of geography, political...
10 Pages (2500 words) Personal Statement

Oil Companies

... in nature there fore are easy to be manipulated) According to the report, titled, Hot Profits and Global Warming: How Oil Companies Hurt Consumers and the Environment, the soaring prices are not dampening demand because most families have little leeway to alter their driving habits. Federal government statistics show this summer's gasoline demand up between 1.6 and 1.9 percent from 2005. The increased prices of gasoline have translated into record oil company profits. In the first six months of 2006, the five largest US oil companies posted $59.4 billion in profits. These companies have spent $112 billion since 2005 to buy back their own stock and pay dividends rather than invest in infrastructure or alternative energy sources, according...
8 Pages (2000 words) Essay

Merging Companies

.... Understanding Mergers and Acquisitions Both mergers and acquisitions are synonymous, however they have different implications. An acquisition takes place when one company takes over another company and becomes the new owner. The target company does not exist thereafter. The buyer runs the business, whose stocks continue to be traded. In a merger, two firms often of the same size decide to become one single new company; it is a merger of equals. In a merger the stocks of both the companies are surrendered and a new company stock is issued. A purchase deal will also be called a merger. If a purchase is hostile and the target...
5 Pages (1250 words) Essay

Companies Act

... constitutes the company's charter with the outsiders dealing with the company and usually contains a number of statutory classes. The Articles of Association on the other hand are the regulations governing the internal management of the company. Section 7 of the Companies Act 1985 has given the option to the companies limited by shares to adopt Table A instead of filing separate Articles. It is established law that where there is a conflict between the Memorandum and Articles of Association the Memorandum prevails. 2.0 Character of the Memorandum and Articles of Association: Section 14 (1) of the Companies Act 1985 has given the character of a statutory contract for the Memorandum and Articles of Association of a Company. These documents...
10 Pages (2500 words) Essay

Multinational Companies

... as environmentally responsible and accept their duty towards the society, making every effort on their part, to come up with safe products which contribute towards creating prosperity and opportunity for the global citizens. It is not unusual to find out that customers are considered to be the most valued stakeholder by both the companies. Samsung as well as GE strive to deliver first-rate products and services to their customers, while focusing on integrity and excellence simultaneously. Another vital similarity that exists between the companies is with regard to innovation and change. Samsung, with its innovative products ranging from camcorders to refrigerators, considers innovation to be extremely critical for a company’s survival...
2 Pages (500 words) Essay

Companies

.... Hence, I would not only find the opportunity to expedite my skills and capabilities, but would also grow professionally. Being employed by this company, I would feel safe for I would be building my experience in one of the largest and most popular companies in Qatar, which would be good for me in the long run. I would like to work for Qatar Petroleum because this is a very old company. It was 1939 when the first well was drilled. Development sustained after the Second World War and the first crude exports took place in the year 1949. The fields of Maydan Mahzam and Idd Al-Shargi were discovered in the year 1960. After the discovery of Bul Hanine, the largest offshore in 1970, Qatar Petroleum was established in the year 1974 (“QP History...
2 Pages (500 words) Research Paper

Limited companies

...Finance and Accounting Limited Companies Table of Contents Table of Contents 2 Introduction 3 Concepts of Limited Liability Company 3 Advantages and Disadvantages of Limited Liability Company 4 Advantages 4 Disadvantage 4 Differences between Ordinary and Preference Shares 5 Conclusion 6 References 7 Introduction Limited Liability Company (LLC) is one of the new forms of company, which gives their members limited liability regarding ownership. This type of company can be established with one member or more .For the establishment of Limited Liability Company the member size can be unlimited as there is no restriction (Legal Zoom 2014 pp. 1-3). In this paper the discussion is about the concept of Limited Liability Company, the advantages...
4 Pages (1000 words) Assignment

FMCG COMPANIES

...1. Beauty Product Regenerist CC Cream Light 1. Introduction of Product Olay Regenerist CC Cream Light was launched by the US-based company Procter & Gamble (P&G)in the first quarter of 2014 as a 10 Minute Miracle Primer (Academic.mintel.com, 2014). This product helps to regenerate the skin’s appearance and to provide visible skin transformation (Academic.mintel.com, 2014). The product was recognized to be best New Facial Skincare Product according to the beauty Award 2014 (thebeautyawards.com, 2014). 1.2 What Was Done Creatively? In order to advertise the new product Olay CC creams through the year, P&G has spent £1.2 million on its Regenerist CC Cream solely (Academic.mintel.com, 2014). The company has invited actress Katty Holmes...
5 Pages (1250 words) Essay

Justifying Increased Regulation in Large Companies - Imposing a Strict Regulation on Pharmaceutical Industry

 PPRS continuously provides a stable framework to ensure the publics’ access to affordable new medicines. (Department of Health, 2007) In line with this goal, GSK acknowledges that improvements can be made to the existing pricing scheme.

As a major consumer product, this study will discuss the importance of having a price regulation within the pharmaceutical industry. Several factors that could affect the competition in the branded pharmaceutical market will be elaborate to give us a good insight with regards to the pricing of medicines. In line with the importance of having imposed a price regulated on medicines, the author will discuss the negative effects of not regulating the generic medicines as well as...
11 Pages (2750 words) Case Study

How International Companies Affected by Unwanted Illegal Movements Seek to Minimize the Problems Presented

It describes the idea that the world is becoming a single global market by the integration of markets for goods, services, labor, and capital. It describes the idea that time and space have been shrunk as a result of modern telecommunications technologies which allow almost instantaneous communication between people almost anywhere on the planet. [8] [12]

In terms of numbers, from a nationally biased perspective, that is only taking into account migration across state borders, all main sources give a figure of roughly 175 million migrants worldwide, or 3 percent of the global population. And illegal migration is according to UN figures, the fastest growing form of migration. [7]

Illegal movement is not only r...
7 Pages (1750 words) Term Paper

Marketing and Production Oriented Companies

...Marketing- and Production-Oriented Companies and Ethics BY YOU YOUR ACADEMIC ORGANISATION HERE HERE Marketing- and Production-Oriented Companiesand Ethics Introduction There are many different verities of business models which focus around specific company strengths. For instance, there are service-oriented companies which emphasise superior customer value and customer relationships as top priority. There are also the marketing-oriented company and the production-oriented company which each have their own, distinct characteristics. This paper compares and contrasts the marketing- and production-oriented companies to determine the specific characteristics which drive their successes. Additionally, the topic of whether marketing practices...
7 Pages (1750 words) Coursework

Entering of Companies Into Strategic Alliance

Companies have basically cut down on their gains in terms of recall, reputation and other factors so that they could earn more within a specified period of time. The basic purpose is not necessarily meant for the long term; however one can understand that the issues related to these companies are more or less dependent on the short term scenarios (Shinawatra 2001). The companies thus lose out on the longevity beliefs tied with these business processes and tasks. All they are concerned with is to earn a quick buck and have their profits settled in an easy manner. The strategic alliances are significant in the time and age of today since these look to put the rivals at par with one another with a single motive in mind – to ear...
6 Pages (1500 words) Assignment

Multinational Companies and Their Impact on the Host Countries

...at it has been spreading inevitably, and during this process, the international and corporate rivalry for economic resources and markets is constantly increasing. Globalisation has certainly resulted in the necessity to introduce new strategic approaches in many branches of the economy. Ever since the notion of globalization became an integral part of international business, there has been a question what influence do multinational companies produce upon the local companies. Both positive and negative effects of their presence at the local markets have been pinpointed, and this issue still remains controversial. Talking about their positive impact, one would certainly name multinational corporations spreading newest technologies,...
7 Pages (1750 words) Term Paper

Validating Late Mover Advantages in e-commerce: Evidence from Selected Companies

... as the one with high competition and rivalry between competing companies. The market dynamics have been drastically changed over the years as marketing and selling over the internet has become an integral part of business strategies. The changing trends in the consumer behaviour and attitude towards shopping at their own ease has pushed businesses to rethink of their strategies and approach the business in an entire new way to which they may not be accustomed to. E-commerce has allowed firms to move away from traditional ways of business by overcoming the constraints including geographical, market selection and targeting, time, cost of operations, marketing and branding and restrictions over communications with customers. E-commerce poses...
12 Pages (3000 words) Research Proposal

Various Types of Companies in the United Kingdom

...Running Head: ABBREVIATED OF YOUR CHOICE (all caps) and Section # of The report explains the various types of companies that can be established in the United Kingdom with a emphasis on corporate governance. It also highlights the importance of the income statement and the various methods that can be used. The report discusses in detail the full costing method and the activity based costing method that provides the basis for setting up the accounting information and reporting systems. Business Information Public Company A public company is one that is limited by shares. The company has its own memorandum of association and articles of association. In UK, the share capital of a public company must be greater than £50,000. The company...
7 Pages (1750 words) Coursework

Oil Companies: Do Oil Companies Get Big Bucks While the Rest of Us Pay $3 a Gallon

... to the producing countries, and away from the large oil companies. This was to secure the producing countries from the exploitation of those large oil companies (Inkpen and Moffett 7). The following are some of the roles played by the organization: To represent government intervention on a global scale, in oil industry related issues. Coordinating and unifying the petroleum policies that govern member countries. The organization ensures the stabilization of oil prices in order to secure efficient economic and regular supply of petroleum to consumers. The organization also ensures that there a steady income to oil producers. It also has the responsibility of ensuring a fair return on capital to those investing in the petroleum industry...
6 Pages (1500 words) Research Paper

Should Shoe Companies Be Able to Give away Free Shoes and Equipment to High School Athletes

Today statistics of October 2013,  284,000 high school boys and 209,000 high school girls are playing soccer, 1 million are playing football, and 500,000 are playing basketball (“Youth Sports Statistics”).  These athletes need shoes and equipment, which are expensive.  It is no secret that under current economic condition many families are struggling to pay bills. It is as well not hard to understand that if parents are struggling to pay bills they will not be able to spend funds to pay for the items that their children need to use in sports. In 1906, a non-profit association by the name National Collegiate Athletic Association (NCAA) was formed that now regulates athletes of different institutions inclu...
7 Pages (1750 words) Term Paper

Should Companies Allow Employees To Exercise On Work Time

...really boring in the long-run as humans normally hate being tied up to one routine during a longer period of time (Falkenberg 512). To top it all up, with the kind of sedentary lifestyle, coupled with stress that a majority of Americans have adopted today, it is significant to ensure that you are always fully fit in order to be productive. The general idea of this paper is to discuss whether companies should allow their workers to exercise during their time at work. Extensive research has been carried out on this topic together with experimentation (Medibank 2; Paul et al. 7 and Oregon.Gov 1). This research paper reveals why maybe it is significant for a company or organization to keep their labor force or staff physically healthy...
10 Pages (2500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Companies for FREE!

Contact Us