Changes in market power - Research Paper Example

Changes in Market Power The market power is the firm’s competency to change or lower the market price of their particular product or service. Hotel industries are now taking on the market power through their strategic concept of advertisement. According to Scherer (1980), the differences on the market price of the products and services will still increase the market power of the industry through increasing the customer’s awareness on the price information (as cited in Tung, Lin, & Wang, 2010).

This only suggests that advertising is a contemporary business strategy that can, in turn, affect the market structure and profit of the businesses and maintain their market power. Hence, despite the decreasing values of hotel prices, the market power can still be strengthened through the use of advertising strategy (Tung et al., 2010). The market power of hotel industries has gained an incremental value especially when hotel management lowered down their room rates. Celen and Thomas (2009) implicated that the changes of the market power within hotel industries are increasing towards a better profit because lowered priced rooms are mostly booked and occupied.

In addition, Eden (1990) and Dana (1999) explicated that hotel industries can gain a change in market power when the distribution of room rates is equal and lowered to an affordable price. Consequently, market power is important within hotel industries in order to cope up with the increasing industrial competition (as cited in Celen & Thomas, 2009). Accordingly, the market power is determined through the market structure of the hotel industry, in which this will influence the changes of the market power held by the particular firm.

Moreover, the vertical integration can benefit the market power of hotel industries and be able to manage their services despite increasing competition. Hence, the market power depends on how the hotel industries market their low priced rooms in order to sustain and regulate their market structure (Celen & Thomas, 2009; Tung et al., 2010). ReferencesCelen, B., & Thomas, C. (2009). Organizational form, information asymmetry, and market prices. Retrieved from http://celen.gsb.columbia.edu/pdfs/organization_web.

pdfTung, G.-S., Lin, C.-Y., & Wang, C.-Y. (2010). The market structure, conduct and performance paradigm re-applied to the international tourist hotel industry. African Journal of Business Management, 4 (6), 1116-1125.