Globalisation and National Governance, Implication of Oligopoly and Perfect Competitive Market Structures - Coursework Example

Business Environment Table of Contents work 3 Introduction 3 Implication of the Perfect Competitive Market Structure to Offer a More Dynamic and Growth Inducing Model 4 Implication of the Oligopoly Market Structure to Offer a More Dynamic and Growth Inducing Model 5 Comparison 6 Conclusion 8 Coursework 2 10 Introduction 10 Identifying Impact of Globalisation on National Governance 11 Establishing Sustainable Development as a Primary Goal 12 Broadening the Base of State-Centric Governance System 12 Managing Institutional Fragmentation 13 Analysing Impacts of Global Factors on National Governance 14 Conclusion 16 References 18 Coursework 1 Introduction Oligopoly refers to a market structure, which has a few sellers in the market and is dominated by the small number of sellers. The oligopoly market is highly concentrated market as it is operated by the small firms and to an extent it is similar to the monopolistic market. In the monopolistic market structure, there is only one company dominating the market, but in oligopoly, there are can be two or three companies dominating the market. In general, the oligopoly market means a large market, which is regulated by the small numbers of firms (Academic Press, 2003). The perfect competitive market is another market structure where the number of sellers and the number of buyers are comparatively large in size. In the perfect competitive situation the buyers play the dominative character in the market. In the perfectly competitive situation buyers are generally referred as a price maker and the marketer are refers as a price taker (Etro, 2009). The aim of the paper is to evaluate the features of the two market structure and recognized the most appropriate market structure for developing a dynamic market structure in an economy. The study also describes about the characteristics of the oligopoly market and about the perfect competitive market structure. The primary objective of the study is to recognize the suitable market structure for a growing economy by the evaluation of each and every feature of both market structures. Implication of the Perfect Competitive Market Structure to Offer a More Dynamic and Growth Inducing Model In a perfect competitive situation there is a huge number of buyers and huge number of sellers who are involved in offering product and services in a particular market. The scenario of the perfect competition describes that the power of the market regulation is operated by the each and every participant. There are several reasons which influence the market structure of a perfectly competitive market. The sellers of the perfect competitive market always sell the identical products or the homogenous products. For instance, the rice market refers to the perfectly competitive market, as all the sellers’ sales the similar types and similar quality products. All the firms, which are the participants of the perfectly competitive market structure, are referred as a price taker. The buyers of the perfect competitive market decide the price of the products. In the perfect competitive market the bargaining power of the buyers is more powerful. All the sellers or the firms of the perfectly competitive market occupy the small slices of market shares. In the perfect competitive market structure, the buyers are often recognized as a gainer as they have all the information regarding products and its price gain a particular market. The price of the product in the competitive market is decided through the bargaining between buyers and sellers. The agricultural product is also referred to be a homogeneous product. The entry and the exit strategy of the perfectly competitive market are relatively easier. There are no barriers to the entry of the firm in the perfect market (Ohio State University, 2014). At the same time, firms are free to exit the perfectly competitive market. As the prices of the product are set by the bargaining power of the buyers, so the sellers are only able to earn the marginal profit from their sale. This policy indicates that the firms have less scope to maximize their profit. The transaction cost is zero in the competitive market as the buyers and sellers are involved in face to face dealings. For instance, the agricultural product refers to be homogeneous products and the price of the homogeneous products is set by the market demand and supply. The firms of the competitive markets are more proficient as they are more efficient in managing the resources of the firms effectively. There are few advantages of the perfect competitive market. The firms of the perfect competitive market are competent as they are performed with the maximum efficiency. In a long run the firms in the competitive market earn the better profits (Mukhopadhyay, 2011). Implication of the Oligopoly Market Structure to Offer a More Dynamic and Growth Inducing Model The structure of the oligopoly market is often similar to that of the monopoly market. The oligopoly market has a few number of sellers who sales heterogeneous products. For instance, the electronic goods, soft drinks and several types of services are known as the heterogeneous product. The video streaming industry, communicative networks such as Airtel, Reliance belongs to the oligopoly market structure. In the oligopoly market structure, there are few firms who act as a main regulator of the market. In the oligopoly market, the price of the product is decided by the firms. As the firms of the oligopoly market are the price maker, the chances of the profit maximization is relatively high. The reason behind the few numbers of buyers in the oligopoly market is that the entry of the new firm is restricted (Farnham, 2005). The government is extensively involved in the licensing agreement in the entry of the new firm in the market. There are several factors, which plays a vital role in the entry of the new firm. The technical issues, strategic actions are to be recognized as most discouraging factors to omit the small firms from the competition. In the oligopoly market, there are a large number of buyers compared to the small numbers of sellers. In the oligopoly market the external cost of the firm is very high. The firms of the oligopoly market spend the huge amount in the marketing and advertisements to capture the larger slice of the market. The selling cost at most of the time help the firms to maximize the sale of the firm. For instance, the Dell is the leading brand among other companies, which sales the computers and laptops, because of its effective advertising strategy. The other characteristics of the firms in oligopoly market are associated with their nature of interdependency. Essentially, the oligopolistic firms are most of the time dependent upon its rivals and competitors for deciding the price of the product. Other feature of the oligopoly market is that the firms generally work in a group (Lakka, & et. al., 2013). Thus, it can be apparently stated that the group behaviour is most important to the oligopoly firms. The firms are not capable to increase the price of the product in a random way. The firms need to follow the group behaviour. The product differentiation is the most important factor in the oligopolistic market. As the products of all the firms in the oligopolistic market are heterogeneous in nature the product differentiation is important for the each and every firm. The mobile phones are the product of the oligopoly market. Though the mobile phones are having the similar features in to some extent, still there some differences are found from each and every product. The oligopolistic firms have the ability to retain the profits for the long term period. The rigidity in the price is the common features of all the firms in the oligopolistic market. If any firms lowering the price of its product, the rival companies are also applying the similar policy in the immediate effect (Pineau, & Murto, 1988). Comparison The above study explains about the several characteristics of the two different market structures. The perfectly competitive market and the oligopoly market represent the two different market structures. Both the market structures apparently have the different features. The perfect competitive market mainly deals with the homogeneous products and the oligopoly market is concerned with the heterogeneous products. The positive point about the perfectly competitive market is that the all the competitive firms are unable to earn a huge amount of profits, but in the oligopolistic market, firms are able to earn the huge profits. The government does not have the regulation over the market in the perfect competitive market, but in the oligopoly market, the government have considerable control over the market. The perfect competitive market structure is apparently better than the oligopoly market structure (Winter-Ebmer, 2012). The oligopoly market structure does not have the freedom of taking decision regarding the price setting. The perfectly competitive market is entirely depended upon the market bargaining power. The buyers bargaining power is stronger than the seller in the perfect competitive market, but in the oligopolistic market the buyers does not have the bargaining power. Another major feature of the oligopolistic market is that the small firms are unable to establish their market position, but in the perfect competitive market small firms are more proficient to prove their presence in the market. By reviewing the above study, it can be stated that the oligopoly market structure is the most suitable for a growing economy. There are many reasons which justify that the oligopoly is appropriate for a developing economy (Missouri State University, 2014). The oligopolistic firms have a strong hold upon the market and it also has the huge scope for generating the considerable profits. The increased scope of the earning considerable profits in the oligopoly market structure increases the GDP of an economy. The oligopoly market structure is often claimed to strengthen the economy. The oligopoly market plays the major role in lowering the average cost. The oligopoly market structure is beneficial for the company as well as for the customers. As the number of the firms and the products are very few so the buyer can get the opportunity to evaluate the price and purchase accordingly. The oligopoly market is also advantageous for the economy as it sets up its price by refereeing to the customer’s point of view. The interdependency in the price setting is the most important factor associated with the oligopoly market structure. This interdependency has profound influence on the company towards lowering its price. The increased revenue earning capacity in the oligopoly market structure promotes firms to utilize their available resources for the recreation of the innovative products. In relation with the above features of the both market structures, it has been observed that the oligopoly is the most suitable for a developing economy as it is regulated by the government. Moreover, in the oligopoly structure the market shares are divided among the large size firm, which helps a growing economy to develop at a faster rate than in the case of a perfectly competitive market. The oligopoly market structure is very much helpful in maintaining the stability in the market, which helps the customers to make effective decisions. The stability in price is a good feature for stabilizing the trade cycle (Hushke, 2010). Conclusion Market structure or models have long been witnessed to have a major influence on the dynamism and growth of a particular market. In accordance with a neo-classical theory of market structure, term oligopoly has been referred as the most impeccable and growth inducing models than other models. In relation to the basic concept of the oligopoly market structure, it has been considered as the most dynamic model for the companies to achieve a competitive position over the existing small numbers of competitors. With reference to the key characteristics of oligopoly market structure, the lower number of competitors along with a huge availability of the potential target customers enables marketers establishing dominant position. In this regard, the model enables the dominant marketer to obtain a large number of markets with an availability of extensive resources that can effectively help the companies to produce innovative products and/or services in accordance with the changing market trend. In this regard, the oligopoly market structure offers extensive financial capability to the companies and substantially promotes the continuous development of a particular economy. In addition, the market shares in the oligopoly structure are often distributed amidst the large firms, which can also be regarded as a major factor towards refurbishing the economic performance of a particular market or economy. Nevertheless, adequate interdependencies along with dominant pricing strategies can also be referred as few major characteristics that make the oligopoly market structure to be more dynamic and growth inducing models than other market structures. Coursework 2 Introduction The emerging trend of globalisation has long been witnessed to form a strong competitive environment due to the unabated transition of the political and economic condition of the nations. In this regard, the governance system espoused by nations has been undergoing fierce changes due to the rapid pace of globalisation. The significance of both the notions, including transition in political and economic condition, and the practice of governance system contends that the continuous emergence of globalisation has severely changed the premises of the political environment of the nations or states. With regard to a traditional mechanism, the political institutions from local, national or overseas boundaries are no longer found to be adequate in terms of addressing the hurdles shaped by the phenomenon of globalisation. In this phenomenon, sound governance system has been considered as a major influencing factor of globalisation (Finger, 1999). The term ‘globalisation’ has defined as an advanced stage of processes wherein the continuous evolutions of economic, cultural, technological and ecological trends are widely extended across the globe. In a synergistic manner, these trends have been observed to gain extensive acceleration, which further lead to the emergence of various new players with adequate power and strong relationship among them. Therefore, the major aim of this coursework is to critically explain and credibility of the proposition that “National boundaries have been surmounted by the phenomenon of ‘globalisation’ and therefore, the national governments are no longer able to promote independent economic policies.” In this context, changing business settings are often identified to play an important role in bringing continuous improvements within the global business environment, fortifying the social and economic wellness of the communities (Kennerley & Neely, 2003). The organisations in this unconventional era are frequently recognised to perform business operations with the aim of addressing the needs along with changing demand trends of the diverse customers. In this process, the strategic directions and practices help marketers to build a strong competitive advantage and ensure the establishment of their long-term sustainability (Nwanji & Howell, 2004). Identifying Impact of Globalisation on National Governance A strong governance system of the nation has long been considered as the key to manage the impact of global environment or the phenomenon of globalisation. More significantly, the national or state governance systems often play the key role in building a strong relationship between these two major aspects. In relation to the process of globalisation or global environment, both the factors are overwhelmingly broad concepts with numerous impacts on a particular nation or state (Prakash & Hart, 1995). However, the factors cannot be considered as a strong set of resistance for the national or state policies. Indeed, both globalisation and global environments are often observed to be created by the policies that have not been considered during the past phenomena. Therefore, the national and state governance systems are shaped by the influences of globalisation or radical developmental trends of the global environments. In this regard, the following are a few of the major aims of the nations and states towards accepting the impacts of globalisation or global environment to accustom their governance systems (Finger, 1999). Establishing Sustainable Development as a Primary Goal In relation to the observation of recent state and national policy, most of the nations are frequently identified to establish goals for long-term sustainability with the transformation of globalisation. This is owing to the fact that the establishment of sustainable goals predominately helps to form a strong linkage between globalisation and environment. The linkage of these two major factors can bring major changes in the national policies irrespective of the development of political obligations along with economic and environmental developments (Wade, 2004). In addition, the sustainable goals that increasingly integrate various structures of the global systems have also been recognised to improve the national and state governance policies for a long-term sustainability. In this regard, the wide extent of the sustainable goals has been observed to bring major developmental changes in the national and state governance policies (Najam & et. al., 2007). Broadening the Base of State-Centric Governance System The evolution of globalisation and global environment has also been recognised to substantially enlarge the groundwork of state-centric governance processes of the states. According to the recent transformational growth of the global nations, the extent of a broader state-centric system has been tailored by number of influencing factors, including technological evolution, socio-cultural development, and political developments along with environmental changes. Despite the progressions over the past few decades, the indispensable architecture of the global governance system remains state-centric (Zurn, 2013). In the context of globalisation and environment dynamics has been recognised by a few of the economists to define the roles to establish directions as well as sequence of different events. However, it is often observed that the global norms and standards are formulated by the multinationals through their strategic processes of supply chain management and procurement standards in specific areas. Therefore, it is evident that the policy in practice across different nations is no longer the sole domain of the state governance system (Bonaglia & et. al., 2001). Managing Institutional Fragmentation Institutional fragmentation can also be considered as a common aspect derived from the globalisation. The institutional design across the nations and states has long been observed to remain critically focused on different issues relating to the persisting challenges of the institutions. In this context, the consisting challenges are related to the globalisation and environment that are often recognised to create major complexities to connect issues within the states particularly, labour market with current trade; investment portfolio with environment; and/or food and health related concerns (Douglas, 1995). Therefore, an evocative framework of global governance reform plays a pivotal role for the state-centric institutions through developing viable and workable mechanisms. Moreover, reforms in the global governance systems have facilitated institutions with a shared vision that have enabled them to operate their business globally rather than limited to national boundaries. Therefore, the evolution of global governance reforms for the state significantly facilitates the states or nations to improve their managing capability and emphasises towards seeking better control of the institutions (Nelson & et. al., 2008). With regard to the aforesaid factors, it can be critically identified that the evolution of globalisation has been playing a major role for the nations to stimulate their governance mechanisms. Moreover, the mechanisms transformed by the globalisation and environment have substantially redefined the political, economic along with environmental performance of the states and nations. Analysing Impacts of Global Factors on National Governance In this context, changing business setting are often identified to play an important role in bringing continuous improvements within the global business environment, fortifying the social and economic wellness of the communities (Kennerley & Neely, 2003). The organisations in this unconventional era are frequently recognised to perform business operations with the aim of addressing the needs along with changing demand trends of the diverse customers. In this process, the strategic directions and practices help marketers to build a strong competitive advantage and ensure the establishment of their long-term sustainability (Nwanji & Howell, 2004). Global factors, such as exchange rates, inflation and Foreign Direct Investment (FDI) along with market opportunities present in the overseas nations, can be considered to impose major impacts on the trade and economic policies of a nation. In this regard, the business regulations of the nations along with their incorporations are few of the direct influencing factors for any organisations when addressing needs and interests of the key stakeholders (Begg, 2009; Sawyer, 2004). In addition, the critical role of the economic factor can also be considered as one of the major changes experienced by the nations to strengthen their governance systems. Economic systems can be regarded as a major set of regulations that can impose strong influences on modern organisations, especially the multinationals to achieve their desired commercial goals efficiently. Economic systems are comprised of multiple processes that impose an inevitable impact on the organisations to effectively organise, produce, distribute and motivate labour in order to achieve the determined organisational objectives successfully. Moreover, the economic systems that are generally accepted by the global nations have also been found to impose major influences on modern organisations to allocate technological and human resources appropriately to suffice their growth needs. In this regard, it can be firmly stated that the evolutionary movement of the economic policies is a major determinant for the nations to stimulate long-term sustainability. The radical changes in economic reforms have been taken place due to the emergence of globalisation that imposed major support to the nations to improve their governance frameworks and policies (Prakash & Hart, 1995). In the similar context, rapid advancement in the technological changes is also one of the key elements of globalisation leading to alter the governance practices of the nations. In relation to the modern evolution of technological environment, nations and/or states are more likely to reform policies in accordance with the usage of different cutting-edge technological aspects. In relation to the current nation and state governance policy of Britain, the agencies and institutions are more likely to promote the use of advanced technological aspects through reforming the policies. Nevertheless, the impacts of globalisation have not only hindered the ability of a nation to frame independent economic policies, but at the same time, it has offered nations, especially developing economy with significant advantages in the form of technology transfer. The step of restructuring the national and state policies has substantially enabled the nations to improve its Information and Communication Technology (ICT) infrastructure. The initiative of reforming policies and provisions has been recognised to boost the trade environment of the nations along with its states at a significant extent. Moreover, the governance policies for the technological environment of the states in Britain have also been observed to create major opportunities for the domestic and multinational organisations to successfully perform their wide range of supply chain activities. In addition, the reforms in the technological policies within the states also ensure adequate support to the states in terms of generating large numbers of employment with greater scope of boosting national economy (Wade, 2004). Corresponding to the global factors, the fluctuation in the exchange rates and other factors such as flow of Foreign Direct Investment (FDI) can also be regarded as few of the major determinants leading to strong impacts on the ability of a nation to structure independent economic policies. In this context, the changing economic policies along with fluctuating trends of currency exchange rates of the global nations have also been found to impose major risks to the foreign marketers. Labour movement, adequate availability of vital resources and skilled workforce can also be considered to lay profound impacts on trade operations of the nations (Finger, 1999), The global factors have been considered to influence the operational performance of the multinationals irrespective of their diversified business areas across different parts of the nations. In this context, the factors associated with strong economic performance along with wider opportunities across the global markets are a few of the key aspects of the modern organisations to build their strong and sustainable position (Finger, 1999). Conclusion The phenomenon of globalisation has been highly observed to create major changes in the governance system of a nation. With regard to the aforesaid discussion, it has been critically identified that the governance systems of the nations and/or states are frequently altered in accordance with the changing trend of globalisation. Although numerous factors have a major influence on macro and micro environmental policies of a particular nation, but the phenomenon of the globalisation and its consequences have considerable impact that might be either negative or positive with respect to the nation’s interest. The rapidly conversing world economy is ascertained to be the by product of globalisation. In this regard, rapid flow of FDI, along with short-term capital flows and international movement of labours are few of the major practices that have major implications for the national economy. Notably, the consequences associated with the phenomenon of globalisation have resulted in a dramatic shift in the nation’s ethno-centric policies towards global orientation. Correspondingly, the greater emphasis on aligning government policies with the changing trend of globalisation and international environment are being widely seen in the current in a globalized world. In this regard, the convergence of the world economy has resulted in bringing reforms in the nation’s policies that see nation as one of the players of the global economy rather than considering it separately. Thus, it can be evidently concluded that the “National boundaries have been surmounted by the phenomenon of ‘globalisation’ and therefore, the national governments are no longer able to promote independent economic policies.” References Academic Press. 2003. Market Structure: Duopoly and Oligopoly. Managerial Economics: Theory and Practice, pp. 145-166. Bonaglia, F. & et. al., 2001. How Globalisation Improves Governance. OECD Development Centre. [Online] Available at: http://www.oecd.org/dev/2675871.pdf [Accessed November 09, 2014]. Douglas, I. R., 1995. 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