People and Organisation - Research Paper Example

In a competitive market, a large number of producers strive to satisfy the needs of the same consumers. These rivalry means that no one party can dictate the price of goods or the direction that the market will adopt. Each player influences the marketing strategy that the other adopts (Economics Online (EO, 2012) When the prospects of gain are high, more firms are bound to enter the market and this is in line with the basic economic theory which dictates that for profits to be earned, the returns in revenue must outweigh the cost of production (Allen N.J. et al. 1990.pp.638-642). The profits could be termed as normal or abnormal depending on the revenue collected.

According to Lan Li: If the returns equal the cost then the profit is normal but if they surpass the cost, it is abnormal. In the case of Coca-Cola Company, the stock of goods lessens with every purchase and this is in line with the Principle of Diminishability. As the stocks approach zero, the price escalates and this drives the company to boost production. Perfect Competition: for a market to be perfectly economical, the number of buyers and sellers must by very large and for the producers, there is the freedom to join and exit the market at ones will.

Monopoly market: monopoly describes a market scene where only one producer dictates the type of product to be availed and it is brought about by the absence of substitutes. This form of dominance brings about limitations on market entry. Duopoly on the other hand brings into play the theory of Oligopoly whereby there are two entities in the market and they are completely independent of each other’s operations. The competition lies between the two firms and they can therefore adjust their prices so as to gain the upper hand in the sales.

Oligopoly means that there is a number of entities in the market and they try to outdo each other. Therefore any strategy adopted be it advertising or