Business Environment - Essay Example

Q.1.What are the different market structures and how they impact on determining price and output decisions on an organizations? However, there are various market structures identified by the best research teams (Sarangi & Srivatsan, 2009), which are described in the following section of this paper Perfect Competition Imperfect Competition Oligopoly Monopoly Perfect Competition This market system assumes that customers are having perfect information about the price and quality of the products offered in the market, while there is a homogeneous product without any differentiation (Etro 2010), so in this way the customers can purchase a best quality product at a lowest possible price (Vlckova & Patak 2011).

However, this type of competition is not present in the real world, because of its unrealistic assumption of homogenous product and perfect knowledge. Imperfect Competition This kind of competition the production is heterogeneous and the quality of the products produced by various vendors is also different. . Oligopoly Under this mechanism various producers of a certain product combine their forces to capture the market through non price competition, in this way they attain the level of economies of scale, which causes their per unit cost to drop to a minimal level, via this strategy they are often able to achieve a monopolistic characteristics within a certain industry (Ananthram & Pearson), which allows them to charge the price of their choice against a product they make.

Monopoly In this kind of market system there is only one supplier in the market, producing a certain product. This position gives it, the full autonomy over the price level for its product in this way it could charge the price of its choice, however, monopolists do produce their products at a minimal inventory level to minimize the hold and freight costs. Q.2 Describe the way in which market forces shape organizational response to external environment? In a general setting, market’s forces of demand and supply interact to determine the price of a product.

Usually where the graphs of the above mentioned variables intersect, at that point the price of that product is determined. But, this interaction is not that simple, because the customers’ consumption and income trends also play a significant role in determining the level of demand and supply thus consequently the price, however, the current technological advancement, which transformed a typical market setup into a web based application, which provides information to the customers, thus shifting the balance of information towards customers and rendering them able to purchase for a best deal.

Characteristics of market in