Question

In 250 words essay discuss how a company from your own selection has dealt with competition. Discuss the type of competition and its dynamics according to what you have studies in chapter 8

Answer 1

Ans:

The company which deal with Competitors are,

1.Do the market reaserch before you launch

2.Beware of no competitors

3.Know your past and future competitors

4.Figure out competitive diffrenciation

5.Keep track of competition but ignore the noise

6.Accept and play "the idea exchage game"

7.Build relationshipwith competitors

8.win with heart and mind

Economists have identified four types of competition.

1.Perfect competition

2.monopolistic competition

3.Oligopoly

4.Monopoly

1.Monopolistic competetion

In monopolistic competition ,We still have many sellers(as we had under perfect competition).Now however ,They dont sell identicalnproducts.Instead ,they sell diffrentialted products-products that differ somewhat,or are preceived to differ,even though they serve a similar purpose.Product canbe diffrenciated in a number of ways,including quality ,style ,convenience ,location,and brand name.Some people prefer coke over pepsi,even though the two products are quit similar.But what if there was a substantial price diffrence between the two?in that case ,buyers could be persuaded to switch from one to other.Thus if coke has a big promotional sale at a supermarket chain,Some pepsi drinkers might switch9at least temporarily)

How is product diffreciation accomplished ?some times,it's simply geographical;You probably buy gastoline at at the station closest to you home regardless of brand.At othertimes,perceived diffrences between products are promoted by advertising designed to convince consumers that one product is diffrent from another -and better than it.Regardless of customer loyality to a product ,however,if its price goes too high ,the seller will lose business to a competition,therefore ,companies have only limited control over price.

2.Oligopoly

Oligopoly means few sellers .In an oligopolistic market,each seller supplies a large portion of all the products sold in the market place .In addition because the cost of starting a business in an oligopolistic industry is usually high, the number of firms entering it is low .

Companies in oligopolistic industries include such large scale enterprises as automobile companies and airlines. As large firms supplying a sizable portion of a market these companies have some control over the prices they charge.But there's a catch :because products are fairly similar,when one company lowers prices ,others are often forced to follow low suit to remin competitives .You see this practice all the time in the airline industry.When american airlines announces a fare decrease ,continental ,united airlines ,and others do likewise.When one automaker offersa special deal ,its competitors usually come up with similar promotions.

3 Monopoly

In terms of the number of sellers and degree of competition, monopolies lie at the opposite end of the spectrum from perfect competition .In perfect competition ,there are many small companies,none of which can control prices;they simply accept the market price determined by supply and demand.In a monopoly ,however there is only one seller in the market.The market should be geographical area ,such as a city or a regional area ,and doesn'tnecessarily have to be an entirecountry.

There are few monopolies in the united states becausethe government limits them.Most fall in to one of two catagories :natural and legal .Natural monopolies include public utilities ,such as electricity and gas suppliers.Such enterprises require huge investments and would be ineffitient to duplicatethe products that they provide .They inhibit competetion,but they're legalbecause they are important to society .In exchage for the right to conduct business without competitions they are regulated .for instance they cant charge what ever prices they want ,but they must adhere to government control prices .As a rule they are required to surve all customers even if doing so isnt cost efficient.

A legal monopoly arises when a company recieves a patent giving it exclusive use of an invention product or process .Partents are issued for a limited time generally 20 years ,United state patent a trade mark office 2006.During this period other companys can't use the invented product or process without permission from the patent holder .Patents allow companies a certain period to cover the heavy cost or researching a developing products and technologies . A classical example of a company that enjoyed a patent based legal monopoly is polaroid which for years held exclusive ownership of instant -filimtechnology(Bellies-2006).polaroid priced the product high enough to recoup, over time the high cost of bringing it to market.Without competition in other words it benjoyed a monopolistic position in regard to pricing