Competition and Markets Module 5 SLP
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Competition and Markets Module 5 SLP
The firm to be addressed in this case is Travelodge. It is a franchise firm which was founded by Scott king in the year 1939 and later began franchising in the year 1966. It offers exceptionally high quality products and services. In addition to its services, it is committed in its work, enabling it to acquire world-class attention and everybody interested to know more about it and also experience its services and products. Travelodge has grown at a very alarming rate, and it is in this view that we are interested to know more about it.
There are several market structures known. They include monopoly, monopolistic competition and oligopoly market structures. Travelodge operates in a monopoly market structure. A monopoly market structure is one which, there is only one seller.it has the most significant market authority (Haines, 2009). A monopoly market structure is a good example of an imperfect market. Bearing in mind, it has the power to raise the price of its services and products. In relation to Travelodge, monopoly arises as a result of lowering the cost of its products and services. Having grown and fully established itself, lowering of its prices on services and goods would not affect its marginal profits as much. On the other hand, it will motivate other upcoming firms to make profits and hence withdraw from the market (Sexton, 2008).
Some of the major characteristics that make it in this firm includes high barriers to entry of other related substitutes, it ensure maximum profit on maximization, it is considered as the sole seller, price determiner and price changer. That is; it can change the price of its products a...
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...rkforce. Increasing wages of employees will improve their living standards and as a result they become motivated and enthusiastic in the job. All of this incorporated will help the firm as a whole to achieve its goals with respect to market power.in addition to all this, the general output will increase, the quality of services an products will improve and consumers will be satisfied with the whole operation of the firm hence improved market power and dominance (Haines, 2009).
References
Haines, S. (2009). The product manager's desk reference. New York: McGraw-Hill.
Mithani, D. M. (2010). Economics for managers. Mumbai [India: Himalaya Pub. House.
Reis, J. G., & Farole, T. (2012). Trade competitiveness diagnostic toolkit. Washington, D.C.: World Bank.
Sexton, R. L. (2008). Exploring economics (4. ed., International student ed.). Mason, OH: Thomson, South-Western.
[6] Turley Mings and Matthew Marlin, [The Study of Economics: Principles, Concepts & Applications] (Dushkin McGraw-Hill, 2000) 413-414.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
McConnell, C., Brue, S., & Flynn, S. (2012).Economics: principles, problems, and policies. (19 ed., p. 375-390). McGraw-Hill/Irwin. Retrieved from http://online.vitalsource.com/books/0077771699/id/L4-1-1
...price, it also allows for them to increase their sales and enter into new markets, which in turn would help to increase their profits.
Although firms in oligopolies have competitors, they do not face so much competition that they are price takers (as in perfect competition). Hence, they retain substantial control over the price they charge for their goods (characteristic of monopolies). In my discussion I will use the Australian airline industry to present how oligopolies operate, and to show the different behaviours and strategies that arise from the interdependence of firms. I will mainly concentrate on the domestic airline market in Australia. The domestic airline market consists of a duopoly of two firms, Qantas and Virgin Blue.
Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009.
A monopoly is a market structure in which there is a single seller (Hendrikse, 2003) indicating the incumbent firm has price setting power- and the buyers are price takers. Remaining as a monopoly can have advantages in terms of market power, controlling and dictating the market, meaning they can charge prices that are abnormally profitable.
Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009.
When the term business is mentioned, the first idea that comes into our minds is profit. However, before that profit is earned, other sectors of the “business” must participate. Every business should at least have the product and the idea about who should buy the commodity. What the business is selling is not important now but the one who buys it (customer) is. The customer is what we generally refer to market in business. Thus, every business needs to be fully aware of the market it serves. Every business has its own type of customers hence it has its own market model known as the market structure. Based on this idea, in business economics we have four types of market structures namely; Monopoly, Oligopoly, Monopolistic Competition and Perfect Competition market structures. Let us briefly explain these market
Bade, Robin, and Michael Parkin. Foundations of Economics. 3rd ed. Boston: Pearson Education, Inc, 2013. Print.
The crucial importance and relevance of economics related disciplines to the modern world have led me to want to pursue the study of these social sciences at a higher level. My study of Economics has shown me the fundamental part it plays in our lives and I would like to approach it with an open mind - interested but not yet fully informed.
Competition - The firm must also evaluate the competitors in the market when coming up with both product and market development strategies. The competition stiffness will drive the firm to make a wise decision when coming up with the
Other intangible benefits include the reinforcement of company goals and values, better internal and external communication a positive working and social environment, an improved company image and increased employee loyalty.
The type of firm we are going to investigate in this assignment is an oligopolistic firm. The essence of an oligopolistic market is that here are only a few sellers. As a result, the actions of any one seller in the market can have a large impact on the profits of all the other sellers. Oligopolistic firms are interdependent in a way that competitive firms are not. The company we chose to study is Petronas.
Sullivan, A., & Steven M., (2003). Economics: Principles in action. Upper Saddle River, New Jersey : Pearson Prentice Hal