Economics - Market structures

Topics: Monopoly, Perfect competition, Oligopoly Pages: 9 (2889 words) Published: April 17, 2015

How Market Structures, Market Forces and Business & Cultural Environment affect a Business By Stuart McDougall
Contents
1.0 Summary
2.0 Introduction 3.0 Market Structures
3.1 Introduction
3.2 Perfect Competition
3.3 Monopoly
3.4 Oligopoly
3.5 Monopolistic Competition
4.0 Market Forces & Organisational Responses
4.1 Elasticity of Demand

5.0 Business and Cultural Environment
5.1 Growth
5.2 Competitive Advantage
5.3 Factors which affect growth
5.31 Technology
5.32 Cultural Environment
6.0 Conclusion
7.0 Works cited
1.0 Summary
Within this report, are the findings, in detail of Market structures. Perfect completion, monopoly, oligopoly and monopolistic competition. The answer to Mr Mark Fish is prganisations are able to charge what they please because they are in a monopoly. Which exits as their market as there is no competition. I will illustrate market forces and how organisations respond by using graphical charts. The report will also illustrate how the business can achieve growth by raising internal capitial or mergers and takeovers, I will also discuss how they achieve a competitive advantage by either selling the product/service for very cheap or create a differentiated product which is ‘better’ than their rivals. The report concludes by discussing the relevances of the factors discussed. 2.0 Introduction

In this report we shall look at how market structures, market forces and business and cultural environment affect a business. This report has been created to provide understanding and knowledge of, how businesses perform and react in each market structure, how market forces and organizational responses are related and how a business and the cultural environments surrounding it, shape the behaviour of an organisation. This report will begin by looking at ‘market structures’ 3.0 Market Structures

3.1 Introduction – Recently here at Midas we encountered a comment from a client who was concerned with, how business within certain market types are allowed and I quote “get away with extoritionate pricing policies without having to appear to innovate or offer exceptional customer service or even quality of offer – I just don’t get it! Why do customers continue to support them? Fairly sure our business (Event management services to corporate business) wouldn’t get away with it!!” – Mark Fish, Director EM Holdings Group plc. This section of the report aims to answer this question, as well as, giving the reader a clearer understanding of market structures. It is traditional to divide industries into categories according to the degree of competition that exsists between the firms within the industry (Sloman, 2006). Figure 1.0 shows the four categories in to which industries are divided

3.2 Perfect Competition
So what is perfect competition? Perfect competition is made up of four assuptions, they are as follows: Organisations are price takers – This means that because there are so many firms in the industry that each one produces an insignificantly small portion of total industry and therefore has no power to effect the price of products. The price of products are dictated by the demand for that certain product. Freedom of entry (No Barriers of entry) – Existing organisations within the industry are unable to stop new organisations setting up in business Organisations produce identical products – All products are ‘homogenous’ or identical which would mean no branding or advertising Producers and consumers have perfect knowledge of the market. Producers are fully aware of prices, cost and market opportunities. Consumers are fully aware of the price, quality and availability of the product At this point, you should take note that few, if any industries in the rea world meet these conditions. The closest markets to perfect competition would be found in agriculture and the primary sector, fresh vegetables such as carrots and...

Cited: Dave Needam, R. D. (2003). Business for Higher Awards. Bath: The Bath Press.
Sloman, J. (2006). Economics. Pearson Education Limited.
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