External Factor

Topics: Monopoly, Perfect competition, Competition Pages: 2 (544 words) Published: June 25, 2013
4.2 External Factors
External factors are a number of influencing factors which are not controlled by the company but will impact pricing decisions. It includes of legal, consumer trends, technological, and competitors. Our company focuses on technological and competitor as external factors that influencing price setting on matcha collagen biscuits. 4.2.1 Competitor

Competition factors can look into three areas which are monopoly competition, perfect competition and oligopoly competition. Monopolistic competition is a situation where a single company or group controls the entire output of the market for a given type of product or service with any buyers. Besides, a monopoly is protected from competition by high barriers to entry and the product it produces has no close substitutes. Example of monopolistic competition is water service which supplier of water has no substitutes. Perfect competition is a market structure where there are a large number of buyers and sellers. There are a perfect knowledge of market condition and the price which no individual firm has any influence on the market price. The products in perfect competition are homogeneous which they can be substituted easily. Therefore, the company can entry or exit the industry without affecting the market.

An oligopoly competition is a situation in which a particular market or industry is dominated by a small number of firms which compete against each other. There is an element of interdependence in the decision-making of these firms. Example of oligopoly competition are newspaper industry, petrol stations, and airlines. Our product’s price is influence of external factors which is perfect competition. This is because there are many firms produce an identical and homogeneous biscuit in the biscuit market such as Munchy, Tiger, and Jacobs. Besides, they are many sellers in the biscuit market which are Kraft, Julie, and Munchy as well as there is no dominating firm. Therefore, our company is...
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