The key feature of an oligopoly is that there. 11 Key Features of Oligopoly Market Structure (With Example) 2022-10-09
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Blue Ocean Strategy is a business theory and approach developed by W. Chan Kim and Renée Mauborgne in their 2005 book of the same name. It is based on the idea that organizations can create new market spaces, or "blue oceans," by offering unique products or services that are not found in existing markets, or "red oceans," which are crowded with competitors vying for the same customers.
According to Kim and Mauborgne, blue ocean strategy is about creating value for both the company and the customer. It involves finding untapped market opportunities and creating value through differentiation and low cost. By doing so, a company can achieve both a competitive advantage and a higher price for its products or services.
One key aspect of blue ocean strategy is value innovation, which involves creating value for both the company and the customer through a combination of differentiation and low cost. This involves finding new ways to deliver value to customers that are not offered by competitors and that meet their needs at a lower cost.
Another key aspect of blue ocean strategy is the idea of eliminating or reducing the factors that drive industry competition. This can be achieved through the creation of a new value curve, which plots the factors that drive industry competition against the value that customers receive from a product or service. By eliminating or reducing certain factors, a company can create a new value curve that offers greater value to customers at a lower cost, thus allowing it to differentiate itself from competitors.
There are several tools and techniques that can be used to implement blue ocean strategy, including the "Four Actions Framework," which involves identifying and eliminating factors that drive industry competition, reducing factors that are not important to customers, creating factors that are unique and attractive to customers, and raising factors that are important but undervalued by the industry.
In conclusion, blue ocean strategy is a business approach that involves finding untapped market opportunities and creating value through differentiation and low cost. It is based on the idea of creating value for both the company and the customer and involves the use of tools and techniques such as the Four Actions Framework to implement this strategy. By following a blue ocean approach, organizations can achieve a competitive advantage and higher prices for their products or services, while also meeting the needs of their customers in a unique and innovative way.
The Features of an Oligopoly
A special case of oligopoly in which there are two sellers, and it is also assumed that both the firms sell homogeneous products and there is no substitute for the product. Peter Antonioni is a senior teaching fellow at University College London. Examples of Oligopoly Markets When a few firms dominate a market, an oligopoly is established. Therefore, the demand curve of an oligopolistic firm is indeterminate. Importance of Advertising and Selling Cost A direct effect of the interdependence of Oligopolists is that the various firms have to employ various aggressive and defensive marketing weapons to gain a greater share of the market or to maintain their share. A wide range of patterns of conduct is possible.
Even though it is rare to find oligopoly firms with homogeneous products, industries like steel, cement, aluminum, etc. Manzur Rashid, PhD, is a lecturer at New College of the Humanities, where he covers second-year micro- and macroeconomics. Homogeneous Product Another important feature is Homogeneous products. The size of the firms is not uniform. This can be only be found in oligopoly. Robinson calls oligopoly as cat and mouse monopoly. This behavior makes oligopoly a useful jumping-off point for looking at even more complex markets, and for understanding how the concepts of game theory are relevant to microeconomics.
Thus, advertisement can become a life and death matter for a firm under oligopoly. The few competing firms are interdependent in their decisions on price output policy. On account of economies of scale, natural barriers to entry usually exist. Therefore, these firms follow the policy of price rigidity, and hence prefer non-price competition. In 2012, computer operating systems were dominated by Windows from Microsoft, Mac OS from Apple, and the open-source Linux operating system.
Who else wants to know the six main features of oligopoly?
These make entry costly and exit not costless. Imperfect or Differentiated Oligopoly: If the firms in an oligopoly market manufacture differentiated products, then it is known as an imperfect or differentiated oligopoly. In other words, the interdependence among the sellers of a commodity is high. Therefore, the demand curve of an oligopoly market keeps on changing or shifting and is not definite. The market is the nervous system of modern economic life where producers and consumers carry out the sale and purchase transactions. Role of Selling Costs: Selling cost is the cost spent on the advertisement, sales promotion, and marketing of the product. Peter Antonioni is a senior teaching fellow at the Department of Management Science and Innovation, University College, London, and coauthor of Economics For Dummies, 2nd UK Edition.
Because more than one reaction pattern is possible from other businesses, before offering a definite and defined solution to price-output fixation under oligopoly, we need to make assumptions about the reaction of others. Therefore, the new firms, which can cross these barriers enter the market, which results in earning abnormal profits in the long run. Few Firms: There are few firms under an oligopoly market whose number is not exactly defined. Changing this condition makes a large difference, because rivals can base their behavior on each other's actions without worrying about potential competitors who aren't currently in the industry. The firms sell products which are good substitutes of one another. As a result, firms behave strategically and try to anticipate the strategic interactions among each other. Some may be small others may be very large.
11 Key Features of Oligopoly Market Structure (With Example)
The decisions of one firm affect the profits of other firms. It is different from monopoly with one seller and monopolistic competition with many sellers and perfect competition with innumerable sellers. Manzur Rashid, PhD, is a lecturer at New College of the Humanities, where he covers second-year micro- and macroeconomics. Demand Curve Under the Thus, now you know the features of oligopoly market structure. Various firms incur enough expenditure on advertising and sales promotion measures.
The key feature of an oligopolistic market is that: a. each firm produces a different product from other firms. b. a single firm chooses a point on the market demand curve. c. each firm takes the market price as given. d. a small number of firms are a
She has taught microeconomics at both graduate and undergraduate levels since 1987. Output or Thus, It is therefore clear that Oligopolistic firms must consider not only the market demand for the industry product but also the reactions of other firms in the industry to any major decisions it takes. Interdependence: The firms under an oligopoly market are interdependent, which means that the actions of one firm affect the actions of other firms. He received his PhD from Yale University. Oligopoly often comes about as a result of the existence of barriers to entry. For example, talcum powders are produced by different firms and have differentiated characteristics, yet all the talcum powders are close substitutes for each other. In response to price shifts, product fluctuations, and sale practices by the first company, there is a high degree of ambiguity as to which variable or combination of variables the rival company would use in its reaction pattern.
As a result, firms behave strategically and try to anticipate the strategic interactions among each other. In addition, patents, trademarks, tariffs, quotas, licenses, other government restrictions, and the differentiation of goods create artificial obstacles to oligopolistic market entry. For example, luxury car producers like BMW, Audi, Ford, etc. Imperfect or differentiated oligopoly produces and sells heterogeneous products. As the firms in this market are interdependent, an action of one firm severely influences the action of other rival firms. Those businesses have extensive relationships with the suppliers of handsets and can have their device pre-installed on each phone. Such barriers to entry can be normal or hypothetical.
These make entry costly and exit not costless. . As there is severe competition and interdependence among the firms, they take help of selling costs to sell their product in the market. Non-Collusive Oligopoly: If the firms in an oligopoly market compete with each other, then it is known as a Non-Collusive Oligopoly. Members of the group may agree to form combination to promote their common interest of profit maximisation. In addition, each organization needs to keep its own decision to be as unforeseeable to competitors as possible. In other words, if one firm tries to reduce the price of their product, then the other firms will also have to reduce the price, and vice-versa because of which the firm can lose its customers, ultimately intended to increase the price.
