MARKET STRUCTURE AND COMPETITION

STRATEGIC DECISIONS: WHICH MARKETS TO ENTER OR PULL OUT OF HOW TO FINANCE EXPANSION WHETHER TO DEVELOP NEW PRODUCTS OR ACQUIRE THROUGH TAKE OVERS

SWOT ANALYSIS be more successful increase profits outdo competitors Strengths Weaknesses Opportunities Threats

INTERNAL FACTORS  current performance  market share  sales revenue  output  productivity  resources (financial, human, products, facilities…)

EXTERNAL FACTORS:  technological trends  social trends  macro - economic situation  political situation  competition

From the view point of businesses: 1. MARKET LEADERS –have the largest market share (innovate, introduce better customer service, distribution channels, cost reduction, product stretching, expensive sales promotions) –expand markets (find new users, stimulate more usage of a product)

2. MARKET CHALLENGERS –the second-largest market share –attack the leader (innovation, price reductions, cheaper or higher quality versions, improved services intensive advertising) or various market followers

3. MARKET FOLLOWERS –less resources (imitate, patents, narrow range of customers) –NICHERS (small, flexible, narrow range of customers, USP, a specialised product, a particular group of users, a geographical region, customer goodwill, multiple niching, a position in two or more niches, a much safer strategy)

From the point of view of economists: PERFECT COMPETITION (clothes, food, toiletries) MONOPOLY (electricity, gas, water) MONOPOLISTIC COMPETITION (medicaments) MONOPSONY (large wine makers, from grape growers) OLIGOPOLY (oil, gas) A DOMINANT- FIRM OLIGOPOLY (Microsoft) CARTEL (vitamins, coffee)

Basic Market Structure Market StructureSeller Entry Barriers Seller NumberBuyer Entry Barriers Buyer Number Perfect CompetitionNoManyNoMany Monopolistic Competition NoManyNoMany OligopolyYesFewNoMany Dominant-Firm Oligopoly YesOneNoMany MonopolyyesOneNoMany MonopsonyNoManyYesOne

FIND WORDS WHICH MEAN THE FOLLOWING: sales ravenue, market share, output, productivity, SWOT analysis, niche 1.The amount which a company produces. _________________ 2.The rate of output per worker or per machine. ______________ 3.The total income that a company receives from sales. ____________________ 4.Percentage of a total market which the sales of a company cover.__________________ 5.Special place in a market with little or no competition. __________ 6.An effective way to study an organization and plan how it can change and grow. ____________________________________

CHOOSE THE BEST WORD: prices, leaders, survey, promotions, competition, features, marketing, sales, competitive, redesign If companies want to have higher ________, they have to spend a lot on ______________. First they do a ___________ to find out about customer needs. If necessary, they try to ________their products to include the special _________ that people want. They give _____________, and make sure their prices are ______________. There is always stiff ____________. Top companies are called ___________________.