The existence of potential entrants into the industry will tend to keep profits to their normal level even in the short run, because existing firms will want to deter new entrants from coming into the market. Contestable markets are both productively and allocatively efficient and are likely to be efficient in the short run as well. The theory regarding the type of profit made in a contestable market is this. Abnormal profit can only be made in the short run, only normal profit will be made in the long run. The reason being is that when firm try to profit maximises in the short run then this will attract new entrants into the market to take some of this profit away from the existing firm.
In order to deduce that a monopoly is ‘harmful', there must be another market system which is preferable to monopoly so as to offer greater benefits to the public. A monopoly can therefore be compared to perfect competition. If the benefits of perfect competition outweigh the benefits of monopoly then a monopoly can be regarded as ‘harmful' since the consumers are not receiving the maximum possible utility for their purchases. Monopolies are criticised for their high prices, high profits and insensitivity to the public. Some governments therefore, in the light of these protests, advocate policies relating to monopolies, in order to regulate their power in favour of the public's interest.
Nevertheless by using this pricing approach Eco-Shack will be struggle to maximize their profit, and this method is less competitive that can affect the company sales performance. Another thing that takes into account for a product success is positioning, how the customer think of the products. A good positioning strategy will not just make the customer knows about the product but will also appeal and attract more customers. An alternative pricing approach need to be prepared if the customer doesn’t like on the pricing of the product or the company want to increase their profit.
There is the potential for a lower profit for the industry when the power of suppliers is present. The power of buyers has the potential to control the certain aspects in the industry which can help provide better quality in product and lower cost. The power of buyers can help the industry be profitable. The force of substitutes deals with the products and services that being provided by the industry to target customers from a different industry. When this happens, it causes both industries to compete against each in order to be competitive and keep their initial consumers.
Price is the amount of money that consumers will give to obtain goods. Price is one of the important factors in companies’ success, yet marketing contributes in determining price for companies’ products. Companies might set the price without marketing but they will likely to set inappropriate prices for customers, which can be expensive or cheap price. On one hand, when the price is too cheap companies surely will lose profit, on the other hand when it set to higher price companies will lose customers. In this case Marketing plays its role.
This is conceivable notwithstanding when the organizations have a low budgetary limit in the wake of making acquisitions since they put resources into non productive speculation ventures (Carolyn, Carroll and Griffith, 2001). Firms can choose to hold free money streams for theoretical reason as they sit tight for a productive venture that can guarantee better returns in future. The firm can likewise choose to put resources into danger ventures that have higher returns; these speculations may later yield better returns which could be beneficial to the firm. Then again if6 inadequately contributed free
While those who support free trade will defend their position by arguing that the increase in exports will instead create jobs, and that competition will help to drive prices down. While both positions tell stories that are true, they fail to accept that for the most part, any effects tend to cancel each other out and employment levels remain stable and level (Irwin Chapter 3). The issue of free trade is both complex and important enough that each side deserves a closer look, so we can see both sides together and get a feeling for what is really happening. After all, just because free trade may not have a substantial effect on employment alone, that is not necessarily true for the economy as a whole. Any industry that competes with a foreign good or service will inevitably have to drop the price of its product in order to stay competitive in an international market.
Lastly, outsource elements that are process to provider which can be delivered to the same output at the lower cost, but it also should be clear, in that so doing, the only competitive advantage accruing will be transient to lowering the costs. So any advantage soon that passes because it is shared across provider client base, that who is will likely be direct to competitors, as well being easily imitable by others outsourcing provider. 2)... ... middle of paper ... ...run of the profits, meanwhile the income increase of the consumer based are strained. Beside the benefit of the outsourcing, there are some of disadvantage in outsourcing which are the risk of exposing the confidential data. When organization outsource human resource, and the payroll and the services, with that outsource it a risk if exposing confidential company information to the third party or in other words, outsourcer.
If they collude, they end up acting as monopoly and thereby maximising the industry's profits. However they are often tempted to compete with each other inorder to gain a bigger share of the profit of the industry. There are two ways in which firms collude in oligopoly. These are: Collusive oligopoly: This is an explicit or implicit agreement between existing firms to avoid or limit competition with one another.
Profit maximising assumption is based on two premises, firstly that owner is in control of day-to-day management of the firm and secondly that the main desire of owners is to make a higher profit then the amount they invested in the firm. Since this assumption is based on two assumptions, therefore if these two premises don’t hold is it understandable to believe that firms goals is not to maximize profits. Well, this will depend on the motivation of individual firms. If a firm’s ownership and control are in the hands of a single person or small groups of people, then it’s reasonable to assume that the firm’s owners’ goal is to maximize profits. But most of today’s firms are owned by shareholders and other large cooperation, but day-to-day control of the firm is under management.