The market structure of the smartphone industry is oligopoly. The few large firms in the market is the dominant firm. This is because the industry is dominant to its specialities. The smartphone industry is a differentiated and pure oligopoly. This is because the firms sell similar but are not identical products as different version will be initiated in their products. For example, Apple is dominant in their digital content delivery. This enhances the profits gained as Apple Application store takes up to 83% of all mobile application downloads (Market structure, n.d.). Furthermore, the use of technology level is high. This is due to oligopoly markets have access to the capital, giving them a better technology improvement. In addition, …show more content…
This is because there is high research and development on the smartphone industry. This is also because of the competitive market in the smartphone industry, making the firms to have more research as to try to improve the technology on smartphones. Thus, it will increase the quality of the product as more development on the product gives them a better chance on making supernormal profits. Furthermore, supernormal profits were achieved on producer perspective as consumers will buy the smartphones from the large firms in the market. Based on the Figure 2 kinked demand curve graph below, supernormal profit is achieved after deducting the total costs and output. This is because the barriers of entry on the smartphone industry are relatively high. New firms will find that it is very hard to enter the market as existing large firms has control over the industry. Resources are also allocated efficiently, as they have a high set up and advertising cost to promote their firm brands. This is to enhance brand loyalty of the customers from existing brands. This will block the accessibility of new firms whom wants to enter the smartphone industry. Another cause for a high barrier is that existing firms already have legislations such as patent, license and copyrights on the industry. This will make it extremely difficult for the new firms to innovate as the existing firms have control over the required materials in …show more content…
Large firms such as Apple, Samsung and Xiaomi should sell their product at a reasonable pricing so that consumer objective will be achieved and more profits will be gained as the increase of consumers due to the reasonable price. Firms in the smartphone industry should also provide good quality and ensured safe products to the consumers. Furthermore, environmental concern is also another moral and ethical value. The smartphone industry firms should choose greener materials for their products as it causes pollution to the environment. Although dominant few firms in the industry is in the ethical guideline for environmental concern, it is also not fully environmental friendly. Thus, choosing a substitution such as polylactic acid plastic (PLA) which is made by glucose and corn starch is biodegradable and renewable. This will be a good substitute to plastic as this is recycled plastic (Tibken,
What 's more, the new competitors always can drive innovation in the mobile phone industry. Because if the new competitors want to success in the industry, it has to have something different with other brands to attract the consumers, and this different thing symbolizes innovation in the mobile phone industry. Xiaomi, as a successful new entrant in mobile phone market in 2011, is a good example. According to IDC, in October 2014, Xiaomi was the third largest smartphone maker in the world, following Samsung and Apple Inc. and followed by Lenovo and LG. The smartphone that Xiaomi release is much cheaper than other smartphones, which contain high configuration as Xiaomi did. What Xiaomi has done, is to substantially eliminate the significant 20 percent to 25 percent cut retailers or distributors typically get, and pair that with the vision of earning profits from accessories and web applications within its eco-system (MIUI) instead. Because of the new consciousness of forging greater margins from the phones itself, they carve out a substantial market in a short time and become an effective competitor for the existing
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
In order to answer the question “How Do Oligopolies effect the Beverage Industry?” we must first understand what an Oligopoly is. An Oligopoly is a market form in which a market or industry is dominated by a small number of sellers. An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market. So what exactly does this mean? To put this into perspective an Industry, such as the Beverage Industry, is composed of various sellers. However there are two main companies that control the Industry, they are Pepsi Co. and The Coca-Cola Company. Although there are several other companies such as
Compare to the pure competitor, the monopolist has a longer lifetime and therefore it allows the firm to have more opportunities for research and development from which the firm will reap the benefits. This might bring production cost down, lowering prices, increase production rates and raise the quality of goods (Ulbrich, 1990). The development of technological innovation will overcome technology barriers and allowing the growth of a new era of prosperity, hence fortifying why economy would benefit from monopolies that conducting research and
Market structure is classified according to the degree of competition firms encounter in their industry (Baker College, 2016). There are four main market structures: pure competition, monopolistic competition, oligopoly and a pure monopoly. Pure competition is where fir...
Monopolistic competition describes a market structure in which relatively many firms supplies a similar but differentiated product, with each firm having a limited degree of controls over price (Mastrianna, 2013). Monopolistic competition also definition with a large number of seller produces different products (Nordhaus and Samuelson, 2010). Monopolistic competition has many sellers to rival for the same group of customer.The major characteristic of monopolistic competition is product differentiation. Product differentiation means the product have either or imagined characteristics that identify the product as unique with their own brand of the product. For example, personal computers have different character such as speed, memory, hard disk, modem size and weight. Personal computers are differentiated sold; they can sell at slightly different prices in market (Nordhaus and Samuelson, 2010). A monopolistic competition is a free entry market. Firms can enter or exit the market without restriction until the economics profit were driven to zero on the market (Mankiw,
Oligopoly is a market structure where there are a few firms producing all or most of the market supply of a particular good or service and whose decisions about the industry's output can affect competitors. Examples of oligopolistic structures are supermarket, banking industry and pharmaceutical industry.
Competition for insurance money causes facilities to increase their technology to attract the insured. Once one facility has increased its technology other facilities need to increase their technology to remain competitive.
Wholefoods Market a retailer of natural and organic foods has become well known all around the world is not just a market place for people to come in and out to get there necessary day to day needs. But it has been setting great examples every day to the people of the community which they reside in, teaching the people how to be greener and how to keep their community safe and clean. This store had started with their first opening in Texas in 1980 and has been making a difference since then. They are founded by a nonprofit organization called the Whole Planet Foundation, which has been combating poverty and has been promoting self-sufficiency for third world countries which provides them the goods for their store.
Furthermore, if the concentration is elevated, it signifies that the top number of companies affect the fabrication or services offered in the market, then the industry is then supposed to be oligopolistic or
The. An oligopoly is a market structure characterised by few firms and many buyers, homogenous or differentiated products and also difficult market entry (Pass et al. 2000) an example of an oligopoly would be the fast food industry where there is a few firms such as McDonalds, Burger King and KFC that all compete for a greater market share. In a Monopoly, there is one firm that controls the market, and there are no similar products being sold by other companies. Advertising is therefore used to encourage people to buy more of their product. In a monopoly there is a downward sloping demand curve, the reason for this is that a firm must lower the price to sell an extra unit of their product.
An industry in which a few big firms dominate the other firms is called an Oligopoly. An average oligopoly might have a dozen firms or even hundreds of them but most of them hardly matter in relevance to other huge firms. These big firms usually dominate the market and make the so called structure called as oligopoly. The firms in such a market structure tend to react to changes made in quantity produced and prices by other competing firms in different manners. Due to such changes, all the firms tend to sell homogeneous or differentiated products. When the firm happen to choose their mode of production individually, they tend to fall somewhere between perfect competition and monopoly through the following ways:
Under the circumstance that the mobile phone industry entered the 3rd generation, Nokia faced competition from both macro level and industry level. For the macro level, the government encouraged competition among the operators and handset manufacturers by giving digital licenses to new entrants. As a result, the mobile phones became more sophisticated, for example, the cameras and the games in the mobile phone. For the industry level, which can be analyzed by the Porter’s Five Forces, (lecture )Nokia was facing threat of new entrants, competitive rivalry and the bargaining power of buyers is increasing as well. As the government encourage completion between the handset manufacturers, there are several new entrants from different countries enter this industry, such as Apple from USA, Samsung from Korea. These new entrants compete with Nokia in both smartphone segment and basic phone segment. Some of them even constructed “ecosystems”, which they could integrate the services and applications quickly, in order to produce the phone in just two days. For the bargaining power of buyers’ aspect, they do not need to rely on the only operating system Symbian. They can choose Windows mobile launched by Microsoft, Android launched by Google and Ios launched by Apple, in addition, basically all of them are better than Symbian (Amiya, 2010). The buyers could choose any
There is increased competition- This is a consequence of capitalism. Increased competition leads to improvement in terms of quality and efficiency of production. It also leads to low prices of products in the market, as producers want to have a larger share of the consumer market. In a capitalistic perspective, businesses that produce high quality products at a low price enjoy a larger market share.
Fiber optics is a new technology that uses rays of light instead of electricity to transmit information over optical fibers at very high speeds. The optical fibers are usually thin strands of glass that are combined into cables and used to send information and computer data in the form of pulses of light. The optical fibers provide much clearer transmission than conventional copper cable and satellite links. The world market for optical fiber continues to grow rapidly, with shipments increasing 14 percent from an estimated 7.0 million kilometers of fiber in 1990 to approximately 8.0 million in 1991. The demand for multimode fiber is predicted to continue to expand through the mid-1990s, with some market analysts indicating that 15 to 20 percent annual growth over the next three years is reasonable. Strong demand is expected for singlemode and multimode fiber to be used in cables for local area networks, telecommunications, cable television (CATV), and transoceanic fiber-optic systems.