Business and Marketing

BUSINESS AND MARKETING
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(07 December 2010)
There Are a Variety of Market Structures and a Variety of Firm Objectives, So That Theory Predicts a Wide Range of Price Outcomes
Critically Assess This Statement Using Relevant Evidence
The market is very dynamic and thus different structures are involved where all businesses must fit in the systems if they don’t want to be eliminated. The market is therefore interconnected in that it has different characteristics such as the number of buyers, their strength, their collusion, the completion among them and their simplicity of entry and exit to the markets (Alogoskoufis, Et al, 1990). The market structure therefore has an influence on what a firm does and aims to do; this includes the pricing, supply, efficiency, in competition, and in the barriers to entry.
For example Wal-Mart has large retail outlets hence their pricing strategy affect the small companies competing with it. Due to its high sales it is able to influence or arm twist the suppliers to sell goods to them and offer services at a discounted rate because they are buying goods or seeking services in large quantity. The reduced cost which in incurred when they are procuring the goods or services are passed over to the consumers through lower prices on goods and services which they offer but still maintain the profit margin as competitors. Such price low competitive prices makes it difficult for the smaller companies to compete with it because if they lower prices like it does they would be likely operating at a loss or decreased earnings.
A market structure is determined by the ease or difficulty of entry and exit to the market, the nature of the goods and services the firm has in the market, the firm’s control of the supply and output, and the control on the prices of the product. This scenario brings to light four basic market structures these are; the perfect competition, oligopoly, monopoly, and the monospony (Sutton, 1991).
The perfect competitive structure is where there is free entry and exit in the market and the presence of numerous homogenous produ...