Ebook Managerial economics (7th edition): Part 2
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: Ebook Managerial economics (7th edition): Part 2
Ebook Managerial economics (7th edition): Part 2
9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2al night ? I'm trying to figure the damn strategics of my competitors!A M ANAGER’S LamentIn die early 1990s, die infant-formula industry accounted for annual sales of some 32 billion. Abbot! Laboratories, Bristol-Myers Squibb, and American Home Products Corp, dominated the market with 50 percent, 37 Ebook Managerial economics (7th edition): Part 2 percent, and 9 percent market shares, respectively. The growth of the overall market had been uneven. Until the early 1970s, breast feeding of babiesEbook Managerial economics (7th edition): Part 2
was on lhe decline, sinking IO a low of 20 perceni of mothers. Formula makers prospered by offering moi hers the convenience of bottled milk. Twenty-9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2rs breast fed their babies.The three dominant companies employed strikingly similar business practices. The formulas they sold were nearly identical (and must have the same nutrients by federal law). The companies charged virtually the same wholesale prices. They increased prices by an average of 8 Ebook Managerial economics (7th edition): Part 2percent annually over the decade (while milk prices increased by 2 percent annually). They produced a 13-ounce can at a marginal cost of about S.60 anEbook Managerial economics (7th edition): Part 2
d sold it for an average wholesale price of $2.10. With average total cost estimated to be about $1.70 per can. the companies enjoyed nearly a 25 perc9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2on in theInfant Formula Industry349350Ch a fit er 9 Oligopolyhospitals and doctors. Such programs were very effective. Research has shown that 90 percent of mothers stick to the formula brand the hospital gives them.Hie cozy oligopoly enjoyed by the three companies attracted would-be entrants and go Ebook Managerial economics (7th edition): Part 2vernment scrutiny. In the late 1980s, Carnation and Gerber entered the formula market by advertising directly to consumers. However, the American AcadEbook Managerial economics (7th edition): Part 2
emy of Pediatrics opposed this strategy, arguing that direct advertising would influence mothers not to breast feed. Consequently, the two companies’ 9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2, and Children (W1C) Program, the government subsidized formula for disadvantaged families. Administered by the states, the WIC program accounted for about one-third of all formula sales. In most states, families received WIC vouchers that could be exchanged for any brand of formula, with the compan Ebook Managerial economics (7th edition): Part 2ies giving the government a discount (about $.50 per can) off the regular wholesale price. However, a number of stales instituted competitive bidding—Ebook Managerial economics (7th edition): Part 2
awarding al) WIC. sales in the state to the firm making the lowest price bid.The history of the baby-formula industry raises a number of questions. Do9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2rket structure, pricing, and profirability in the infant-fonnula industry?hl the previous two chapters, we fix used on perfect competition and pure monopoly, the polar cases of market structure. I low ever, many markets occupy positions between these extremes; that is, they are dominated by neither Ebook Managerial economics (7th edition): Part 2a single firm nor a plethora of firms. Oligopoly is the general category describing markets or industries that consist of a small number of firms. BecEbook Managerial economics (7th edition): Part 2
ause of oligopoly’s importance and because no single model captures the many implications of firm behavior within oligopoly, we devote the entire chap9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2petes against an identifiable number of competitors similar to itself- This chapter and the succeeding chapter on game theory answer this question by introducing and analyzing competitive strategies. Thus, we depart from the approach taken previously where the main focus was on a “single" firm facin Ebook Managerial economics (7th edition): Part 2g rivals whose actions arc predictable and unchanging. In crafting a competitive strategy; a firm’s management must anticipate a range of competitor aEbook Managerial economics (7th edition): Part 2
ctions and be prepared Io respond accordingly. Competitive strategy finds its most important applications within oligopoly settings. By contrast, in a9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2 Industry price and output arc set by supply ami demand, and the firm is destined to earn a zero profit in the long run.'z'"The strategic approach extends the single-firm point of view by recognizing that a linn's profit depends not only on the firm's own actions bill also on the actions of competit Ebook Managerial economics (7th edition): Part 2ors. Thus, to determine its own optimal action, the firm must correctly anticipate the actions and reactions of its rivals. Roughly speaking, a manageEbook Managerial economics (7th edition): Part 2
r must look at the competitive situation not only from his or her own point of view but also from rivals’ perspectives. The manager should put himself9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2lled interactive or strategic thinking.The outline of this chapter is as follows. In the first section, we describe how to analyze different types of oligopolies, beginning with Michael Porter’s Five-Forces model. Next, we introduce the concept of market concentration, as well as the link between co Ebook Managerial economics (7th edition): Part 2ncentration and industry prices. In the following section, we consider two kinds of quantity competition: when a market leader faces a number of smallEbook Managerial economics (7th edition): Part 2
er competitors and when competition is between equally positioned rivals. In the third section, we examine price competition, ranging from a model of 9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2competition within oligopolies: the effects of advertising and of strategic precommilmeiils.OLIGOPOLYAll oligopoly is a market dominated by a small number of firms, whose actions directly affect one another’s profits. Ill this sense, the tales of oligopoly firms are inienleỊteiuleid. lb begin, it is Ebook Managerial economics (7th edition): Part 2 useful to size I ip an oligopolistic industry along a numlter of important economic dimensions.Five-Forces FrameworkFor 25 years. Michael Porter’s FiEbook Managerial economics (7th edition): Part 2
ve Forces model has provided a powerful synthesis for describing the structures of different industries and guiding com pctitivc strategy.1 Figure 9.19Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2 in the market and how they compete. Naturally, the number of close rivals, their relative size, position, and power, arc crucial. (The following section looks closely at the notion of industry concentration to measure the number ami sizes of firms.) Entry into the market is the second most importan Ebook Managerial economics (7th edition): Part 2t factor in sizing up the industry. We have already seen that free’The Five-Forces model is examined ill length in M. F. Porter, Campriitive Stmtfgy:Ebook Managerial economics (7th edition): Part 2
Terhnúpu* for Analyzin’' Mtutria aiut < jtmfvliinn (New York: Simon & Schuster, 1998).352 Chapter 9 OligopolyFIGURE 9.1The Five-Forces Frameworkentry 9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2ibed in Chapter 8) are a precondition for monopoly. Ease of entry is also crucial for analyzing oligopoly. Boeing and Airbus compete vigorously Io sell new aircraft, but barriers Io entry due Io economies of scale protect them from new competitors. By contrast, numerous new discount air lines in the Ebook Managerial economics (7th edition): Part 2 United Stales and Europe have dramatically changed the competitive landscape ill the air travel market. Similarly, a small independent studio (pullinEbook Managerial economics (7th edition): Part 2
g together a good script, directing talent, and up-and-coming actors) can produce a well-reviewed and profitable hit movie despite the formidable clou9Oligopoly/í « in rare moments thai I see my business clearly: my customers, my organization. my markets and my costs. Then why do I still lie awake a Ebook Managerial economics (7th edition): Part 2of industries, this impact is ongoing, even relentless. For instance, trucking and railways arc sub stitutes, competing modes of transport in the long-haul market. Soft drink consumption suffers at the hands of bottled water, sports drinks, and new-age beverages. In other cases, the emerging threat Ebook Managerial economics (7th edition): Part 2of new substitutes is crucial. Cable companies have long challenged network television (with satellite TV a third option) and now vigorously compete fEbook Managerial economics (7th edition): Part 2
or local telephone customers. Since the millennium, online commerce has steadily increased its sales, often at the expense of “brick-and-morlar" storeGọi ngay
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