Premium Essay

Perferct Competition

In: Other Topics

Submitted By Martin72
Words 1166
Pages 5
Perfect Competition
Perfect competition is a problem that is emerging in a market in which buyers and sellers are informed about all elements of monopoly that are absent and the market price of a commodity is not control by individual buyers and sellers. Perfect competition is simply looked as a market structure where competition is at its greatest possible level. According to Kirzner (2000), “Perfect competition therefore came to mean the situation in markets where each and every participant lacks any power whatever directly to influence product price or product quality”. Perfect competition is used to compare other and real-life market structures. A real life market structure such as agriculture is the industry that closely resembles a perfect competition. The four key characteristics of perfect competition are a large number of small firms, identical products sold by all firms, perfect resource mobility or the freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology. These four characteristics basically describes that a perfectly competitive firm does not have any control over the market. A large number of small firms that produce identical products have a large number of perfect substitutes that exist for the output produced by any given firm. This means the demand curve for a perfectly competitive firm's output is perfectly elastic. Freedom of entry into and exit out of the industry means that capital and other resources are perfectly mobile and that it is not possible to erect barriers to entry. Perfect competition is that all firms operate by the same guidelines and that all buyers know about all substitutes for a given good that firms produce that are identical products.
Perfect competition is the opposite of a monopoly. A perfect competition is when a firm supplies a particular good or service in which the firm...

Similar Documents

Premium Essay

Evolution Health Care

...Evaluating the Plan The last stage and a very important aspect of our efforts is evaluation. Organizations must evaluate their plan on a regular basis and make adjustments when the circumstances warrant – such as an economic downturn, change in competitors or product demand. Traditionally, plans are evaluated on an annual basis. Here is a sample marketing plan outline included in our readings, Essentials of Health Care Marketing, (Berkowitz, 2006) “Marketing Plan Outline I. MANAGEMENT SUMMARY This is a one-page summary of the basic factors involving the marketing of the service next year along with the results expected from implementing the plan. It is intended as a brief guide for management. II. ECONOMIC PROJECTIONS What factors in the overall economy will affect the marketing of this service next year, and how? This section will comprise a summary of the specific economic factors that will affect the marketing of this service during the coming year. These might include employment, personal income, business expectations, inflationary (or deflationary) pressures, etc. III. THE MARKET—qualitative Who or what kinds of organization could conceivably be considered prospects for this service? This section will define the qualitative nature of our market. It will include demographic information, industrial profiles, business profiles, etc., for all people or organizations that could be customers for this service. IV. THE......

Words: 624 - Pages: 3

Premium Essay

Versus

...Versus: Competition is a Child’s Best Competitor Life is not fair. One of the most overused phrases still to this day. That phrase is overused for a reason. Life really is not fair. During early adolescence we are taught to share your things, be fair, and that everyone is equal. How nice this American society would be if those virtues of being equal were true, but sadly it is not. As someone’s cognitive abilities develop and they start to assess their abilities, they automatically compare them to others, sometimes not even on purpose. As we grow up we learn that this society is a “dog-eat-dog” world, and if people do not possess the necessary skills and characteristics that one needs to get ahead or be on top, other people who are equipped with those essential skills will not even think twice about surpassing those who are lacking. By the time some people realize that America is dog-eat-dog society, they haven’t been prepared to handle competition correctly. The mere thought of a little competition scares the hell out of most people. That first loss that is handed to them during adolescence where their winning classmate throws up the “L” shape on their forehead and yells out “loser!” is almost unbearable. They completely bomb that group interview and are outshined by others in the same room where they have to openly compete for a spot in a company. Almost your entire life you have to compete either with yourself or others. Competition is very beneficial for adolescents......

Words: 1535 - Pages: 7

Premium Essay

Reaction Paper " Going Global Lessons from Late Movers

...Student: Guillermo P. Nalica Subject: Global Business Management Time: 6:00-9:00 PM Friday Professor: Mrs. Portia Cordova Salva Reaction Paper 1: Going Global: Lessons from late movers The readings presented by Christopher Bartlett and SumantraGhoshal give us the picture of entering and competing in the global market. I may understand that today, the primary aim of businesses is to penetrate the international market especially if this businesses is successful in their own country of origin that going global is the next thing to do. Of course, business expansion is not an overnight thing. We have to consider the people, capital and resources that we may put to use to realize our aim. Going global: Lessons from late movers, best exemplified the challenges confronted by Ferdinand Magellan when he first proposed the idea of expedition, that was;sailing through rough oceans and unknown territories. In business, going global is venturing into highly competitive market and unknown territories also. The authors had presented success stories of companies who penetrated the international market. The companies’ different strategies employed explained thoroughly by the authors. The authors presented how Jollibee used benchmarking from its direct competitor Mcdonald and gain momentum to venture into the global market. Jollibee did not immediately aim the US market but rather it focuses its expansion to the neighboring countries. The strategy employed by Jollibee gave the......

Words: 585 - Pages: 3

Premium Essay

Factors Effecting Divine Chocolate Ltd

...share of it. If they don’t consider this, they make not make much profit, if any at all, and their business will be unsuccessful leading to loss of sales and no profit. A second factor affecting their pricing decisions is the competition they have with Cadbury’s. Cadbury’s bars of chocolate cost 82p and Divine Chocolate Ltd’s chocolate bars are 81p. They have to consider their pricing because Cadbury’s is a well known brand which is very popular so if they had their chocolate bar more expensive than Cadbury’s then customers are more than likely going to purchase the Cadbury’s bar because not only is it more popular but it is cheaper too. So in order for Divine Chocolate Ltd to do well, they have to make sure they are cheaper than their competitors. 2. A rivalry of two or more businesses that target the same customers. Business competition tends to result in increased efficiency as firms attempt to reduce expenses. One advantage to show that Divine Chocolate Ltd has become more competitive is the cheaper prices they offer. If customers see a chocolate bar, that would probably taste the same as a Cadbury’s bar, cheaper than Cadbury’s then they may be more than likely tempted into buying the cheaper priced bar. This would mean Cadbury’s would be in competition with Divine Chocolate Ltd as they have cheaper prices than their Cadbury’s products. This leads to more sales for Divine Chocolate Ltd and more profit. One disadvantage to show they aren’t more competitive is that they......

Words: 588 - Pages: 3

Premium Essay

Porters Diamond Model

...Firm Rivalry This part of the diamond focuses on the affect that competition has on rival firms in a relevant industry. Firms identify their strengths and capabilities to build on their market position and use a variety of strategies to remain competitive. True rivalry exists between firms that are comparable in size, power, product or service offering and their actions induce a response from their closest competitor. There are many strategies that firms engage in their attempt to gain a leadership position in the market, they include, pricing, product differentiation, brand image and the support services offered to consumers. A strategy based on solely on pricing can be detrimental to a firm as the reduction in prices also reduces profits and encourages competitors to follow suit, which in turn can spark a price war. This was evident in the 2011 milk war. Coles, followed closely by Woolworths reduced the cost of Homebrand milk to $1 a litre, the chief for Coles reported that they were the losers in the battle as the competition has made it impossible to return milk prices to a position of positive return (Anon, 2011). Intense rivalry can reduce the available profits within an industry with consumers reaping the rewards that remain for the taking due to firms continually lowering prices in an attempt to remain competitive. The differentiation of the products or services offered by firms remains the key indicator of profit levels, as firms that offer little difference...

Words: 791 - Pages: 4

Premium Essay

Political Systems in International Business

...Public Procurement and supply law helps our organization in achieving the following: Promotes economy and efficiency in the use of public funds Kenya Meat Commission ensures that the public procurement procedure is conducted and the selection of tenderers made within the time limits and in the manner prescribed by this law, incurring as little costs as possible in the effecting public procurement. It provides for a fair Competition among the tenderers KMC do not limit competition among the tenderers; in particular, it does not prevent any tenderer from participating by unjustified use of the restricted procedure or by using discriminatory criteria. It promotes transparency of the organization in the use of public funds Public funds may be used only for the purposes determined by a contract concluded in the public procurement procedure. Through the Principle of Equality of Tenderers KMC may not impose conditions that would constitute territorial, subject or personal discrimination among tenderers or discrimination arising out of the classification of the business performed by the tenderers. It allows for the confidentiality of the contracts When disseminating technical specifications concerning the awarding of contracts to tenderers, KMC ensures the protection of confidentiality of the information placed at their disposal. It helps in Prevention of corruption Common measures for prevention of corruption may include, procurement officer drafting a plan and......

Words: 455 - Pages: 2

Premium Essay

401 - Meli Marine

...Meli Marine Strengths Meli Marine became profitable under David Tian through cost restructuring. The company moved towards owning only 30% of their fleet to reduce downside risk during economic turndown. In addition, the company invested in fleets with lower capacity, which provides them with greater flexibility in adjusting capacity and serving the intra-Asia market. Meli Marine has established a strong position in the niche markets in delivering a select few perishable foods, chemicals and halal products. Their customer base is loyal to the company since Meli Marine has developed expertise in delivering these niche products. Reasons to Enter Growth – The Trans-Pacific route grew 48.9% from 2002 to 2007 and is projected to grow by 42.9% from 2007 – 2012. Meli-Marine customers have also expressed interest in needing services along this route. Therefore, Meli-Marine can capitalize on this growing market by buying the new ships. Diversification – Meli-Marine is able to diversify their revenue streams and create a buffer during economic downturn in Asia. Customer Needs – Meli-Marine will be able to provide their customers with end-to-end service, which provides their customers with more convenience and speed in delivery. Expanding from their feeder services. Competitors – Meli Marine has the opportunity to take market share since there are only a few competitors. Reasons not to Enter Cost Structure – In an industry with razor-thin margins, achieving cost......

Words: 548 - Pages: 3

Premium Essay

Logitech

...are important for innovation and internationalization. These industries provide cost-effective inputs, but they also participate in the upgrading process, thus stimulating other companies in the chain to innovate.[2] Firm strategy, structure and rivalry constitute the fourth determinant of competitiveness. The way in which companies are created, set goals and are managed is important for success. But the presence of intense rivalry in the home base is also important; it creates pressure to innovate in order to upgrade competitiveness. Government can influence each of the above four determinants of competitiveness. Clearly government can influence the supply conditions of key production factors, demand conditions in the home market, and competition between firms. Government interventions can occur at local, regional, national or supranational level. Chance events are occurrences that are outside of control of a firm. They are important because they create discontinuities in which some gain competitive positions and some lose. The Porter thesis is that these factors interact with each other to create conditions where innovation and improved competitiveness occurs To what extent can Porter's diamond help explain the choice of Taiwan as a major manufacturing site for Logitech? Porter's diamond considers four...

Words: 411 - Pages: 2

Premium Essay

Soap Football Feasibility Study

... 1 2. Table of contents 2 3. The concept 3 4. Preliminary marketing planning 5 5. Customers 6 6. Competition 7 7. Location 8 8. Pricing strategy 9 9. Promotion 10 10. Distribution ...

Words: 2256 - Pages: 10

Premium Essay

Sa1-08-E-Cheng

...Simulation Analysis 1 Due Date: 18 April 2012 4:00pm, via Turnitin through myunihub only. Instructions This Simulation Analysis consists of 7 tasks. You should complete tasks 1 to 6 before the start of the simulation. Tasks 7 can only be completed after you have made your first set of decisions. The 7 tasks are: Task 1: Market Attractiveness Task 2: Business Position Task 3: SWOT Analysis Task 4: Strategy Assignment 1 Task 5: Competitor Analysis Task 6: Strategy Assignment 2 Task 7: Decision 1 You must respond to all tasks, and referring to the simulation data and case when making your response. You must use this word document as the template for submission. Make sure you complete your details on this page. You must save the template for submission using the following convention: SA1---.doc For example, if you are firm A competing in industry 7 and your family name is Li, then the file name you will use to save this document will be: SA1-07-A-Li.doc Please complete the following information: StratSim Industry: Car StratSim Firm (A, B, C, D, E): Firm E Student Number: M00387183 Family Name: CHENG First Name: Xiabei SA1 Task 1: Market Attractiveness Select what your firm believes to be the top 3 markets in StratSim. How you choose to define the markets and what makes them attractive is up to you. Some definitions you might want to consider are segments, vehicles classes, and customers. Some measures of......

Words: 4232 - Pages: 17

Premium Essay

Manu Soccer - Case Study

...Collins area ensures that all soccer players age 11 to 14 are aware of his soccer program. Weaknesses: * MANU's dependence on Tom Owen in all of its functions offers little opportunity for him to expand to other locations. Opportunities: * The close proximity to three large cities that offer limited soccer training camps. Threats: * Some parents may consider soccer as a luxury that can be eliminated in face of economic downturn and growing unemployment. * The emergence of new soccer training programs in direct competition with MANU. Market Situation Approximately 90 percent of MANU’s customers live in Fort Collins which has a population of 110,000. Greeley and Longmont are about 25 miles away by interstate highway and have a population of approximately 80,000 each. Loveland is a city that is also about 25 miles from Fort Collins and has a population of approximately 60,000. Competitive Situation There is almost no direct competition for MANU in Fort Collins. The surrounding cities of Loveland, Greeley, and Longmont offer even less developed soccer programs. Target Customer The target customer for the MANU's services would be competitive soccer players from the ages of 11 to 14. However, the ultimate purchaser of these services would be the mother or father of the soccer player. This...

Words: 858 - Pages: 4

Premium Essay

Samsung Semiconductors Case

...SAMSUNG Case 1. What kind of advantage are the Chinese entrants seeking? How close are they to achieving that advantage? Chinese firms have cost advantage to jump in growing market. While Samsung and the other innovative companies had focus on inventing new territories stuff, they positioned in cost advantage with using rather cheap labor. Even though they didn't have flourish experiences and tacit knowledge to require getting enough market share, still they have easy access to outside finance and talented local engineers to lead success of potential market. 2. How much of Samsung's performance is based on its reputed low-cost advantage? The biggest challenge for Samsung recently, Chinese firm has been positioned with similar strategy that Samsung did at late 80's against Japan and US market. So that they need to choose their price value for competing with Chinese market, this lead company to have cost advantage in their market. Furthermore, with based on their reliable technology, cost value will give enforcement to Samsung market barrier against Chinese competitors. 3. Can Samsung's low-cost advantage withstand the Chinese threat on costs? Samsung's major business strategy is to be innovative market leader, they have anticipated to future potential market, not just rely on short term profit. They had move faster step forward than other competitors. The reason Samsung's low-cost advantage can withstand the Chinese threat on costs is that, as one side, they......

Words: 394 - Pages: 2

Premium Essay

Avoiding Price Wars Summary

...ay Price Wars Summary: Price wars have plagued industry after industry in recent years. Indeed, price wars must be avoided like the plague! More often than not, there are no winners, only losers. The effects of price wars are not only severe but also enduring. Price wars can lead to a severe erosion of profits. Unless there is a significant cost advantage, for the company introducing the price cut, a price reduction will lead to retaliation by competitors. So dropping prices normally does not lead to an increase in market share. Instead it leads to a sharp drop in profits. Price wars also shape customer expectations. Research indicates that the lowest price people pay for a product or service is remembered longest, and becomes their reference point. Driving down prices to unreasonable levels, has a dramatic influence on a customer's perception of what is a "reasonable" price long after the war ends. Price wars also divert the attention of customers away from product benefits towards price. That is usually bad for the industry. Many of the justifications given by managers for entering a price war are untenable. The claim that weak competitors can be knocked out through a price war is weak. Indeed, there is sufficient empirical evidence to indicate that price wars are not guided by any logic. They tend to get emotional and continue long after it has become economically unviable to offer these products at such low prices. As Robert A. Garda and Michael V. Marn, point out,...

Words: 1091 - Pages: 5

Premium Essay

Guillermo

...Guillermo Furniture Store FIN/571 February 4, 2013 Garrick Turner University of Phoenix Instructor: Paul Stevens Guillermo Furniture Store The Guillermo furniture store is the largest furniture store in Sonora, Mexico. The store definitely has established itself as the main provider of fine art furniture, until the late 1990 when two competitors, pose as a problem for the local store. The first company is a foreign furniture company, making a good use of a high-tech approach, building furniture with exact specification. The second competition is one of the largest retailers who have expanded which caused an influx of people and jobs. This paper will evaluate Guillermo processes and determine how to handle the challenges they are facing from a changing market. Guillermo’s financial interest, return, and risk and its ability to maintain its business ethic taken in consideration if they decide to continue business on their own sticking with its traditional way of making fine furniture; Adapt the new high-tech developments of producing furniture or merge with a possible alliances, taking on new services as a distributor. The financial interest for Guillermo Furniture Store is to manufacture a product that best fit the needs of the business and its customer. Examine their budget information, can be analyze to determine if the company will be more profitable by staying independent or merging with its competitor, to become more efficient they......

Words: 757 - Pages: 4

Premium Essay

Positive/Negative Assignment

...Date: November 1, 2011 To: (All) Communication Interns From: John Done Subject: Intern Scholarship Competition Dear interns, It is that time of the year again! I am excited to announce that the intern scholarship competition is now opened and has become an annual MTV event. We are looking for a highly creative and dynamic intern to win this year. Choosing the winner of this competition is going to be more difficult than past years because we have had the opportunity to work with so many of you amazing interns. The prize for the winner is a $2000 scholarship that goes towards any school expense. The application process is quite simple; write a two (2) page essay telling us about your financial situation and what this scholarship can do for you professionally. In addition to a recommendation letter from someone you worked with whether it is at school or at a job, please no personal references. Applications are limited to one essay per contestant. The deadline date for all applicants is November 30th 2011 at 9 pm. Please send all essays to the email address provided below. If anyone has any questions please feel free to email me and I will help best I can. Good luck to all, and I look forward to announcing the winner. Email address: kristinanesbit@gmail.com Sincerely, John Done Communications Executive 24 Harlow Drive, Scarborough, ON M1J5K9 December 2nd, 2011 John Done 29 Grapevine Circle, Toronto, ON M1X1X5 Dear Paul Lemieux, The......

Words: 406 - Pages: 2