The economic factor depends on outside control of the business, but it can affect the performance and marketing of the organisation. The main factors which mainly influence the economic balance of an organisation are political, economic, social technological, environmental and legislative factors. On an international front economic aspect is an essential interference in the performance of Tesco. Apart from the political stability of the region, factors also involve acts of legislation and tax rates. It is a major point of concern for the organisation, therefore it is essential to be aware of the changes in the policies.
The strength in each of the forces can determine the profit potential of the company in that industry. For example, in an industry in which entry is relatively straightforward, the prospects for long-term profitability are limited conversely, in an industry where the competitive forces are weak. There are likely to be greater opportunities for profit. The objective for a company in this case ECCO, is to determine how it best can defend itself against the five forces or how to influence them in a way, which will positively impact their competitive position. The challenge is to analyze and understand the basis of each force.
When there is a large number of sellers and a large number of buyers in a market, that market is regarded as a perfectly competitive market or industry. In a perfectly competitive market, a single firm cannot dictate the pace and the selling price (Khan Academy, n.d.). In other words, one firm cannot set the prices and the competitors are obligated to market prices. What is fascinating about a perfectly competitive industry is that barriers that prevent new firms from entering the industry are flexible; that means, there are minor barriers of entry as well as little or no barriers to exit (Rittenberg & Tregarthen, 2009). In view of this, the following items will be classified as a perfectly competitive market and a non-perfectly competitive market.
In advanced economies there are various ways to deal with the question of scarcity. Different countries use different approaches or types of economic system. Arguments about the merits of markets and planning proceed at different levels. For example, opponents of the market system are often found really to be attacking ‘capitalism’. Private ownership of the means of production leads, they claim, to an inequitable distribution of income and wealth and to the exploitation of labor by the capitalist class.
It analyse the national goals of the economy, such as maintaining full employment, stabilizing the economy or pursuing the economic growth. A market, in an economic view refers to which buyers and sellers negotiate the exchange of specific goods. Markets can be distinguished into product
Nowadays, there is a problem with finding the right price in the market because consumers want the lowest and producers the highest price. The market structures shows who is a price maker and who is a price taker and so, the level of profit available. Natural monopoly is a type of a monopoly, which is one of the main market structures. But how does a natural monopoly differ from a normal monopoly and what benefits or disadvantages does it bring with it? A monopoly is a market structure, where there is only one supplier or entity of a good or service in the market.
The second case – controlling the market – is where the contrast between small firms and big business contrasts is most evident. The small firm lacks the capacity to influence prices, as both their market share and purchasing power are limited; however, big business possesses an abundance of both. Big business is able to exert their power by influencing prices because their decision to buy can be the difference between survival and failure for suppliers. Furthermore, Galbraith (1967, 30) suggests that the influence of size enables firms not only to control price but also quantity sold. Although Galbraith acknowledges that influence on demand is inexact; One should not discount its importance.
When businesses compete they can be more successful than other businesses, and that is what business is all about. “ scrapping net neutrality would allow companies like at&t and verizon to charge the big companies the true cost of doing business with
The article written by Thomas J. DiLorenzo entitled The Myth ofNatural Monopoly, as the title states is about unravelling and explaining the natural monopoly myth. Natural monopoly is defined as a monopoly in which only a single firm can obtain the utmost benefit from the industry it is in. This usually happens when there is an extremely high fixed cost in production. As production increases, the long run average cost of production decrease as fixed cost is spread over the units produced. It would be more beneficial for the manufactured product to be produced by only one producer since more investors would possibly bloat the price considering the high fixed cost involved in manufacturing.
It can also mean the level of competition and product differentiation where the main structures are monopolies, oligopolies, monopolistic competitions and perfect competitions. Verizon wireless is an example of an oligopoly because it does not have any major competitors especially after the merger of the previous companies. Additionally, the market consists of a large customer base while there are also barriers in accessing this pool. Hough the platform is seemingly competitive, only a few market players dominate the market where the barriers are caused by high cost of infrastructure required for reliable