Oligopolists
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15-1. Major considerations among oligopolists is the desire to keep price changes to a minimum because of the nature of an oligopoly (few sellers in the market). If an oligopolists decreases his price even slightly, competitors are likely to do the same in order to avoid losing business (customers are likely to be highly attracted to the new lower price). On the other hand, raising prices even a small bit can result in a tremendous loss of business. Competitors are likely to keep their prices the same, creating a difference between the maverick and the rest of the industry, and customers are likely to move to the lower priced products in order to take advantage of the better pricing. Awareness of the competition, awareness of the market and the customer, and a desire to maintain the status quo (in terms of market share) would all be considerations that the oligopolist takes into account.15-2. Mergers and acquisitions are both concerned with two businesses entities becoming a single entity, but there are subtle differences between the two terms. Mergers refer to the uniting of two companies, generally in the same industry, where economies of scale can be realized and where the resulting company has considerable advantage over the two companies operated separately. Acquisitions refer to one company essentially taking over another; this can happen in the same industry, such as when a competitor takes over another competitor, or among companies in different industries. Ac
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cent years.
However, there is no reason to assume that a new entrant into the market will immediately realize those same profits. Instead, there is a learning curve which takes place during which time equipment has to be purchased or leased, new staff has to be hired and the company goes through the same pains as a start-up organization. However, it has already paid a premium to the government for the right to operate in this industry. Thus it must operate at a profit for a considerable period before it realizes profit on the overall investment (including the franchise fee) that it actually made. In this way, the government is able to reap the profit from the first company's success while later entrants must build up their organizations before they are able to make money.
13-3. American industries such as automobiles, steel and clothing have become highly efficient in their production processes. They are highly automated in their factories and they have a highly skilled work force which runs the machines. However, the work force demands high wages which, it suggests, are fair remuneration for the skills that its workers must now possess.
In this way, it is possible that the efficiencies that American manufacturers have ga
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Approximate Word count = 5224
Approximate Pages = 21 (250 words per page)
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