Factors Affecting Nokia

Hint : Typically, in a monopolistic competition industry, if one company increases price, the other company also increases their price to make more revenue in the long term.

The price adjusts to rise when the quantity demanded exceeds the quantity supplied and for price to fall when the quantity supplied exceeds the quantity demanded is a central elements to supply and demand. Although individuals tendencies to change prices exist as quantity supplied and quantity demanded differ the changes in price brings the law of supply and demand into play. Whenever the quantity supplied and quantity demanded are unequal, price will stay the same cause no one will have an incentive to change. One thing to remember equilibrium is not the model framework they use to look at the world. Although to establishing the current value of a consumer product Economics has evolved through the centuries there are a few factors that led to a change in

there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand. Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price.

So firms in those industries can, to one degree or another, influence total supply through their own output decisions. In changing market supply, they also can influence product price. Firms with downsloping demand curves are price makers. (McGraw-Hill) Monopolists can charge higher-than-competitive prices that result in an under allocation of resources to the monopolized product. They can stifle innovation, engage in rent-seeking behavior, and foster X-inefficiency. Even when their costs are low because of economies of scale, there is no guarantee that the price they charge will reflect those low costs. The cost savings may simply accrue to the monopoly as greater economic profit.

From the diagram above we can see that if we get the firm to behave as a competitor and take the market price as being set exogenously. Then we would have (Pc, Yc) for competitive price and output. If the firm recognised its influence on the market price and chose its level of output so as to maximise profits, we would see monopoly price and output (Pm, Ym). Since P(y) is greater than MC(y) for all the output levels between Ym and Yc, there is a whole range of output where people are willing to pay more for a unit of output than it costs to produce it. Clearly there is potential for Pareto improvement (Varian, 1996, p.412-413).

Nokia, which overtook Motorola in 1998 to take the crown of biggest phone manufacturer of world, lost its prestigious crown after struggling for last 3 years. The 4 costly mistakes that lead to Nokia losing the battle are described in this article. Nokia launched its Symbian 60 series in year 2002 which initially had a good market response but with the introduction of Apple iOS in 2007 and Android in 2008, the OS race was completely taken over by the two giants. The reasons for collapse of Symbian OS is lack of applications and UI (User Interface). After facing competition from iOS and Android, Nokia continuously tried to improve their Symbian OS but it was mostly following the UI of Android and iOS and was not creating something unique. Secondly, the company failed to look into the need of available applications in gaining market share. The company made the biggest mistake to take a leap of faith in Windows in 2011. At that point of time, the company already was in declining condition and trusting Windows which was new in the field to regain its status was the biggest mistake the company made. tiff competition from Samsung and Apple, and lack on focus on innovation was the second big reason of collapse. Even if users could ignore the OS, the the hardware features which Nokia was rolling out were quiet late as compared its major competitors Samsung and Apple.

In a monopolistic market, there is more control over pricing that in a monopoly. If they raise their prices, they will only lose a small amount of customers. A monopoly is a large enough business to influence its own price, such that it is the price setter rather than taker, unlike a perfectly competitive market where each firm

The main purpose is to find why Nokia lose the largest market share and have not improvement after innovation. This research will use two type of data these include primary and secondary data to analyse the reasons.

Monopoly is a single firm that controls the market of a given product. In a monopoly there is an absence of competition, which results in high prices and inferior products. Because there is an absence of competition and the firm has total domination of the market, the demand curve in the entire market for the good is equal to the demand for the individual firm’s output. A key characteristic of a monopoly is the individual’s firm downward sloping demand that shows that the firm has some market power. Market power is the ability to control price without losing market share. A monopoly’s profit maximization is achieved when marginal cost equals marginal revenue.

Nokia Company is a telecommunications company and Information Technology. They produce mobile phone. Nokia is very old company or we can say it a one of the best company in past. In this integrated research project, I will provide a lot of details of chosen industry, organization, a SWOT analysis highlighting issues or challenges that lead to proposed research objective. Also, I will identify three relevant CLOs from semesters 7 and 8. Then I will identify of the chosen issue or challenge with a clear objective or problem statement. Moreover, I will write details of research activities including the proposed methodology. (wikipedia, 2016)

Nokia now facing hard time. The company which was dominating the market for years now do not any entity in the market. They mainly focused on middle class and lower class people which was the main problem. They should focus on higher class people who can afford better quality phone with better features and application. If they starting doing it again I am sure people will again attracts to Nokia phones and the company will start once again.

Determining price is out of our control, given the competitive firm is a price taker; the price is determined through the interaction of supply and determined through the interaction of supply and demand in the market. Markets always move toward equilibrium, so the market can determine the price. However, its the price that makes quantity demand equal to quantity supply.

If the Regulator sets price equals to marginal costs, then the price and output is Pmc, Qmc. This gives the socially optimum quantity of the product with low price. Unfortunately, as you can see in the graph, since the average total cost is the average of all costs including the large fixed costs while the marginal cost is only the extra cost of producing an additional unit, the average total cost of a natural monopoly continually declines and the marginal cost will always be less than the average total cost. This implies a loss for the firm if the price is limited to its marginal cost. Hence, the monopolist will only operate under this regulated price if this loss is subsidized by the government like this figure

In oligopoly market, each firm has substantial market power with high degree of interdependence. The key for success in a oligopoly market is to gain more market share than the competitors. Increasing the price can lead to loss of market share to the competitors, so in the oligopoly market, if a firm decreases the price, the other firms will always follow, but if a firm increase the price, the other firms will not follow. The demand curve is kinked.

There is only one model for monopoly and one for perfect competition but in contrast to these oligopolies have several models to try to explain how they react, examples of these are the kinked demand curve, Bertrand and Cournot models. A non competitive oligopoly is ‘a market where a small number of firms act independently but are aware of each others actions’ (Oligopoly, Online). In perfect competition no single firm can affect price or quantity this is due to intense competition and the relative small size of the firms, on the other hand there is a monopoly market where there is little or no rivalry and firms have control over the market. Oligopoly is a state in-between perfect competition and monopoly where the firm can change its