Is the Watch Industry dominated by an Oligopoly*, which is beneficial to both firms and consumers?
*= See glossary for meanings.
Hypothesis
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I believe that the watch industry is dominated by an oligopoly, which is beneficial to both firms and consumers. The watch firms are both price makers*, which is good for the watch firms, and price takers*, which is good for consumers.
Aim
In this investigation I shall be examining the watch industry. I will use a Mintel report of the watch industry produced in 1995 and information worksheets to test my hypothesis.
Findings and Application of Theories
Five companies, or the 'C5 ratio', dominate the watch industry. They have 40% of the market share* (see fig.1.).
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Seiko) they will often think of reliability, accuracy and quality. New firms don't have established names and so people may not buy the product.
With this situation, the new firms will have a problem in trying to find places where they can sell their watches. Forty-four percent of all watches are sold in specialist jewellers (P22 Mintel), and much of the remainder is sold in retail stores or catalogues. A new firm will find it difficult to penetrate the stores and catalogues as they can easily sell other, more established, saleable watch brands. This may also be a result of control of retail*.
Another barrier to entry is innovation. There are already so many different styles and variations of watches (as opposed to only one, as it would be if it were in perfect competition) that it may be difficult for a new firm to be able to think of a good idea for a new style or function of watches that would sell. Also, a relatively large amount of capital would be needed to start up a watch firm for initial advertising/promotion, manufacturing and production costs. All of the established firms have a competitive advantage in at least one area, most likely innovation or reputation.
The watch industry is more inelastic* (see fig.2.) than not, because in oligopolies competition tends to be based on non-competitive pricing*, 'brand proliferation' and promoting the product and differentiating it rather than
Imagine you are hired by a new start-up company. You are tasked to recognize and explore a new business opportunity of creating a new product or service for your company. As part of your new business vision, you will create a business plan describing all keys elements of the business opportunity which will ultimately be presented to an executive team in a venture capital group for possible funding and execution.
Competition is prevalent in various aspects of life, including sports, school, and jobs. Everyone at some point in their lifetime will have to compete against others in order to achieve a goal or earn a prize. It’s how the world has worked for a long time; it’s survival of the fittest and this minor competition between everyone is how we have continuously gotten smarter, faster, and stronger. Competition is necessary to a certain degree, but how much is too much? It’s definitely not a bad thing, and as long as there’s a healthy amount, it can be beneficial because it fosters self-improvement, and it will push people to go all out and try their absolute best.
The purpose of the coursework is to undertake a critical analysis and an assessment of the level of competition in the insurance industry of the country of our choice. In my case, I have decided to explore the health insurance industry of the United States. One of our aims is to
Imagine you are hired by a new start-up company. You are tasked to recognize and explore a new business opportunity of creating a new product or service for your company. As part of your new business vision, you will create a business plan describing all keys elements of the business opportunity which will ultimately be presented to an executive team in a venture capital group for possible funding and execution.
There are many models of market structure in the field of economics. They include perfect competition on one end, monopoly on the other end, and competitive monopoly and oligopoly somewhere in the middle. In this paper, we will focus on the oligopoly structure because it is one of the strongest influences in the United States market. Although oligopolies can also be global, we will focus strictly on the United States here. We will define oligopoly, give key characteristics important to the oligopoly structure, explain why oligopolies form, then give an example of an oligopoly in today’s economy. Finally, we will discuss the benefits and costs in this type of market structure.
The study looks in-depth at the direct effect of new ideas on the progress of any business. The study focused on trying to look past the overt benefits like profit, dividends, revenues etc. that a new business model would bring to a striving organization. The study researched into the adaptability of many of these companies interest into entering the always changing local and international markets, and also what steps that would need from each model to be successful in doing so. It also showed that trust is part of making strong business sense decision.it also spoke of developing more business links and better understanding of standard principles were fostered by the incorporation of new ideas into any business. This study was useful in the sense that it uses a business model which allows companies to follow a business plan and not to go into a major business idea without a sound thought process.
The article “Beyond United: How oligopolies hurt Americans’ pocketbooks” written by James Downie for The Washington Post discusses the financial issues that arise from oligopoly control. The article explains how, because of mergers, the airline industry has gone from nine major companies to just four. The author argues, “Travelers can’t avoid higher fairs and fees unless they choose not to fly” (Downie). Downie brings attention to the growing profits for the consolidated airline companies while consumers pay the same or higher prices. He also explains how the drug industry operates as an oligopoly with only three companies controlling 75 percent of the market. These three companies control drug prices and touch every wallet in America. Downie
However, if not properly researched first and planned out effectively, it could be a major setback, that is time consuming, costly and generate minor revenue in the beginning. The financial statements will show any initial negative impact and low operating efficiency. For this new adventure, will come, all new, tools, parts and equipment that will have to come from already made revenue, established employees will have to be trained on how to use this new products. Additional time will have to be allocated into process and procedures, as this will be necessary and expected, also “Additional time will be necessary to complete services, and it is highly likely bottlenecks will occur within the operations”. (Talluri, Kim, and Schoenherr, 2013).
Oligopoly has been derived from Greek implying "few sellers". According to Sloman & Sutcliffe (2001) oligopolies are a type of imperfect market wherein a few firms share a huge proportion of the industry. Therefore industries such as oligopolies have dominance of small number of manufacturers which may produce either differentiated or almost similar products. Nevertheless there are differences between perfect oligopolies and imperfect oligopolies. While perfect oligopolies are characterized by firms that produce almost identical products like tea or CDs, imperfect oligopolies differentiate themselves through niche products such as motor cars and aircrafts. Oligopolies are marked by interdependence of firms operating in the market which either collude or compete among themselves. In collusion, firms consent to avoid competition amongst them. A formal collusion is a cartel wherein firms act like a monopolist and earn maximum profits. (Wellmann, 2004, pp: 1-2)
Another advantage of a monopoly is that you can set the price to how high or low you’d like. Not only that, but you can make as much or as little of the product as you’d like. Monopolies can also make a huge amount of profit since no one has the same product as the monopoly so there is no competition. Monopolies can also afford to use the latest technology there is. Technology is always advancing and there are always going to be newer products that people use each time. Take a cash register for example. Cash registers used to be very low tech. It used to take a while to punch in all the numbers and use a credit/debit card, but now cash registers are fairly easy to use. Nowadays, cash registers are touch screen and the items are on the screen. It is fast, efficient, and easy to use the cash register.
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Using existing organizational systems often means completely missing the boat on the real customer and his real needs. This is the customer who values the products as a breakthrough. Products are frequently under-appreciated by firms when the new product is based on an existing platform. This leads to a wait and see attitude and the product is not given adequate support and often under-priced.
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Our assignment is to create and promote an innovative product. In developing a new product, we started with an idea generation. This is a systematic search for new-product ideas. Companies go through many ideas before they come to find some good ones. We had to do the same thing. We thought of many ideas on our own. It was more of an internal idea source as opposed to going outside of our partnership for ideas. Our first idea was a restaurant with half of it an actual restaurant and the other half an automobile tuner shop. The next idea was a new energy drink that would be less costly and better tasting. Our next idea came up when we were sitting
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