Taaroa Camera Company: Market Analysis

There are a variety of different business structures that comprise the market in the world today. The most common ones found in the business world today are sole proprietorships, partnerships, and corporations. From these you will also find monopolies and oligopolies. Economists assume there are a number of different buyers and sellers in the market which leads to competition which allows prices to change in response to changes in supply and demand.(1) In many industries you there are substitutes for products, so if one type of product becomes too expensive the consumer can choose an alternative product that is cheaper, or one of better quality.

competition, both in attributes and in products. In order to supply an attribute that no

a. The product is identical (ie, aluminum), all the companies procure the same resources to make production with same production line and process. The firms only differentiate in terms of controlling and lowering the variable cost in order to make a profit as a price-takers. Pricing is somehow fix in global level as aluminum is openly traded in the financial market.

Monopolistic competition is defined as, "a market structure in which many firms sell products that are similar but not identical" (Econ UIUC). The demand for monopolistically competitive firms is downward sloping. This is because there are free entry and exit within the market structure. Monopolistic competition exists in the short run and in the long run. In the long and short run firms want to produce where their marginal revenue is equal to their

In a free market economy producers maximize profit by satisfying consumers demands while commodities that are available are determined by the budget constraints of its consumers. Market equilibrium is a significant part of a business’ success. The market determines equilibrium prices leaving business managers the task of determining business decisions while factoring in the law of supply and demand, and its economic principles for the financial success of the organization. This paper will discuss the following four concepts that are important in market equilibrium

Industry: One could argue that innovation in the machine tool equipment industry has been stagnant and resulting caused customers to view machines as commodities and compete on price. Another thought is that the industry allowed a low cost player to enter and therefore put the premium priced equipment manufactures in a position of having to rationalize their price. Unfortunately, competition on price erodes industry margins and profits.

For example in the electronic market in 2007, the entertainment company Nintendo was struggling to keep up demand with the sales of the Nintendo Wii. It had wanted to sell seventeen million units, but was only able to sell fourteen point five units due to supply issues. (Cleland, 2007).This shows that while demand is high, Nintendo still had problems with its supply and therefore at the time Nintendo had not found its price equilibrium at that time. Which goes to show how the price equilibrium is very difficult to find and in such a fast moving industry, it is even more difficult.

* Competition – Direct and indirect competitors’ responses. Launching of similar products by competitors could lead to a fight for shelf space.

The steeper the demand curves the better the discretion in pricing. Some businesses, during the day to day running of business, may choose to have a nonchalant or unconcerned approach to its competitors, ignoring the competitors’ market-related decisions can have detrimental consequences in securing the businesses’ place in the market structure is disadvantages, depleting instead of maximizing its profit and revenue. Managers must be diligently aware of their company’s competition at all-times to maximize profitability possibilities. “Managers, of oligopolistic competitive firms may engage in open price (or design-, service-, promotion-) warfare or other predatory or even criminal behavior to the end of eliminating competitors so that monopoly (or more-limited oligopoly) position can be achieved (Chapter D4, Oligopolistic Competition).

There are few sellers but endless abundance of buyers. When one seller decides to alter their pricing strategy, it will affect its competitors to alter their strategies. Apparent today with the U.S. automotive industry however, due to their unwillingness to change with their competitors overseas, the “Big 3” General Motors, Ford, and Chrysler have fallen into financial peril. The Internet changed the way some industries that were once extreme oligopoly operate. The music industry which was once dominated by a handful of companies has new competitors in the market.

The supply/demand dynamics for the industry’s product describes the wave, changes, or price signals that resulted from the ongoing changes in supply and demand of any individual product or a group of products. In other words, regardless of the volume of change in supply and or demand for any given product or group of goods, it ravishes a harmonize change in the other; these variances cause pricing signals

Firms, in general, tend to produce the quantity which ensures that marginal cost equals marginal revenue in order to maximise profit. This way of deciding the best output applies to both monopolies and competitive firms, though outcomes differ. The total output defines the equilibrium price for the level of consumer demand. The demand curve then indicates price and revenue. Finally, the average cost is worked out to identify the cost and profit for the profit maximising output and consequent price.

Right now the industry is competing in tow strategic groups: budget and premium segments, and there is intense competitions in the budget segment were the key is the price; additionally the distribution

This drive is the essence of the competition, which is a component on the market that regulates price and quality. If an organization offers a product or service that is needed, there will be demand for it, and other providers will appear to find business opportunities, the more providers are the more options for the buyer are available, at the same time, organizations can present their products or services with attractive prices, overriding the other suppliers and bringing the buyer a better price for the same product. However, costs can be cut down only to a certain extent before lowering quality, therefore there is always this constant element in the markets: there is demand, there

The demand curve kinks as if a firm raises it’s price above P* which is the market price for this industry, then none of its competitors will follow suit and they will have priced themselves out of the market. Consumers are highly sensitive to price changes and when prices go up, and consumers will just move to another firm to buy. If however the firm drops their price below P*, all consumers will move to the firm who enacted the price decrease, overwhelming the firm, who can’t keep up with the increased demand and therefore have to put prices up again. The only stable price is P* and this is why oligopolistic firms compete on things other than price. The marginal revenue curve on the diagram is