The Impact of Market Influences (B5:M4-5) Flashcards
what kind of market structure is a kinked demand curve associated with?
oligopoly. few sellers dominate the market (auto manufacturers)
the kink is caused by other firms matching price cuts, but ignoring price increases. the kink in the curve is the prevailing price.
regardless of the model that represents the industry, when will firms maximize profits?
when marginal revenue = marginal cost
under pure competition, strategic plans focus on…
maintaining market share and being responsive to market conditions related to sales price
what are the four market structures and what is an example of industry that belongs to each?
perfect competition: oranges, milk, etc.
- homogenous products
- price takers (price set by market)
monopolistic competition: fast food
- price makers
- easy for firms to enter
- similar goods, but not perfect substitutes
oligopoly: auto manufacturers
monopoly: De Beers diamonds
* price makers
* high barriers to entry
* differentiated products
what are Porter’s 5 forces that affect profitability?
existence of substitute products
bargaining power of customers
barriers to entry
market competitiveness
bargaining power of suppliers
Porter identified 4 major factors that impact global competitive advantage, what are they?
conditions of the factors of production (e.g., labor force)
conditions of domestic demand
related and supporting industries
firm strategy, structure, and rivalry
