Business Economics Market Structure Assignment Help
Market structure is important for business entities to make benefits from the market to serve the customers by procuring significant products (Taylor & Weerapana, 2007). In the given circumstances, the companies of potato chip were competing in a monopolistically competitive market structure in its related industry and they were gaining average rate of return in 2007. In the staring of 2008, two lawyers combined theses potato chip companies for creating a monopoly called “Wonks”. So, this business assignment help paper would discuss the monopolistic competition and monopoly market structure.
It also discusses its advantages and disadvantages along with how these market structures affect pricing of products, turnout, needs, and its stakeholders. This Business Assignment Writing Service paper would also help to understand to know which market structure is more beneficial for the company of Wonks to function in with the following thesis statement: “Impact of market structure on profitability of Wonks’ stakeholders” Benefits to Stakeholders In context of new company, Wonks is now work as a monopoly that will give the several benefits to it’s relates stakeholders like consumers, government and businesses.
In law, a monopoly is business entity that contains substantial market power for changing the price of products from lower to higher position (Baum, 2002). As per US and Australia assignment help experts, followings benefits would be for the stakeholders of Wonks: Benefits for Government: With the help of this market structure, the new company would be able to increase the demands to sell huge products. It would help to increase revenues and profits therefore; the government will get more tax revenue (VanHoose, 2010). On the other hand, due to monopoly of Wonks, the government would be able to make direct communication with the company regarding new market rules and regulation that would also help the new company to gain huge shares of market. So, new company would make higher profits that would force the owners for giving large amount of taxes to government (Hanekom, Willemse & Strydom, 2010). Thus, in the reference of government, monopoly would work as convenient sources of revenues for government. Benefits for Business: A monopoly situation frequently allows the companies to set a monopoly price for respective products, which is generally higher than the price that would be less in competitive market (Jong & Shepherd, 2007). So, monopoly could be profitable Wonks because it would help the management of new company to decide the cost of the producing product. This market structure would also facilitate the decision makers to reduce the supply for increasing the demands (McEachern, 2011).
It would also works as an ideal situation to improve the selling of the Potato chip and consequently organizational profitability. Therefore, this situation would also increase the brand value of new company in the market without any physical promotion. Customers’ Benefits: The monopoly of Wonks would give a power to hold large shares of the market that would facilitate the owners to make huge profits form market. So, they would be able to spend huge amount on research and development for inventing new technologies, and improving the standards in the quality of their products (Xiaoye, 2004). With the help of this, the new company would save huge profits and will offer the products to customers at lower cost. Benefits for Employees and Investors: An increase in earnings of new company would be effective to increase wages for employees that could help to make greater satisfaction among them. It will also increase employees’ contribution and consequently organizational effectiveness (McEachern, 2011). It will increase organizational earnings and return for shareholders on their investment within the organization.
Impact of Transition In the monopolistic situation, the company was facing huge competitions by the large number of sellers with similar products (Pearson Education, Inc, 2010). But this situation was also profitable because of huge customers’ availability. So, the company was following large production policy (Mkrtchyan, 2005). But in the case of monopoly, there is only one seller to serve the demands of large number of consumers (Venkatesh & Kamakura, 2003). Therefore, the transition from monopolistically competitive company to monopoly, it will cause several changes in the procedures and process related to the prices and output strategies: Prices: Due to monopolistic competition, the company faced more elastic demand curve. So, the company was unable to raise its price of potato chip because it could reduce its market share (Mankiw, 2011). Therefore, the large number of customers will shift to other close substitutes that also present in the same place of market with similar product at fewer prices.
But in monopoly, no close substitute would be presented in the market (Jong & Shepherd, 2007). Therefore, the availability of substitute product would not be present, so; there would be no other option for the customers to choose the products like potato chip (Hanekom, Willemse & Strydom, 2010). Hence, in this situation, the company would be able to raise the price of its potato chip without the fear of losing market share for making significant profits. Outputs: In the monopolistic market structure, the sellers would not be able to get huge profits because of the huge availability of similar products in the market of Northwest. So, this situation negatively affected the demands of products and restricted the monopolistically competitive firm for producing huge output (Pearson Education, Inc, 2010). But the situation of monopoly market structure will restrict other organization to enter in the market of Northwest. So, this situation would be encouraged the firms to produce huge quantity of products for making large profits due to the less availability of competitive products (Venkatesh & Kamakura, 2003). Therefore, in the transition from monopolistically competitive company to monopoly, the output of the firm would increase.
Beneficial Market Structure for Wonks In context of Wonks, the monopoly market structure could be profitable to make effective financial value in market, but it would also influence the profitability of the customers rather than monopolistic market structure (Xiaoye, 2004). The volatility of market and the increasing presence of global products can make a force on the related countries to give the opportunities for the new business owners that would reduce the significance of the company (VanHoose, 2010). Therefore, the monopoly market structure is the best option for the Wonks to operate its business. This market structure would also help the management of Wonks to operate its business without any risk that could be presented by the overproduction because of the availability of huge buyers (Hanekom, Willemse & Strydom, 2010). This situation would retain its profits. Due to monopoly, the company would not require spending higher capital on the activity of marketing that would increase overall revenues to grow the capital strength. Therefore, the company of Wonks would be able to implement new techniques and production methods that would produce cheaper and quality products. The monopoly market structure would also be useful for the company because it gives a right to make a control over the whole market (Meyer & Cramon-Taubadel, 2004). So, by the help of this, Wonks will be utilized the available resources effectively.
Thus, the strategy maker would be able to think about the improvement of offerings and related services to grow the standards of entire community (Mankiw, 2011). With the help of this, the company would submit huge amount in the account of local government as a part of tax to improve the image of country. The monopoly market structure would not be beneficial for the customers because it gives the whole power to single supplier or producer to make decisions regarding the products and services without any invention of other entities (Taylor & Weerapana, 2007). So, it would eliminate the concepts related to the profitability of societies. Further, by the help of this business concerns, the management of company would use its customers as a profitability tool for completing own business objectives and goals (Baum, 2002). Due to entry barrier in market entry, no other manufacturer would be offered similar products. This situation will restrict the choices for customers and will also force them to use only available products. Therefore as per business help experts of US and Australia, the customers would not feel any new experience by the use of products that may cause internal dissatisfaction (Xiaoye, 2004). So, it would take the customers far from the use of products that may negatively affect the demand-supply curve. On the other hand, monopoly structure eliminates the competitions; therefore, it will lead to inefficiency that may affect the buying behavior of consumers (Jong & Shepherd, 2007). This type of market structure increases the prices high rather than marginal cost that would also reduce the profitability of the customers. Hence, the same market structure would not be benefited to customers.
Conclusion On the basis of above discussion by case study assignment help experts concluded that the market structure makes a direct impact over the functions of a company. This paper develops a concern about the influence of market structure transition on the organizational operations and the products’ price along with its output. This paper also helps for developing in-depth understanding to know the impact of market structure on profitability of Wonks stakeholders. From the above discussion, it could be determined that “monopoly market structure is beneficial to increase the profitability of an organization.”
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