Economic Markets

Question 1

Market strategy for perfect (pure) competition

Answer 1

Maintain market share

Responsiveness for sales price per market condition

Question 2

Market strategy for monopolistic competition

Answer 2

Maintain market share
Enhanced product differentiation
Allocation of resources of advertising, marketing and product research

Question 3

Market strategy for oligopoly

Answer 3

Maintain or enhance market share
Proper spending on advertising
Proper adaptation to price changes and production volume (note: kinked demand curve)

Question 4

Market strategy for monopoly

Answer 4

Ignore market share!

Focus on profitability!

Question 5

SWOT

Answer 5

Internal - Strengths, weaknesses

External - Opportunities, threats (Porter’s 5)

Question 6

Porter’s 5 Forces

Answer 6

Forces that have a significant effect on the competitive environment and profitability of the firm

Barriers to entry
Intensity of competition
Existence of substitute products
Bargaining power of buyers
Bargaining power of suppliers

Question 7

Elements of market competitiveness

Answer 7

Ability of rival firms to respond to change
Advertising of rival firms
Research and development of rival firms
Alliances of firms and suppliers
Market growth, stagnant

Question 8

Elements of substitute products

Answer 8

Selling price
Availability
Switching costs

Question 9

Bargaining power of buyers

Answer 9

High buyer concentration
Availability of information
Low cost to switch
Alternative suppliers

Question 10

Bargaining power of suppliers

Answer 10

Ability to change suppliers

Reputation of supplier, demand for goods

Question 11

Competitive strategies

Answer 11

Cost leadership for broad range
Cost leadership for niche range
Differentiation for broad range
Differentiation for niche range
Best cost provider