Market Influence on Business Strategies

Question 1

Factors that Affect the Competitive Environment of the Firm

Answer 1

Porter’s Five Forces

Barrierts to market entry
market competitiveness
existence of substitute products
bargaining power of the customers
bargaining power of the suppliers

Question 2

Perfect Competition

maintaining market share and responsiveness of sales price to market condition

Answer 2

many small firms, easy entry, homogenous products, control over quantity not price, perfectly elastic, zero economic profit long run,

Question 3

monopolistic competition

maintaining market share, enhanced product differentiation, and allocation of rescues to advert.

Answer 3

many small firms, low barriers to entry, some product differentiation, control over quantity produced, not price. highly elastic but downward sloping, zero economic profit long run

Question 4

oligopoly

maintaining or enhancing market share

Answer 4

few large firms, high barriers, various products, firm has control over quantity produced and riced, inelastic, kinked demand curve, positive economic profit

Question 5

monopoly

ignore market share and focus on profitability from product levels that max profits

Answer 5

one firm, 100% of industry, no entry is possible, one firm sells only one product, firm has control over both price and quantity, inelastic, firm has entire demand curve, positive economic profit