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Chapter 34: Marketing and Comopetitiveness

This chapter explores the four main market structures—Monopoly, Oligopoly, Monopolistic Competition, and Perfect Competition—that shape how firms operate competitively. It delves into Porter’s five competitive forces that affect a business's ability to thrive, including rivalry intensity and the threat from new entrants or substitutes. Additionally, it identifies key factors that enhance competitiveness, such as investment in technology, staff training, innovation, and effective marketing strategies. Businesses can improve their market position by focusing on quality, cost reduction, and operational efficiency.

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Chapter 34: Marketing and Comopetitiveness

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  1. Chapter 34: Marketing and Comopetitiveness

  2. Markets and market structure • In general, four different market structures explain the broad range of competitive environments in which most firms operate: • Monopoly – if there is little or no competition in providing a particular product or service, and therefore few or no alternative supplies of it, monopolists can charge high prices and offer poor service • Oligopoly – a market dominated by a small number of large businesses, rivalry between firms usually takes the form of ‘non-price competition’ such as special offers and advertising • Monopolistic Competition – where a large number of firms are competing in a market, each having enough product differentiation to achieve a degree of monopoly power and therefore some control over the price they charge • Perfect Competition – all the sellers produce homogeneous (identical) products and are ‘price takers’, meaning that they accept the ruling market price.

  3. Porter’s five competitive forces • 5 features of markets that determine how a successful business might cope with its competitors • Intensity of competitive rivalry • Threat of entry to the industry by new competitors • Threat from substitute products or services • Power of suppliers • Power of buyers

  4. Factors that determine whether a firm is competitive • Investment in new equipment and technology • Staff skills, education and training • Innovation through investment in research and development • Enterprise • The effectiveness of the marketing mix • Incentive schemes for staff • Improvements to operational procedures • Quality procedures • Financial planning and control

  5. Methods of improving competitiveness • Marketing • Reducing costs • Improving quality • Staff training

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