Economics: Market structures and market strategies

Market structures and market strategies
Name
Institution
Professor
Date
Market structures and market strategies
The computer or IT industry has been growing very fast in the recent past. The increased growth of the industry has resulted from the increasing digitization of operations all over the globe. The world has also become global: a small village to live where people need to connect and conduct business over long distances without physically travelling. Dell Corporation is one among so many other companies that has ventured into the computer industry. The computer industry is the range of operations involved in the development of computer software, designing of computer hardware, and computer infrastructures. The industry extends to the manufacture of a wide range of computer components and shaping of the nature of information technology CITATION Jef05 \l 1033 (Yost, 2005). Firms in this industry operate with the main objective as making profits. To make profits and maintain profit sustainability in such a fast growing industry, a firm needs to adopt the most realistic and competitive market strategies. The characteristic of a given market structure is independent on many factors. These factors include the size of the given firm in proportion to the industry, the number of firms in the industry and their market share, consumers` behavior and so on. The different degrees of competition make up for the different market structures. The four main market structures include perfect competitive market; monopoly; monopolistic competition; and oligopoly CITATION Sky12 \l 1033 (Carl, 2012). A monopoly market structure has only one firm as the supplier. The firm sells products that have no close substitutes. The firm in the monopoly market structure controls the entire market share. Several factors contribute to the existence of a monopoly market. A firm may own a key resource, acquire exclusive rights for the production of a good and/or service from the government, or the cost of production may make a single producer more efficient than a combination of producers CITATION Sky12 \l 1033 (Carl, 2012). Monopolies regulate the quantity the produce in order to charge a high price. For this reason, monopolies affect the economy in a more negative way by taking resources away from the consumers; resources that can be used in the purchase of other goods and services. Oligopoly market structure is slightly different from a monopoly. In oligopoly, there exist a few firms producing a slightly differentiated product. The prices in an oligopoly market are also similar with the firms being the price makers.Perfect competitive markets are characterized by existence of many buyers and sellers. Firms are price takers as they produce and sell similar products. There is perfect information from both the supply and demand side; there is also free entry and exit into the market. Monopolistic competitive markets have the characteristics of both a m...