Corporations and Monopolistic Competition

Corporations and Monopolistic Competition

Corporations

Based on the current studies, various organisations have different advantages that allow them dominate the modern economy.  In most instances, contemporary corporations are dominant in the market in terms of profit making. A good number of modern prominent organisations have dominated their market in term making huge profits out of their sales. High profits allow business entities to have the required expansion resources and capitals (Sullivan, & Steven, 2003). For instance, the current dominant of Apple Computer, Inc in American markets has been helpful in increasing its profit. The huge profits created by the company have enabled Apple Computer Inc to venture into other global market including Chinese market. Moreover, the corporations that dominate their market can generate a huge amount of resources through the sale of their bonds and stocks. The sale of bonds and stocks is relatively useful in advancing the business reputation and flowing capital. Currently, the Apple Computer Inc is one of the multinational companies that have dominated the United States stock exchange market. The company has in the recent five years being getting their development capital through the sale of its bonds and stocks.

Furthermore, the Apple Computer, Inc has other means of raising their development capital. For example, the business can use its huge and valuable fixed assets in getting loans from the American’s financial institutions.  The corporations’ limited liability attracts a good number of potential owners. In an ideal situation, a business that has limited liability attracts a huge number of potential investors willing to spend huge resources to acquire the company shares.  Currently, the broader ownership and size of Apple Computer, Inc has been helpful in enabling the business a build huge customer base. The company huge customers’ base is also of the essence in increasing the business sales and profitability.

Monopolistic competition

A Monopolistic competition is an imperfect competition that involves many manufacturers producing similar products. The Monopolistic competition is characterised by endless advertising because numerous manufacturers intend to sell comparable brands in almost similar market (Antony & Thomas, 2005). Therefore, the advertising aids in attracting the limited number of customers willing to buy a given product. Advertisement is also apparent in Monopolistic competition since there is not business that have full control of the market. As a result, the advertisement aims at attracting new customers and retaining the existing customers. In most instances, there are no huge differences in the prices and quality of products sold through the Monopolistic competition.

The similarity between the organisations’ products requires informative advertisement that will help customers in making informed decisions. For instance, the monopolistic competition compelled the selection of my college sporting shoe. The puma attractive and informative advertisement strategy played a critical role in the choice of my product. Initially, I had a plan of buying a relatively cheaper sporting shoe but the Puma monopolistic competition structure was very influential in compelling my selection of the shoe. Although the shoe has been useful in my sporting activities, the quality of the product is slightly lower that the cost of the shoes.

Modern scholars assert that the monopolistic competition has the advantage of enhancing impulse buying among customers. In most instances, though monopolistic competition structure the customers purchase products that are not within their budget. Furthermore, monopolistic competition is relatively expensive among the competing businesses. The cost incurred in promoting the organisation products hinders systematic growth and development of an organisation (Krugman, 2009). The promoters also engage in an unethical mechanism in ensuring that the business dominates the projected market. Therefore, despite being one of the most popular competition structures, the monopolistic competition structure is ineffective in the modern market.

 

References

Antony D.  & Thomas C., (2005).  A Consumer Behaviour Approach to Modelling            Monopolistic Competition. Journal of Economic Psychology 26 (6), 797–826

Krugman, W., (2009). Microeconomics (2nd ed.). New York: Worth

Sullivan, A. & Steven M., (2003). Economics: Principles in action. New Jersey, NJ: Pearson         Prentice Hall.

 

 

 

 

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