TYPES OF

COMPETITION
Introduction to Business

2/2009
MARKET STRUCTURE
 PERFECT
 MONOPOLISTIC
 OLIGOPOLY
 MONOPOLY
 PERFECT
• EASY • MANY

Ease of COMPETITORS
Entry

CONTROL
PRODUCT
S
OVER
PRICE

• SAME • NO
PERFECT
MONOPOLISTIC
• EASY • MANY

Ease of Entry COMPETITORS

CONTROL
PRODUCTS
OVER PRICE

• DIFFEREN
TIATED • YES
MONOPOLISTIC
 OLIGOPOLY
• DIFFICULT
• FEW

Ease of Entry COMPETITORS

CONTROL
PRODUCTS
OVER PRICE

• SAME-
DIFFERENT • YES
OLIGOPOLY
 MONOPOLY
• DIFFICULT • NONE

Ease of Entry COMPETITORS

CONTROL
PRODUCTS
OVER PRICE

• - • YES ( under
LAW regulation)
 MONOPOLY

A monopoly is a company
that dominates and controls
a specific industry.
QUESTIONS & ANSWERS

From Wal-Mart ‘s case study

1. What industry Wal-Mart
is competing in?

GENERAL
MERCHANDISE
RETAILING
INDUSTRY
 2. Which market structure should Wal-
Mart be considered?

Monopolistic According to
theory

•There are a lot of retailers (competitors) like Wal-Mart in the market.

•It is easy to be general merchandise retailers.
• Wal-Mart can control over the price by dumping it downwhile
others(small retailers) cannot.
•The products are differentiated by product testing tactics to
let the customers perceived that they are The new, improved Great
Value products and redesigning Great Value packaging
graphicsalthough it may be still similar or same.
 In a world where most
retailers are categorized as
Wal-Mart
having a monopolistic
competition market might be
structure, Wal-Mart Stores
Inc. appears to have an
oligopoly market structure.
considered as
Nevertheless, because
there are far too many
“Oligopoly”
retailers to deal with, then
they also have a
monopolistic competition
Wal- Mart is the 1st in
market structure. retailing market.
Regardless, Wal-Mart would
rather have it this way
because it has not hurt them
at all by having competition.
3. Which determinant of demand/supply is affected causing change in
demand/supply of products in the general merchandise industry? How? Explain
and draw the diagram to illustrate the effect.

When the prices at Wal-Mart are much lower.

PRICE
The other small retailing businesses can’t cut their price like Wal-Mart

( cannot compete with Wal-Mart’s dumping )

DETERMINANT
The customers buy the cheaper products at only Wal-Mart.

More convenience More services

The other general merchandisers cannot exist.

4. As the result of Wal-Mart’s action, which determinant of
demand/supply is affected causing change in demand/supply of
superior products? How? Explain and draw the diagram to illustrate
the effect.
EXAMPLE OF EFFECTS from Wal-Mart to Superior Products

LEVI top brands had

declining sales

Levi hooked up with Wal-Mart to

produce a low costWal-Mart
jeans. has
squeezed suppliers till
they meant
The price pressures scream, and
that Levi
Strauss has ceased
forcedall manufacturing
them to move
operations. jobs abroad to keep
cutting costs
Resells Asian-made jeans under its
trademark. Its quality is far inferior to
the original one.

They're cannibalizing sales of Levis top

brands.But the new jeans are cheap.