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Differentiating Between Market Structures Essay

1144 words - 5 pages

All organizations fall into one of four different market structures; perfect competition, monopoly, monopolistic competition, and oligopoly. The market structure an organization is grouped in is based on characteristics such as competition, products, and ease of entry into the market. Powerlifting is a specialized sport with only a few companies selling the custom equipment required. Titan is one of the companies that sell powerlifting equipment. The following paragraphs will identify which market structure Titan belongs to and how that market structure compares to the others, identify three competitive strategies for Titan, evaluate the competitive strategies in Titan’s market structure, and make recommendations for how Titan can maximize profits.
Identify Market Structure
Oligopoly
Powerlifting is a specialized way of lifting weights. One of the companies that supply the equipment necessary for the sport is Titan. Titan falls into the oligopoly market structure. A limited number firms and each firm using the decisions made by other firms to make their decisions characterize an oligopoly (Colander, 2010). The International Powerlifting Federation, otherwise known as IPF, must approve equipment in a powerlifting meet. There are only eight companies approved by the IPF and five of those only for knee sleeves. There are only three companies approved to sell squat, deadlift, and powerlifting suits and one of those is Titan (International Powerlifting Federation, 2013). Since there are a small number of companies approved by the IPF, and the companies pay close attention to what each other are doing when making decisions oligopoly best describes Titan.
Monopolistic Competition, Monopoly, and Perfect Competition
Titan does qualify as an oligopoly, but what about the other market structures. Titan would not qualify as a monopolistic competition because, in a monopolistic competition, there are many firms. According to Colander, the biggest difference between an oligopoly and monopolistic competition is interdependence (2010). In a monopolistic competition, companies do not make decisions based on what their competitors are doing. There are many companies with slightly different products and each company focuses on marketing their own individual product. Titian also does not qualify as a monopoly. In a monopoly, one firm takes up the market and it holds many barriers for entry. Titan is one of only a few but is not the only one. In a perfect competition there are a large number of firms, selling the same product, both buyers and sellers are price takers, and there are no barriers for entry. Titan is not in perfect competition, because there are a small number of firms and the sellers set prices.
Competitive Strategies
No matter which market structure an organization is in they must employ competitive strategies to remain viable as a business. Titan must do better, than their rivals, in managing and innovating to maintain their competitive edge. One...

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