1. Competition in the real world Presented by: 65- Mukul 75- PrashantVerma 85- SalmanAzizi 95- ShakeelSiddique 105- Tahaa Lokhandwala 115- Yusuf

2. Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services What is competition ?

3. Types of competition Monopoly - A situation in which a single company owns all or nearly all of the market for a given type of product or services Oligopoly - An oligopoly is a market form in which a market or industry is dominated by a small number of sellers Perfect Competition - In economic theory, perfect competition describes markets such that no participants are large enough to have the market power or price of a homogeneous product

4. Leading authority on company strategy and the competitiveness Developed a 5 force model for industry analysis & business strategy It focuses on the forces close to the co. that hampers its customer service & profit Michael Porter

5. 5 Forces Model

6. Threat of New Entrants Existing loyalty to major brands Incentives for using a particular buyer High fixed costs Scarcity of resources Brand equity Capital requirements

7. Power of Suppliers There are very few suppliers of a particular product There are no substitutes The product is extremely important to the buyer, they cannot do without it The supplying industry has a higher profitability than the buying industry Threat of forward integration by suppliers relative to the threat of backward integration by firms

8. Small number of buyers Purchases of large volumes Switching to another (competitive) product is simple The product is not extremely important to the buyer, they can do without it for a period of time. Customers are price sensitive Power of Buyers/ Customers

9. Buyer propensity to substitute Relative price performance of substitutes Buyer switching costs Perceived level of product differentiation Fad and fashion Technology change and product innovation Availability of Substitutes

11. Large numbers of undifferentiated buyers and sellers.

13. There are many competitors acting independently.

14. Market price must be flexible over a period of time.

15. No obstacle to the entry or withdrawal of the firms.

16. Equal excess to production techniques.

19. Method of analysis used by marshall .

20. He suggested three periods of time-

21. Market period

22. Short period

24. In pure competition marginal revenue = average revenue.

26. Decision to operate at loss or shut down and why should continue in losses?

28. CONSEQUENCES OF PURE COMPETITION Market price is less than cost of production of a particular producer, he can do nothing but to take a loss. if the price remains below his cost of production for a sufficiently long period, he has no alternative but to go out of business. 2. Increases profit by selling more units. 3. Products subject to competitive market situation face a greater of price instability than is the case with differentiated products. 4. No useful purpose is served by advertising.

29. Monopoly

30. The word monopoly is derived from the Greek word MONOS POLIAN He is a single seller in the market who has complete control over the entire market supply There are no close substitute for the product There are entry barrier This sole seller in the market is called the monopolist What is Monopoly

31. Monopolist is the single producer in the market There are no closely competitive substitute There is complete absence of competition A monopolist is a price maker and not a price taker Monopoly firm itself being an industry faces downward sloping demand curve A pure monopolist has no immediate rival Feature of Monopoly firms

32. A Comparison

33. Monopolist exercises the market power by restricting supplies Consumers choice is restricted Absence of efficiency Disadvantages Of Monopoly

34. Large financial resources Savings in expenditure Monopoly is essential in public utility sector Advantages Of Monopoly

35. INDIAN RAILWAYS BEST BUS SERVICE IN MUMBAI Example Of Monopoly

36. What is Monopolistic Competition? Monopolistic competition is a market structure in which: There are a large number of firms The products produced by the different firms are differentiated Entry and exit occur easily Entering firms/competitors produce close substitutes Monopolistic Competition

37. The four distinguishing characteristics of monopolistic competition are: Many sellers. Differentiated products. Multiple dimensions of competition. Easy entry of new firms in the long run. Characteristics

38. When there are many sellers, they do not take into account rivals’ reactions. Modest changes in the output or price of any single firm will have no perceptible influence on the sales of any other firm. The relative independence of monopolist competitors means that they don’t have to worry about retaliatory responses to every price or output change. Many Sellers

39. Product differentiation gives monopolistic competition its monopolistic aspect. Differentiation exists so long as advertising convinces buyers that it exists. Each firm has a distinct identity – a brand image. Consumers perceive its output to be somewhat different than others in the industry. monopolistic competitors establish brand loyalty. Differentiated Products

40. gives producers greater control over the price of their products. makes the demand curve facing the firm less price-elastic. implies that consumers shun substitute goods even when they are cheaper. Brand loyalty.

41. One dimension of competition is product differentiation. Another is competing on perceived quality. Competitive advertising is another. Others include service and distribution outlets. Multiple Dimensions of Competition

42. There are no significant barriers to entry. Barriers to entry prevent competitive pressures. Ease of entry limits long-run profit. Easy Entry

44. Each oligopolist is aware of the actions of others

45. The decision of one firm is influenced by the other OLIGOPOLY

46. Jagdish Seth & RajendraSisodia The magic number 3 70-90% of market share Rule of 3

48. Barriers to Entry

49. Interdependence

50. Rigid Prices

51. Mergers

55. InnovationGOOD AND BAD OF OLIGOPOLY

57. A single firm sets industry price