Differentiating between Market Structures Essay
Differentiating between Market Structures
This paper is designed to provide information differentiating between market structures of Nike which is the leading athletic shoe and apparel company. As a consultant our firm will perform a market analysis, review competitive strategies, and make recommendations on how to maximize profits. In order for our firm to make recommendation we will achieve results by evaluating four similar organizations and their market structures. Competitive strategies will be explored within the market the organization competes. The market will accessed positively and negatively in order to evaluate the structures competitive strategies. Collectively the results will provide strategies and recommendations Nike might consider to maximize their profits. Two visionaries created an iconic brand which later became Nike. A college track coach Bill Bowerman who coached at the University of Oregon along with a middle distance runner by the name of Phil Knight created a company which later became Nike with a handshake and $500 (Nike Inc., 2014).
The original company Blue Ribbon Sports hired Carolyn Davidson to design their classic “swoosh” logo in 1971. This logo was created for the price of $35 dollars and in 1972 Nike was founded (Nike Repository, 2014). In1978 Blue Ribbon Sports changed its name to Nike (Fundinguniverse, 2014). Nike has come a long way from selling athletic shoes out of the back of a car to being one of the best strategies of the way they go to business. Census states that Nike does a better job of marketing products. Nike has flooded the market for athletic shoes. Every major shoe store has more Nike shoes than any other brand. Market structure is defined by the manner in which a market is organized, based largely on the number of firms in the industry (Industry Outlook, 2014). The number of competitive firms in the industry is four. Of the four Nike leads sales in the United States in front of Adidas, Reebok, and Under Armor for athletic shoes.
The four basic market structure models are: perfect competition, monopoly, monopolistic competition, and oligopoly (Industry Outlook, 2014). A perfect competition is market structure that is theoretical. A perfect competition is often used as a benchmark and compared to real structures. This is a model that is traded freely by buyers and sellers usually in large numbers and there are no individual transactions determining the price. Monopoly is the control of particular market. A monopoly is referred to when one company is the sole controller of an industry. For example Microsoft has a monopoly on the market. The software market is monopolized by Microsoft. If you were to buy a new computer and you get it home it will not work without software. The computer is no good without the software and no other company has been able to produce software to replace or give the consumers an option.
Monopolistic competition is a market structure in which several or many sellers each produce similar, but slightly differentiated products. Each producer can set its price and quantity without affecting the marketplace as a whole (Investor Words, 2014). The last basic market structure is oligopoly. Oligopoly is defined as the number of sellers being small. This is due to a few amounts of suppliers and how this can cause a substantial impact of prices and competitors. This analysis has determined that Nike operates under the basic market structure model of monopolistic competition. Monopolistic competition is assembled a few expectations. 1. The first expectation is that there are many buyers and sellers. 2. All of the firms manufacture and provide for consumers products that are the same but have a slight differentiated product. 3. There are easy entries and exits for companies.
Nike has established all of the above. Athletics has become a part of everyone’s life. At one time or another everyone has bought tennis shoes, workout shoes, running shoes, basketball shoes, baseball cleats, football cleats, and soccer cleats to name a few. The buyers are endless and sellers are limited.
Fundinguniverse. (2014, February). Nike, Inc. History. Retrieved from http://www.fundinguniverse.com/company-histories/ Industry Outlook. (2014, February). Economic definition of market structure. Retrieved from http://glossary.econguru.com Investor Words. (2014, February). Monopolistic
Competition. Retrieved from http://www.investorwords.com/ Nike Inc. (2014, Feruary). Nike, Inc – History & Heritage. Retrieved from http://nikeinc.com/system/assets/ Nike Repository. (2014, February). Nike, Inc. Company History and Information. Retrieved from http://www.nikerepository.com/nike-company-history