ECO 212 Week 3 LTA Differentiating Between Market Structures Paper
ECO 212 Week 3 LTA Differentiating Between Market Structures Paper
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Differentiating Between Market 1 Differentiating Between Market Structures Team B Names University of Phoenix Differentiating Between Market 2 Differentiating Between Market Structures The four different market structures are public goods and private goods natural monopolies and common resources Thus this paper will describe and compare each of these structures Moreover it will also take a look at the impact of labor supply and demand to the market equilibrium To further clarify the concepts a famous international organization will be studied Kraft Foods will be studied in this paper as well as how effective their market structure is in providing them success The result of this paper showed that an organizational reorganization can lead to global success too In fact Kraft Foods remains to be one of the largest companies that produces and distributes processed food Comparing the Different Types of Market Structures The first market structure to be discussed is the public goods In this market structure there is no rivalry or competition and exclusivity This means that even if an individual consumes a good the rest of the individuals can still consume equal amount of goods and these goods are naturally made for everyone s consumption On the other hand private goods need to be carefully distributed among individuals to ensure efficient consumption Public goods are usually facilitated by the government while the market is incharge of private goods allocation An example of public goods is national defense and an example of private good is rice and bread Considering sacks of rice being distributed to various families there will always be families who will not be able to consume rice because it has ran out already Private goods are also those that cannot be consumed by someone else once consumed by one individual Differentiating Between Market 3 Further common goods are also not exclusive but the consumption of one individual can affect the amount or quality of the product for the next consumer This kind of situation can even happen in public goods and is often referred to as the tragedy of the commons For instance the seawater resources are technically not exclusive but it can also be complicated to prevent people from abusing these resources Finally natural monopoly occurs when the economies of scale has a huge supply that it is enough and more practical if one supplier allocate the commodity Water and electricity are natural examples of natural monopolies One of the reasons why these commodities rarely have multiple suppliers is that they are very expensive to establish so very few businessmen can afford to have this kind of investment Hubbard amp O39Brien 2010 Differentiating between Market Structures In this section the case of Kraft Foods Inc can be taken into consideration Upon evaluating the supply and demand of Kraft products an automated system is truly necessary to assist in their business processes Because of this there is already lesser work that humans have to work on and it is mainly about analysis of whatever data derived from computers and quality check Some people may consider factory works less significant because of its highly mechanical nature but for organizations this is one of their best ways to make their production process as efficient as possible Kraft Foods is also completely aware of the risks involved in having an automated system Naturally there will always be technological failures that are beyond human control like software malfunction power shortage and even better technological tools of the competitors If these risks are not properly addressed then Kraft will have a problem in productivity Differentiating Between Market 4 because it might need to hire more people without the guarantee of more results A uctuation in the supply and demand of workforce should also be anticipated as Kraft adapts an automated system Given the current scope of operation of Kraft Foods Inc in can be easily categorized as an oligopoly This is because it is one of the few leading producers of processed foods all over the world An oligopolistic market structure can be categorized as differentiated or homogenous But generally this is a market structure that imposes great barriers that prevents other competitors from entering the market Moreover the price demand for this kind of market structure can be elastic or inelastic Currently Kraft Foods produces macaroni pasta cheese and crackers The company s CEO announced in 2004 that Kraft is geared towards a stronger position in the market that will allow them to sustain company growth thus the company restructuring Business Wire 2004 This major change in Kraft foods created three organizational aspects which are seen to really strengthen the global image of Kraft Part of restricting is also the creation of new product categories and marketing strategies Another aspect is the geographic focused strategy of the company to make sure that their brand can well penetrate in every country and region Finally Kraft aims an international scope by improving their processes while cutting on cost There is also a specified team in the huge company who will be taking charge on each of the five major brands of the company Snacks Cheese and Dairy Grocery Convenient meals and Beverages This new organizational structure of Kraft will be one of the strongest strategies of the company to establish its global and Differentiating Between Market 5 local presence and deliver the best product quality the fastest way possible True enough Kraft owns 13 of the processed food distributed all over the world Kraft qualified as an oligopolistic because it is a large company that has very few competitors and this is one of the basic foundations of oligopoly Kraft has its main headquarters in North America but has remained to be a key player in processed food all over my world It is really hard for any other business to compete with a company like Kraft given their size and scope As a matter of fact in one quarter this company can achieve a net profit of 119 billion dollars Thus only companies as big or bigger than this can break the barriers of the competition Currently there are 500 snack food companies all over the world based on the records of US Snack Foods Manufacturing and the total of their annual income is estimated to be 24 million but 90 of this came from the biggest companies including Kraft Business Wire 2010 Moreover Kraft also falls under the category of differentiated oligopoly because of the variety of products they distribute They have currently expanded to producing candies gums cookies boxed foods and many more However it is harder to determine the price demand for Kraft because of the diversity of their products For some products it may be elastic and for some it is inelastic The balance between the demand and supply of labor is best determined through the labor equilibrium Simply put equilibrium is achieved if the labor market meets the demand of an organization for a workforce Thus even a slight change in the demand or supply will truly affect the equilibrium as well Differentiating Between Market 6 While there are many people out there looking for jobs there are also a lot of organizations that are having a hard time filling up their job vacancies This only means that there is both a supply and demand for workers and the only challenge that remains is to find the most qualified employee for the job There are also a lot of factors that can affect this supply and demand for labor One in uential factor is the salary offer Naturally if the the salary offer is high the supply will also increase and vice versa Equilibrium is achieved once the labor demand and labor supply intersects in the highest peak of the curve Hubbard amp O39Brien 2010 And as previously stated this equilibrium can be constantly changing and will greatly depend on the salary scheme So any changes in salary will affect labor supply and consequently will affect the equilibrium as well There are also some instances wherein the supply and demand of labor does not change accordingly For instance there are times when the demand increase but there are no changes in the supply Another thing is that too many people might be looking for a job but there are not enough vacancies This only means that the rate of either supply and demand is not in synch all the time Market equilibrium is still affected but in a rather unusual way The case of Kraft Foods serves as an epitome of the success that can be achieved out of company reorganization Because of this move the company was able to achieve a global image and maintain labor equilibrium There are still a lot of companies out there that are successful in their own organizational structure but the main lesson to be learned here is that the market and organizational structure of a company greatly contributes to its SUCCESS Differentiating Between Market 7 References Business Wire 2010 Research and Markets US Snack Foods Manufacturing Report Top 50 of the 500 Companies such as PepsiCo and Kraft Account for 90 of the Annual Revenue of 24 Billion Retrieved July 30 2010 from httpWWWbusinesswirecomnewshome20101105005565enResearchMarkets SnackFoodsManufacturingReportTop Business Wire 2004 Kraft Foods Announces New Global Organizational Structure Retrieved July 30 2010 from httpfindarticlescomparticlesmim0EINis2004Jan8ai1 1 19601 13 Hubbard R amp O Brien A 2010 Economics 3rd ed Boston MA Pearson Hall PR Newswire 2010 KRAFT FOODS REPORTS SOLID THIRD QUARTER RESULTS WHILE INVESTING TO ACCELERATE Retrieved July 30 2010 from httpWWWprnewswirecomnewsreleaseskraftfoodsreportssolidthirdquarter resultsWhileinvestingtoaccelerate growth 1067 14623 html