How is that structure advantageous to your proposed business and how would it affect the future growth of your business?

Question: Different market structures

Assume you are graduating from Holmes Institute and that you want to begin a business in Australia. You are aware that there are four different market structures and that some structures are hostile to new products and services. You decide upon Australia as a location for an Asian fast-food theme restaurant because you have expertise in that sector and you believe that it will be popular. You have also considered the four market structures: perfect, monopolistic, oligopoly and monopoly competition. You decide on one of the structures.

a. Describe each of the four market structures and explain how each one may be conducive to starting your new Asian themed small business.

ANSWER:
a. A perfect competition market is characterised by a homogeneous product, large number of buyers and sellers, a fixed prize, there is existence of perfect knowledge across and within the market, any number of business organisation are free to enter and exit at the discretion, there is no price control mechanism and there is a perfect mobility of the factors of production across the market. This form of market structure can prove to be conducive for the restaurant business as there would be large number of sellers and buyers any time thereby boosting sales turnover of the restaurant.

A monopoly market structure is characterised by a single seller of a product or service that is unique and not homogeneous, he is considered to be the price maker and hence price discrimination exists. There are high barriers created for other organisations to enter the market structure.This form of market structure can be considered to be conducive for the restaurant business as there would be price discrimination and profit maximisation policy adopted by the owner. Due to its ability to provide unique services to its clients, this business sure to last for long

A monopolistic market structure is usually regulated by a single supplier, he is considered to be a profit maximiser as there exist price discrimination due to the uniqueness and exclusivity of the product or service being offered. There are barriers to entry and exit and there are large number of buyers as well.

The oligopoly market structure is characterised by a non-price competition market where every business organisation is interdependent on each other. Selling costs play an important role in defining the success of increased turnover of the organisation. There are barriers to entry of the firm and product is differentiated from one form to another.This form of market structure is considered to be conducive for restaurant business since it may undertake advertising campaign to boost the sales of the company and make feet establish a market in less time.

b. Suppose you start your business within a monopolistic market structure. How is that structure advantageous to your proposed business and how would it affect the future growth of your business?

ANSWER:

b. There would be immense advantages if the restaurants operate as a monopolistic market organisation. Since there are no barriers to entry and exit, markets are considered to be contestable. Product differentiation as the restaurant is Asian themed, would create better choice and utility for the consumers. This particular form of market would be considered to be more efficient than the monopoly for the restaurant business and would boost it's efficiency and effectiveness. It may prove to be dynamically innovative business organisation that would always attract a solid consumer base.

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