Comparison of the Various Competition Strategies

A perfect competition is the simplest market structure and is relevantly uncommon because of the number of factor that are involved, which are. Multiple participants, identical products, information and free market. More often than not at least one of the factors is absent, or modified, in market structures due to either Government Intervention or specialisation. Large number of buyers and sellers In perfect competition, the buyers and sellers are large enough, that no individual can influence the price and the output of the industry. An individual customer cannot influence the price of the product, as it is too small in relation to the whole market. Similarity, a single seller cannot influence the levels of output, who is too small in relation to the gamut of sellers operating in the market.

Homogenous Product

Each competing firm offers the homogenous products, such that no individual prefers a particular seller to the other. An increase in the price would let the customer go to some other supplier.

Free Entry and Exit

Under the perfect competition, the firms are free to enter or exit the industry. This implies, if a firm suffers from a huge loss due to the intense competition in the industry, then it is free to leave that industry and begin its business operations if any of the industry, it wants. Thus, there is no restrictions on the mobility of sellers.

Perfect Knowledge of Prices and Technology

This implies that both the buyers and sellers have complete knowledge of the market conditions such as the prices of products and the latest technology being used to produce it.

No Transportation Cost

There is an absence of transportation cost; this is an essential condition of the perfect competition since the homogenous product should have the same price across the market and if the transportation cost is added to it, then the prices may differ.

No Artificial Restrictions

Under the perfect competition, both the buyers and sellers are free to buy and sell the goods and services. This means any customer can buy from any seller and any seller can sell to a buyer. No restriction is imposed on either party. In addition, the prices are liable to change freely as per the demand-supply conditions. No big producer and the government can intervene and control the demand, supply or price of the goods and services.

Imperfect Competition

An industry in which single firms have some control over price and competition. Imperfectly competitive industries give rise to an inefficient allocation of resources.

Monopoly

An industry composed of only one firm that produces a product for which significant barriers exit to prevent new firms from entering the industry.

Features

Large number of firms in the industry. May have some elements of control over price due to the fact that they are able to differentiate their products in some way from their rivals- products are therefore close, but not perfect, substitutes. Entry and exit from the industry is relatively easy- few barriers to entry and exit. Consumer and producer knowledge imperfect. Most suppliers have a degree of control over market supply. Some buyers have monopsony power against suppliers because they purchase a significant percentage of total demand. Most markets have heterogeneous products due to product differentiation and constant innovation. Consumers nearly always have imperfect information and the effects of persuasive marketing and advertising can influence their preferences and choices. Finally, there may be imperfect competition in related markets such as the market such as the market for essential raw materials, labour and capital goods Nike is an example of monopolistic competition because they have the aspects that a perfect competition has, except their products are not exactly like their competitors such as Adidas and Under Armour. Monopolistic is a characteristic form of an imperfect competition. An imperfect competition exists when there are many seller of a good or services but the products do not contain noticeable differences. There are several forms of imperfect competition of which monopolistic competition is one. Nike has sponsors like Kobe Bryant who endorse and wears the products

Demand

The power to purchase a good along with willingness to purchase it. If a consumer holds one of them, demand does not exist. The quantity of a good that potential purchasers would buy or attempt to buy, at a certain price.

Affordability

The degree to which the product is affordable to customers, in terms on acquisition and deployment operation and support, and disposal costs. If there is a minor decrease in Nike’s prices, the demand for its goods may rise as consumers move from competitiors. The prices of the products of competitors such as Adidas have an immediate effect on their demand. When the prices of its products are high, the demand of Nike products will increase as consumers move to Nike. As Nike and Adidas are global sports businesses, therefore both will be trying to top the other in sales and revenue. The Nike Market is also very competitive with other sports brands, such as Under Amour and Puma. Nike has links with Jordan which also brings profit to the business, but competition like Adidias has links with Reebok which is also seen as a competition to Nike’s Jordan’s brand.

There has been recent changes in Nike’s products. As Nike is a sport product business, it will consist of a lot of items including, sportswear, such as sports jersey’s, footwear, sports accessories and more. This may be due to the competition with other sports brand names like Adidias and Puma. Nike have an aim to make as much profit and cement their top spot as the leading sporting brand. These specific changes have altered the business for the good as they gain more profit from more products thast are to sale. Nike have adapted to these changes significantly and have even advertised them, as well as become a franchise product for the company. This has alos help them gain levergae over their competiton as they are seen as more reliable and more flexible due to their range of products. This give the customers and target audience an intel of the business and how it is easy and beneficial for them to change and adapt to new ideas and products. The current Gross domestic product (GDP) for the UK is $2.619 trillion from 2016. This contributes with Nike’s income as it totals the countries profits amd economy. Nike helps with this as it is the biggest sporting brand and has an income revenue of $19 Million. This includes its other brand, Jordan.

Needs and Aspirations of Consumers

This means when unsatisfied human desires that motivate their actions and enhance their fulfillment when met. Many business marketing departments pay close attention to the needs and wants of their target market since both drive consumer. Nike have slogans to help the business get their business going round the world and as they are a global business, it links with it grabbing the customers and target audiences attention. The Nike slogan is ‘Just Do It’ which was inspired by a serial killer who had his final words on his final words as ‘ Just Do It’. This can also link to the prices of nike’s products to increase. This could be due to the recent events that have occurred in the UK including their departure from the EU and how that had damanged Nike’s profit due to the current British pound’s value decreasing.

Supply is the total amount of a product avalible for purchase at any specific price. This can link to availibility of raw materials and labour which means availble factors of prodcution, such as labour or raw materials, which can affect the amount that can be produced and supplied. This can refer back to my chosen business which is Nike. Despite Nike is Billionaire company, it does not have its own factory to manufacturing its shoes, which make 88% of its revenue. However, Nike are aware of its manufacturing and how they do not want to produce a large amount of waste. Nike has a -70% of waste reduction from landfields. They tend to use their waste to make new products so they prevent any negative enviromental factors. Recent events with the UK, EU and brexit has not only cause chaos for immigration, but also global businesses such as Nike have been effect due to the prices and value of the British economy dropping. Nike are a global sport company who supply in sportwear, footwear and accessories. Mnay workers in the UK are not of British nationallity and are currently allowed to work here with ease due to the rules put in place by the European Union. When article 50 is finally evoked and the UK leave the EU businesses may find that many of their employees may no longer be able to automatically work in the UK without paperwork from the Government such as a Visa. This means that Nike may have to pay for any workers who do not hold a British passport to gain a working Visa which would significantly increase cost. In additional it will limit the pool of potential employees that Nike can recruit from. If they cannot recruit enough staff they will not be able to supply enough products to meet demand. Nike need to be aware of the ever increasing natioanl wage to ensure they are meeting the legal requirements. This will mean that their employment cost will increase yearly and for a business that hires a signifcant number of staff that means they may have to imcrease the price of their products to cover it.