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Difference Between Market Structures
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| Words: 1113 | Submitted: 14-Sep-2012
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DescriptionThis paper will discuss the carbonated drink industry and will specifically address the coke product. This paper will identify some competitors in the industry, the market structure of the industry and provide some alternatives in the structure that may improve the current structure in place
Difference between Market Structures
Coca-Cola, known as Coke, is a company name known by the world, and has stayed in the number one position for cola throughout the world. Cokes mission is “The world is changing all around us. To continue to thrive as a business over the next ten years and beyond, we must look ahead, understand the trends and forces that will shape our business in the future and move swiftly to prepare for what's to come. We must get ready for tomorrow today” ("The Coca-Cola Company", 2012). This paper will discuss the carbonated drink industry and will specifically address the coke product. This paper will identify some competitors in the industry, the market structure of the industry and provide some alternatives in the structure that may be improve the current structure
Coke is in basically a duopoly with the main competitor of Pepsi. A duopoly occurs when there are only two businesses in a market, even though there a few smaller companies in the market, these two companies control the market. The best outcome for both companies is to cooperate and agree to restrict output of product so that each company has a share of the market and where the price is above the marginal cost, and profit is maximized. The carbonated beverage industry is one which is very competitive. A few firms dominate this industry, most notably Coca Cola and Pepsi Cola. This is because of the substantial barriers to entry. There is one other company trying to break into the soda industry and that company is Cadbury-Schweppes, who is the producer of products such as 7up and Dr. Pepper. This company is the third leading company in soda industry. Due to the duopoly of Coca Cola and Pepsi, Cadbury-Schweppes faces a hard fight for market share and the success of staying in the market of soda.
The following will describe the difference between duopoly, monopoly, oligopoly, and competitive market. With a monopoly there is only one company that controls a product, an example of this would be Microsoft. In the oligopoly market the market is dominated by a small number of firms that together control the majority of the market share. This is close to the duopoly market that Coke is in; the difference is that Coke and Pepsi are big organizations. In the competitive market there are a large number of firms, each having a small proportion of the market share and slightly differentiated products.
In the highly competitive market, Coke has faced many organizational problems. The biggest threat faced by this company is other companies trying to work other products into the market. ...
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