Antitrust Practices and Market Power Essay Example | Topics and Well Written Essays - 750 words

Antitrust Practices and Market Power - Essay Example Standard oil firm counts among one of the firms that was investigated on the antitrust act. The firm has an oligopoly structure dominated by small number of sellers. The main reason that seeked to investigate the firm was to establish whether it posed a barrier for other companies’ entry into the market. With the expansion of oil across the globe, the oil factories were involved in poor disposal of waste products into the water system and adoption of poor methods of oil distribution. For instance, it was observed that oil could be passed through leaked pipes which posed a great danger to the society. The establishment of the oil company firm was to see an improvement in the field of oil and refinery. As a natural monopoly company, it developed proper infrastructure within the American region which could see proper distribution and proper disposal of oil without causing any damage to the environment. This saw it rise above other companies in a quest to benefit the economy (Utto n, 2003). In the case of the oil company, the court adopted Sherman Antitrust act so as to regulate the monopoly. This act was coined by John Sherman viewed to be an appropriate for prevention of abusive monopolies from exploiting the consumers. The standard oil firm was estimated to be in control of about 90 percent of oil facilities in America. The oil firm faces imperfect competition as a result of existence in low number of people as prospective sellers. Through government monopoly, power was vested in the American Congress to regulate the economy through tax collection. The main provision of this act was that any person responsible for monopolizing will be held guilty and so be subjected to punishment. The year 1911, the Supreme Court in America established that standard oil company was structural monopoly that was responsible for taking part in unfair practices in the field of business (Utton, 2003). Monopolies are believed to have originated during the colonial period of admi nistration. This case saw huge companies and firms in the United States endowed with the responsibility of receiving huge contracts deals. Monopolies can be seen in form of capitalism characterized by lack of competition; this eventually leads to high fluctuation of products prices and poor quality products. For instance, monopoly is known to supply at a very low output and charging higher prices for its products which may eventually lead to a dead weight loss in the society. In this regard, it will seek to maximize its economic profits and take control of the market demand curve. Monopolies are also at a very better place of enjoying the economies of scale which comes as a result of production of goods in large quantities. In this essence, there are tendencies to be a decline in cost of production resulting to increase in monopolies profits. It has been cited that the loss in economic welfare that arises from exploitation of monopoly power has made the government to take upon some measures in order to regulate some monopolies (Wall et al 1988). In other cases some firms that practiced monopoly were able to rise to power since they had positive effect on the economy of the American government. It was estimated that some of the profits gained through monopolists were used to conduct a research viewed to be beneficial to the society. Through research, consumers were able to learn more about the products that were being sold in the monopoly market and the benefits

Case Study - Culinarian Cookware Example | Topics and Well Written Essays - 1250 words

- Culinarian Cookware - Case Study Example The company has conducted previous price promotions of 20% discount in the year 2004 (for CX1 Tyro collection line), in the year 2005 (for CX1, DX1 line) and in the year 2006 (CX1 and DX1 line). Vice President of Marketing’s View Vice president of marketing for the company believes there is no need for adopting price promotion because that can hurt the premium brand image of the company. He took help of research report prepared by consulted to show that price promotion in 2004 impacted negatively to the profit margin of the company. The company hired external consultant to analyze profitability of 2004 price promotion. The consultant pointed out price promotion has caused of loss of $469, 489 as contribution during 2004 period. Time series analysis shows that unit sales for DX1 line decreased by 4800 units during price promotion hence external consultant concluded that $99,332 was lost as contribution DX1 product line due to brand cannibalization. Taking support from above men tioned statistics marketing vice president of the company concluded that price promotion for a single product line might increase sales revenue for that particular brand but it would eat the revenue of other brand. Price promotion for a particular product line will encourage customers to switch from purchasing other product lines offered by the company in order to purchase discounted products and as a result total revenue earned by Culinarian Cookware would be decreased. Senior Sales Manager’s View Senior sales manager is in support for price promotion and she pointed out that report of external consultant is apocryphal due to following reasons. Sales revenue for first quarter of 2004 was 24% low in comparison to sales revenue for the same quarter in 2003 hence due to external reasons. She concluded that company should not blame price promotion alone for the low sales volume of second quarter in 2004 and sales data for the year should be judged by lowering the margin by 24%. Inclusion of elements other than labor and raw material in variable cost calculation in the report was questioned by her. Cannibalization cost calculation method was also questioned by her. Industry Trend Research data shows offering gift with purchase is more successful push strategy in comparison to price promotion strategy. Competitors of Culinarian Cookware such as Robusto and Le Gourmand offer gifts with purchase. Multi dimensionality of the condition forced Culinarian Cookware to rethink about implementing price promotion strategy to increase sales revenue. Major marketing challenge for the company is to select a pricing strategy which can help them achieve sustainable growth in near future. Analysis of the Current Situation Strength Culinarian Cookware sells premium range cookware products and also the market leader with 6.5% market share in the premium product segment. They offer four product lines complemented with Tyro Collection (CX1), Classic Collection (DX1), Advanced C hef collection (SX1) and Professional Grade collection (PROX1). Variety of product line helps the company to cater multidimensionality of customer’s demand. Sales and distribution channel for the company is