The behaviour of organisations and the market environment - Essay Example

?Business Environment Table of Contents Table of Contents 2 Task 3– The behaviour of organisations and the market environment 3 Identify and critically evaluate the effectives of the barriers to new entrants wanting to compete in the industry? 3 Define the meaning of perfect competition. To what extent does your chosen industry’s structure fit with your definition? 5 Identify three regulatory mechanisms that are in force. How is compliance monitored? 6 Reference 8 Bibliography 9 Task 3– The behaviour of organisations and the market environment Identify and critically evaluate the effectives of the barriers to new entrants wanting to compete in the industry? The competitive environment of the company is understood by evaluation the five forces acting on the business process of the firm. These five forces if not evaluate by the company can affect the company’s performance in the industry. In order to evaluate the different forces of the business environment Porter’s five forces is a very essential tool for the companies. Understanding of the situation will help the company to cope the different dimensions which can act as threat in long run for the firm and it will also be able to continue its profitable position in the competitive environment (Society for Human Resource Management, U.S. 2006, p. 38). The five forces which porter mentioned are Threats from new entrants, Suppliers bargaining power, Bargaining power of customer, Threats from substitutes and lastly the threats from direct rivalry in the industry (Roy, 2011, p. 26). Of the five forces one of the major force which acts as an important aspect for the firm to look after is the threat from the new entrants. Figure 1: Porters Five Force model (Source: Hill & Jones, 2009, p. 43) Sony being one of the leaders in the music, movies, gaming and electronic industry is competing with many players in the electronic market. Several players like Samsung, hp, LG are already in a steady position in the market with around same market share. The industry of electronics grew at a very fast pace over the year and with the emergence of many new companies from South Korea like Samsung and LG many existing players of the market like Sony are suffering to maintain their market share. Samsung maintained a huge profit of $3 billion profit while Sony suffered in earning during the same period (LedTV, 2011). To maintain the market share the company need to develop a strong base to compete with the global market (Market Research News, 2011). Though these players are entering into the market but threats from new entrants are relatively low in electronics industry as compared to other industry. The capital requirement for the entry is huge for the new players which is not possible for many to enter the market. The switching cost of the new entrants is also high in electronic industry. For new players it’s difficult for them to know the new technologies and invest in research and development process. The diversified product line from the existing players like Sony is a great advantage for them. Economies of scale are another issue which keeps the competition low from the new players. Define the meaning of perfect competition. To what extent does your chosen industry’s structure fit with your definition? In a perfect competition scenario all the players of the market are approximately equally sharing the market share. None of the companies in the market are large enough to set the price for the industry. Most of the firms in the same industry produce same kind of products and follow the expected price for the product which other players are using. In a perfect competition market no single company leads the race for the industry. Everyone in the market possesses same kind of small market share. The customers in a perfect competition market are aware of the products from all the players and they have an expected price of the different products from the companies the new entrants can enter with ease in this market situation and they also don’t face much barriers to exit from the race. No advertisement of the products and promotional activities are required for players as it will only increase the cost for the firm and decrease profit for the firm (Peoi, 2002). Sony being the leader in the electronic industry has a great competition with many existing players of the market like Samsung, LG, and Philips, who occupies the major share of the market. In electronics market the major market share holders like the competitors of Sony maintain a perfect competitive market. But on the other hand many emerging players of the electronic and other diversified products produced by Sony follow the price strategy of the leaders of the industry. Many Chinese and Japan electronic companies follow the benchmark created by the leaders like Sony, Samsung etc and place their products at lower price in the market (SME, 2009). In perfect competition market the products are homogeneous whereas the product line of Sony consists of diversified products from music, movies, electronics, game players etc. Identify three regulatory mechanisms that are in force. How is compliance monitored? Sony’s market environment is mainly operated by three regulatory mechanisms. These regulatory mechanisms can be referred as competitive regulators, consumer pressure groups regulators and industry standard bodies. Government owned agencies are the competitive regulators who come across after the different activities and policies regarding to competitive environment. Countries without regulation structure face much more competition than the countries with regulatory bodies (Kenny, 2005, p. 9). To control the laws and policies of the country there are many regulatory bodies like these who take a close look on the regulation of the economy of the country. Various functions performed by the competitive regulators through competitive law and policies can be mentioned as Internationalization, Private law enforcement and Criminalization and Due process and judicial supervision along with competition advocacy (Ascioglu, n.d. p. 4). Consumer group monitors are another regulatory body who operates by putting pressure on the suppliers and the manufacturers in the market for different products and services. The price is controlled by the groups with the power of pressurizing the market players. The third regulatory mechanisms that are in force in the market are the industry standard bodies. These organizations are responsible in setting the price for different products and services offered in different sectors of the market. All the operators in the market abide by the standard set by these organizations. The main focus is given towards standardization of price in the market. Sony has its own monitoring program to ensure global handing of Code of Conduct and policies of the firm. The monitoring systems help the company to address issue and act according to the need and suggest instructions. Various step of the monitoring system includes Crisis Management System, Anti-Bribery Program, and Exclusion of antisocial forces and Information security with personal information management. These step by step approaches help the company to implement strategies and take a closer look at the different activities of the firm (Sony, 2011). Reference Society for Human Resource Management, U.S, (2006), Essentials of strategy. Harvard Business Press. Roy, D. (2011). Strategic Foresight and Porter’s Five Forces: Towards a Synthesis. GRIN Verlag. Hill, C., Jones, G. (2009). Strategic Management Theory: An Integrated Approach. Cengage Learning. Kenny, C. (2005). Reforming the posts: abandoning the monopoly-supported postal universal service obligation in developing countries. World Bank Publications. Market Research News. (2011). The Top 10 Consumer Electronics Manufacturers. [Online]. Available at: http://www.salisonline.org/market-research/the-top-10-consumer-electronics-manufacturers/. [Accessed on July 28th 2011]. Peoi. (2002). CHAPTER 4:PERFECT COMPETITION. [Online]. Available at: http://www.peoi.org/Courses/mic/mic4.html. [Accessed on: July 26th 2011]. Sony. (2011). Corporate Social Responsibility. [Online]. Available at: http://www.sony.net/SonyInfo/csr/compliance/index.html#block5. [Accessed on: July 26th 2011]. SME. (2009). Sony Product Lines, Lagging Competitors, Seen As "Critical Flaw”. [Online]. Available at: http://www.sme030.org/index.php?option=com_content&view=article&id=149:sony-product-lines-lagging-competitors-seen-as-qcritical-flawq&catid=46:sme-briefs&Itemid=27. [Accessed on: July 26th 2011]. LedTV. (2011). Sony Struggles To Maintain Its Dominance. [Online]. Available at: http://www.ledtv.org/node/29. [Accessed on: July 26th 2011]. Bibliography Chang, S. (2011). Sony Vs Samsung: The Inside Story of the Electronics Giants' Battle For Global Supremacy. John Wiley and Sons. Gia, K. (2009). Marketing Strategy of Sony for Portable Audio Device Business. GRIN Verlag. Read More