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Matket competition - Timing and risks while entering or exiting a market - Essay Example
Pages 3 (753 words)
Running head: MARKET COMPETITION Market Competition – Timing and Risks while entering or exiting a market [Supervisor’s name] Market Competition – Timing and Risks while entering or exiting a market A major issue that holds up in creating an initial strategy for the firms is the timely entrance or exit from the market…
Timing is one of the major reasons for the new products success or a failure in a way that a firm can have a first mover advantage and can benefit the revenues before any competitor enters into the market (Lilien & Rangaswamy, 2004). For example, Amazon.com started its business as an online bookshop but as gradually the demand for the grocery items had increased, Amazon.com adhering to that demand and started its first online grocery shop. As we see in the case of Monopoly where there are no competitors and therefore firms set a price to maximize profit and gain the first mover advantage. Whereas in a perfect competition there are no entry and exit barriers so the role of time in deciding the entrance or exit from the market is minimal and perfectly competitive firms are free to enter and exit an Industry and so in the case of Monopolistic competition in which there is a relative freedom of entry and exit out of industry but a difference between those two terms is that in Monopolistic competition the firms are not ‘perfectly’ mobile but they remain unrestricted by any government rules and regulations, start-up costs or any substantial barrier to entry which is the total opposite of Oligopoly in which there are significant barriers to entry where time plays a major role in determining the entry and exit from the market (Rugman, 1990). ...
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