The U.S. healthcare system has always maintained a certain level of detachment from the needs of the population. In the early 20th century, hospitals were mainly for treating deadly illnesses. Eventually, as modern medicine evolved, hospitals had the ability to treat a wider range of conditions effectively, but the cost increased as well. In the 1920’s hospitals were empty. A system was launched at Baylor University Hospital which allowed individuals to contribute a small amount each month in exchange for the full health bill covered on visits. This increased public visitation rates. With the Great Depression and World War II, patient loads decreased which led to the popularization of this idea leading to the first health insurances being sold under the name of The Blue Cross (Blumberg & Davidson, 2009).
Many employers began to offer health insurance and government initiatives such as Medicaid, both covering out of pocket costs for patients, increasing visitation rates. However, the health system took advantage of this and began to raise costs without fear of deterring patients since they never saw the bill. There was no inherent market competition which led to tremendous expenditures, exceeding the rate of inflation. The following events led to the emergence of market competition in healthcare. Federal initiatives were passed to increase the supply of physicians (Health Professions Educational Assistance Act) and contain costs (Health Maintenance Organization Act of 1973) which sought to address the critical issues of limited competition and overextended government payments to health organizations. Furthermore, the private sector which provided 2/3 of the population with healthcare took action. High labor costs due to health benefits led to industries pressuring health insurers to create individual plans as well as redesigned benefits which caused the marked demand to transfer away from employers to health insurers. Finally, anti-trust laws began to be enforced in the healthcare sector which disrupted inhibited competition by professional associations and legal loopholes which supported price-fixing (Feldstein, 1986).
Some consequences of market-based competition include improved efficiency and entry of new providers. As hospitals compete for patients and information on quality and process becomes publicly available, the quality of care increases. Economic theory implies that organizations will seek to be more efficient and innovative. Furthermore, the market will result in new competitors seeking to enter the market. In theory, it will result in improved access to healthcare, both geographically and in terms of services provided (Barros, Brouwer, Thomson, & Varkevisser, 2016). However, in recent years, the healthcare market has become increasingly consolidated which has led the rise in the cost of care. Anti-trust enforcement has little effect on this trend. Larger organizations are merging or acquiring smaller service providers, consolidating market share. Meanwhile regulation is requiring a scale of operation for survivability on the market, which small medical practices or even insurers are unable to maintain (Ginsburg, 2016). Healthcare systems believe that costs are justified due to the expense of modern medical technology and the necessity to maintain profitability in operations.
The dichotomy between market competition and public healthcare provides a barrier to understanding the realities of the sector which is usually neither of these. The healthcare system’s participation in the market is complex. Unlike a regular business, it does not necessarily compete for a customer in a traditional sense. The position on market competition in healthcare is mostly political and value-based. It can be seen as a consequence of privatization that leads to a primary purpose of making money rather than offering health care. Meanwhile, it can also serve as a mechanism of efficiency (Goddard, 2015). The complexity of the topic suggests that a compromised balance should be found between competition and public medicine. Regulation should exist not to limit health care systems but ensure the protection of patients and maintain a reasonable level of prices for the consumer.
References
Barros, P. P., Brouwer, W. B. F., Thomson, S., & Varkevisser, M. (2016). Competition among health care providers: Helpful or harmful? The European Journal of Health Economics, 17, 229–233. Web.
The new technology creates great opportunities for North Island Hospital to compete in the medical market and deliver the best services to its customers. The case suggests that the cost of technology is high and it will need careful analysis of pros and cons. In order to assess and evaluate effectiveness of the proposed investments in new technology, Financial Key Performance Indicators (FKPIs) will be used. This method of financial analysis is intended to analyze of the financial performance of the proposed collation (Harris 1989).
Model identification
In the case of North Island Hospital, the financial ratios are applied to the market to examine current achievements and trends. In addition, these data will be applied to competitors to identify external benchmarks’ of performance. The analysis will involve charges to patients and the cost of technology for the hospital. The question of Profit Generation shows that implementation of new technology will be beneficial for the hospital and will be repaid in twp years approximately. The proposed solution is good at generating profits. The question of Cash Control shows that the hospital is successful to meet its commitments. It means that new laser technology will help it to meet customers’ needs and demands and improve healthcare facilities in the region. The issue of Asset Utilization allows saying that the hospital does well to utilize its assets and ensures operational efficiency. The cost of new laser is NZ $ 1,500,000 but it will be repaid in two years if the number of patients remain the same (100 per year) (Johnston and Graham 2008). If the hospital attracts new customers from other areas of the New Zeeland, the new laser will be repaid in a shorter period of time (Cawford 2002).
Description and Analysis
Also, it is important to take into account that the new technology will position North Island Hospital as a premium facility with innovative and unique services. This image will help to attract more customers and generate more profit. Throughout the hospital there needs to be a focus on both external performances (how the patient is satisfied) and internal performance (Naylor 2002). Patients are usually concerned with three aspects: From an internal perspective the main factor of performance and success is widely acknowledged to be the competence and commitment of the medical staff at all levels. Financial Key Performance Indicators (FKPIs) allows to say that the hospital will benefit from buying this technology and will generate more money for other projects (Drejer, 2002). The proposed model is important and efficient as it takes into account financial indicators and competitive environment. To examine the performance of the hospital, and its competitors, the assessment ratios are applied. The model provides a definition of the ratio plus brief guidance notes to support interpretation. Measures the effectiveness with which the hospital invested in the new technology are used to generate sales income. The trend of achievement will be monitored by the hospital staff as well as comparison to other similar projects (Drejer, 2002).
Conclusion
In sum, the case shows that financial analysis is effective if it is combined with competitive analysis and assessment of market opportunities. The case of new laser technology, the level of return is sufficient to ensure that borrowing can be serviced, Reinvestment can take place for the development of the hospital and equity shareholders can receive a satisfactory return. In addition, the decision to purchase the technology is driven by the demands of the patients. The new technology will help the hospital to create a unique image and provides innovative services and treatment to diverse customer bases.
Bibliography
Crawford C. Merle. 2002, New Products Management. Irwin-McGraw Hill. 7th edition.
Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Quorum Books.
Harris N. 1989, Service Operations Management, Cassell.
Johnston, R. and Graham Clark. 2008, Service Operations Management.
Naylor J. 2002, Introduction to Operations Management, 2nd Edition Pearson Education.
The US healthcare system is very complex. The lack of uniformity in the coverage policy determines its specificity in comparison with the systems of other developed countries. Whereas, the high cost of medical service is the object of the US population’s complaints the enormous healthcare spending is the focus of the government’s concern. Hence, the country’s public spending on the healthcare is one of the highest among all the members of OECD. About 17.7 percent of the US GDP is spent on the healthcare while an average representative of OECD spends only 9.3 percent on the similar sector. However, it seems that large expenses fail to provide high efficiency. According to the official data, 30 percent of American adults could not afford to have a health insurance in 2012 (The U.S. Health Care System: An International Perspective 2014). As a consequence, all the transformations of the US health care market are aimed at increasing the competition and, thus, reducing both the medication services’ cost and the public health care spending.
One should necessarily note that the uneven coverage in the health insurance system results in the negative impact on the healthcare market in general. Whereas some segments of the US healthcare system, such as educational and institutional markets, show high competition rate, other fields, such as health insurance sector, are oligopolistic. In other words, the competition within the insurance market is low that leads inevitably to the cost’s increase. Thus, the small number of health insurance companies in the USA enables their owners to determine prices that prevents the market from efficient allocation of resources (Mwachofi & Al-Assaf 2011). In order to implement the measures that will help to reduce the costs of the healthcare market, one needs to analyze the principal mechanisms that underpin the competition level in the relevant field.
Health Economic Analysis
Moral Hazard
The moral factor is one of the determinants of the healthcare services’ cost. Some specialists believe that this phenomenon is the result of the information asymmetry that exists in the patient-company relations (Mwachofi & Al-Assaf 2011). Thus, it is presumed, that an individual that has a healthcare insurance tends to use the relevant services more frequently, and, at the same time, pay less attention to the health preservation procedures. For example, a person that is protected by the insurance can take up some unhealthy habits like alcohol and smoking increasing, thereby, the possibility of the service’s overuse. Healthcare companies, in their turn, employ the measures to avoid potential money loss – they reduce the clients’ access to the particular medical services or introduce extra charges. The problem is that the following actions affect all the patients including both those who do not have a healthcare insurance and those who perform proper care about their health.
The following problem might be resolved on condition that healthcare companies do not try to predict the risks of the service’s overuse and give up the practice of deductibles’ implementation like it is done in Germany (The U.S. Health Care System: An International Perspective 2014). The sustainable and clearly put terms of the insurance will encourage more people to purchase it that will compensate the risks. However, the relevant measures require the government’s intervention.
Allocations and Provisions
The unreasonable performance of allocations and provisions in the healthcare system might also lead to considerable cost increase. Thus, the US government allocates huge amounts of money to the healthcare budget, but the services’ cost remains rather high. It might happen because of the irrational spread of the resources within the system. For example, the government might oblige the citizens to undergo unnecessary procedures and, at the same time, fail to provide them with the truly essential services.
In order to avoid this inefficient allocation, a reconsideration of the service list is required. Hence, the government is to perform the monitoring of the healthcare services that show best preventative results and include them on the insurance. On the contrary, those services that prove to be less requested or less effective can be excluded from the insurance coverage and paid independently by patients whenever they use them.
Asymmetric Information Which Leads to Adverse Selection
The asymmetry information that is present in the patient-market relations is another factor that affects the cost formation. Specialists point out two main types of asymmetry: between a doctor and a patient and between the former and a health insurance company (Mwachofi & Al-Assaf 2011).
The example of the first asymmetry might be illustrated by the case when a doctor takes an advantage of a patient’s ignorance and prescribes extra services in order to receive the benefit.
The second issue is an opposite case when a client tries to conceal his medical history from a health insurance company so that the latter remains unconscious of the potential risks. The company, in its turn, is aware of the adverse selection and the fact that initially unhealthy people are more likely to use their services. Thus, they raise the premium in an attempt to prevent the possible loss. As a consequence, high costs affect all the patients (Mwachofi & Al-Assaf 2011).
Statistics shows that the described adverse selection is highly harmful to the healthcare market (Mwachofi & Al-Assaf 2011). The possible resolution of the following problem implies the introduction of universal coverage that will oblige all the patients to buy a standard insurance.
Third Party Agents
Apart from consumers and health care suppliers that essentially participate in the treatment process, there are also third party payers that play an important role in the cost formation (Morris, Devlin & Parkin 2007). Thus, the structure of the three agents’ interconnection might be represented by the following graph:
Graph 1 Health Care Financing Framework (Morris, Devlin & Parkin 2007)
Therefore, the presence of a third agent prevents the supply and demand from being determined interdependently. One of the potential solutions is to reduce the determining power of the third party payer by implementing a universal coverage that will make the health insurance companies less dependable on the potential risks and less interested in the particular demand’s increase(Morris, Devlin & Parkin 2007).
Externalities
Externalities, or the “spill-over effects” as some specialists call them, can be of positive or negative character (Mwachofi & Al-Assaf 2011). One of the most typical examples of the positive externalities is the implementation of the vaccination practice. Thus, by vaccinating particular patients, one automatically prevents the rest of the society from getting infected. The negative externalities base on the similar principle. For example, the unhealthy habit of smoking is likely to have a negative effect not only on its owner but the people around him.
The major problem is that, whereas one is aware of the externalities phenomenon, there is still little possibility to consider all of them in the framework of the potential outcomes. Meanwhile, some specialists assume that the employment of the certain regulating tools might be an effective solution (Morris, Devlin & Parkin 2007). Such tools are supposed to encourage positive externalities on the one hand, and “punish” the negative ones. Therefore, the government can introduce the system of special subsidies and taxes (Mwachofi & Al-Assaf 2011). Whereas this measure will not help to eliminate the problem completely, it is still likely to be helpful for keeping the situation under control.
Market Power
It is presumed that the appearance of the market power is determined by the economies of scales factor. The increasing return to scales takes place in those cases where there is a large cost of the foundation of the service producer and a low cost of the services themselves. Thus, for example, the building of a large healthcare center requires a lot of expenses, whereas the costs of the service might turn to be relatively low. In other words, large companies tend to have more benefits than smaller firms. Therefore, it is advisable that the government encourages the creation of big healthcare organizations preferring them to a series of small companies (Mwachofi & Al-Assaf 2011).
Conclusion
The analysis of the US healthcare system has shown that whereas the country spends a large amount of its budget on the national healthcare, the cost of the service remains rather high and the system still has a number of serious drawbacks. First of all, it is necessary to point out the negative influence that the lack of coverage uniformity has on the general healthcare performance. Practice shows that the market conditions are not perfect; therefore, it fails to control the healthcare system properly. As a result, the government’s regulation is highly needed because it is only the authority that can assure the preservation of the equality and common accessibility principles of the health care service. Otherwise, every agent of the treatment process pursues the personal interest that, consequently, affects the cost formation. Hence, the key idea is that the present health care system lacks clarity and unity.
As a consequence, one should suggest that the government’s intervention is essentially required in order to improve the current set of things. It is assumed that the country might implement a universal mandate for the healthcare coverage to resolve the existing problems. Thus, the USA can make a shift to a multi-payer insurance system that has been successfully employed by other members of OECD, such as Germany and Japan for a long time, and, thus, has already proved its efficacy (The U.S. Health Care System: An International Perspective 2014). The country will manage to eliminate the administrative costs for billing on condition that the government supplies its citizens with universal insurance and sets the uniform rates for the healthcare workers.
Reference List
Morris, M, Devlin, N & Parkin, D 2007, Economic Analysis in Health Care, John Wiley & Sons, Chichester.
If you are a student or were the one once, you must have had the same experience as I had during my happy weekends. In those days, I could stay at home reading my endless assignments and having fun with my friends at various parties. Perhaps, you have noticed that some people spend more time on entertainment than reading. Probably, it is because they realize neither the best way to read nor the importance of reading to their future. We all know that reading is important, and most of us do not want to regret in the future failing to achieve our goals. We should, therefore, find ways that could help us read more efficiently.
As an independent student with his/her discretions, one should not find reading difficult or boring activity. This is possible if only we can discover the best ways to read which vary depending on the choice of each individual and his/her background. In my case, I found my best reading method after joining high school, due to a reading competition against my best friend. While in China, I found English to be a very important subject for every high school since it could even determine the choice of a university that a student aspired to join after graduating from High school. Teachers as well focus more on reading. Students have to answer several questions after reading; this assignment is a standard criterion based on which teachers evaluate them. To win in this competition, I read more carefully than ever before. I began to realize that if I wanted to make the right answers and win, I must have defined the main idea in the article and summarised it.
Due to competition, reading would no longer be a boring task. In contrast, it became the most essential part of my daily life. Should I win, then I would focus on maintaining the best level of reading and keep on winning. However, if I lose, then I would read even harder to win in the subsequent competition. There is as well another method of learning to read which does not involve competition. Malcolm X learned to read by copying the dictionary (Helfer and DuBurke 72). Likewise, I have learned to read using competition to encourage me, thus it is my best reading method. However, each one can find his own “unique” method to improve in reading.
During the period when one is searching for the best way to read, some ideas or thoughts may come into his/her mind, which probably influences his/her future as well as changes his/her entire life. The positive impact of reading on some great people shown in their autobiographies has given me some new ideas and encouraged me to occupy with my favorite activity, which is reading autobiographies of successful business executives. I also learn to inspire others rather than just develop myself. the book Malcolm X: A Graphic Biography has influenced me to read history books about different races and people who devoted their lives to fighting against the white and defending the rights of the black (Helfer and DuBurke 57). Consciously or unconsciously, reading will affect you altering your views in the way Malcolm X: A Graphic Biography has changed me.
While you are trying to discover your best reading method to change your life, you should realize that you will not be the only one to benefit from it. Everyone around you will be an advantage as you will be influential and able to advise them on a difficult situation. They may as well derive inspiration from your example. This shows how serious one should be in selecting a reading method. Before the reading competition, I was just an average student in English. However, after the reading competition, I became among the top five best English students in my class. This surprised the entire class. It motivated my classmates to join the competition. It also impressed our English teacher so he began to award us with presents for making some progress. Consequently, our class became the best performing class in English in terms of grades.
I influenced a small group of people around me while I was learning to read, even though it was not my original intention. I had learned from Malcolm X: A Graphic Biography that Malcolm X influenced a lot more people, including those he had neither known nor ever met before. He used all his life experiences to transform others. He did this by copying the dictionary when he was in prison for fighting for the civil rights of the black around the world. Reading competition has become the most effective method for me to learn to read. Anyone has the potential to find his or her way to achieve success. It does not matter what method you use as long as it works for you. You should develop your approach to read and learn more trying to absorb the knowledge from the books as well as from your thoughts and ideas.
Works Cited
Helfer, Andrew and Randy DuBurke. Malcolm X: A Graphic Biography. USA: Hill and Wang, 2006. Print.
According to the information provided in the case study, the main problem that TFC faces is the rising competition. Despite the fact that TFC has managed to maintain its position as the market leader due to its initial approach, which included supplying the audience with up-to-date fashion news, features, and information via an on-going 24/7 broadcast, its profitability is now threatened by the rise of new competitors who started providing similar content (Stahl 1-2). The TFC’s vulnerability to this threat is justified by a variety of factors, including the lack of audience-specific approach and relatively low revenues from CPM and advertising.
Contributing Issues
Competitors
TFC’s biggest competitors are CNN and Lifetime, which are both well-established channels with high ratings that have recently introduced fashion-related programs. For instance, CNN’s Fashion Today broadcast has an average rating of 4% and reaches 4.4 million households (Stahl 8). Lifetime, on the other hand, has a lower average rating of 3% with a coverage of 3.3 million households; nevertheless, its values are still higher than TFC’s, which has a 1% rating with a coverage of 1 million households (Stahl 8). There are also significant differences regarding the audience of the three channels: for instance, Lifetime has the highest population of younger viewers aged between 18 and 34 (Stahl 8). CNN, on the other hand, has a higher proportion of male viewers (Stahl 8). This is important as both young and male viewers are considered to be the premium audience and can help the channel to generate more revenues from advertising: “Advertisers would pay a premium CPM to reach certain other groups; in 2006, these were men of all ages and women aged 18-34” (Stahl 4). The channels also differ in the content they provide: out of all three, CNN is the only channel that includes celebrity news into its fashion broadcast (Stahl 8), which might be one of the reasons for its high viewer ratings.
Lack of audience-specific Approach
Being the one and only channel to provide a never-ending broadcast of industry news and information, TFC has never considered narrowing down its marketing strategy to address specific groups of people. For example, Stahl explicitly states that addressing male groups was never part of the company’s strategy (6), which may be the reason for relatively low ratings among male viewers. Also, as noted in the study, the majority of TFC’s audience is comprised of female viewers aged between 35 and 54 (Stahl 2). The segment of Planners & Shoppers is mostly comprised of viewers in this age range, which means they are interested in value (Stahl 8) and are less likely to buy expensive products from premium advertisers, which, in turn, lowers the company’s advertising revenues. This audience is also relatively loyal, which means that, as long as the channel’s most popular series are kept in the program, it would be possible for the executives to reshape the daily program to attract more audiences without losing the interest of this viewer segment.
Low Interest
Comparing to its major competitors, TFC has a low consumer interest, which also affects the company’s revenues. For example, Stahl writes that “TFC had achieved a 3.8 rating on consumer interest in viewing, while the two competitors with new fashion programming had scored higher: CNN had scored 4.3 and Lifetime a 4.5” (5). The perceived value of the channel was also relatively low: were CNN and Lifetime scored 4.4 and 4.1 respectively, TFC’s perceived value was at 3.7 (Stahl 5). Given the fact that the channel’s awareness score does not show such a dramatic difference to the competitors (Stahl 5), it is clear that the problem is not the lack of people’s knowledge about the channel, but rather the lack of interesting programs for the audience to watch.
Evaluation of Scenarios
The three separate scenarios provided in the case study focus on increasing the channel’s coverage of premium populations. For instance, the first scenario proposed a broad, multi-segment approach to three different consumer categories: Fashionistas, Planners & Shoppers, and Situationists (Stahl 6-7). This option included a major investment in the channel’s an advertising and marketing strategy, as well as into programming (Stahl 6). However, given that the vast part of the proposed audiences would be those interested in value and have a lower percentage of young female viewers, as well as viewers with a high income (Stahl 10), this strategy would not be helpful in increasing the channel’s advertisement revenues.
The second option outlined in the study was to focus on Fashionistas only, thus achieving an increase in younger viewers with high income (Stahl 7, 10). Indeed, this scenario would help to reach a substantial growth in advertisement revenues (Stahl 7). However, the percentage of Fashionistas is still relatively low compared to other segments of viewers. Moreover, Fashionistas are less concerned with value and are more likely to be interested in inexpensive items and brands (Stahl 10), which means that tailoring the program for them would decrease the interest of other popular consumer categories, especially those for whom value is an important factor. The third scenario included targeting both Fashionistas and Planners & Shoppers by developing a well-rounded programming structure to achieve and preserve the interest of both segments.
A video game is an electronic game that has two specific features. One is its fundamental status of a game and second, is the usage of technology, specifically electronic technology, in executing the game (Wolf 3). The electronic systems that are used to play the games are platforms – like personal computers and video game consoles. The platforms range from mega computers to small devices that fit into the palm. Thus video-game-console refers to a device that consumers buy for the sole purpose of operating video games as distinct from a personal computer. Computer games made its first debut in the 1950s.
The Xbox video game console is a product of Microsoft – it being the first attempt by the company to enter the gaming market. Sony’s PlayStation2 was one of its prime competitors. The integrated Xbox Live enabled the players to participate in online competition till 2010 April.
Microsoft collaborated with Sega in making its first foray into the market of video game console. The first edition was the handwork of a small team that included Seamus Blackley. It was first mentioned in 1999 by Bill Gates but the debut was repeatedly delayed. But when it finally entered the stage in 2000 at the Game Developers Conference the viewers were awestruck. Initially Microsoft concentrated on the market in Japan but later European markets proved more receptive. Two members of the original team, Seamus Blackley and Kevin Bachus exited from Microsoft but Otto Berkes and Ted Hase (founding members) are continuing with the company although they are not with the project of Xbox.
Prior to its launching Microsoft took over Bungie and made use of its launch title – Halo:Combat Evolved. It was a good marketing move. Microsoft outpaced Nintendo and came to rank second in the North American console market. Some of the popular games included in the console are Dead or Alive 3, Amped: Freestyle Snowboarding, Halo: Combat Evolved, Fuzion Frenzy and Project Gotham Racing (Marks 89).
PlayStation is a fifth generation video game console (32bit) released by Sony Computer Entertainment from Japan in 1994 December. It was the first of this PlayStation series of consoles and game devices that could be held in the palm. Those succeeding it as upgrades were Net Yaroze, PlayStation one, PSX, PocketStation, PlayStation 2, PlayStation Portable, and PlayStation 3. PlayStation was the first of its kind to ship 100 million units – a number it could achieve in 9 years and six months since its initial launching.
The concept was born in 1986. Nintendo had been trying to operate with CD-ROM technology but facing problems. Its rewriteable feature could be erased easily that meant it lacked durability. Moreover the discs were facing copyright infringement allegations. Nintendo contacted Sony to develop a CD-Rom add-on that was for the time being named SNES-CD. After the inking of a contract the work commenced. Nintendo pitched in with Sony because of something that had happened earlier. Yamauchi, refusing to accept this situation, secretly cancelled all other plans regarding Nintendo-Sony SNES CD attachment. The event was dramatic. When everyone was prepared at nine in the morning to hear about the partnership between Nintendo and Sony, Howard Lincoln the chairperson of Nintendo walked onto the stage and announced the alliance between Nintendo and Philips. Moreover it was said that Nintendo was going to abandon all the work hitherto done by Nintendo and Sony. Unknown to others the deal had been signed in the headquarters of Philips in Europe.
Sony forayed out alone to develop the console on its own. It then faced a lawsuit from Nintendo. However in 1992 a deal between the two was reached by which PlayStation would continue to have a port for SNES games but Nintendo would have independent rights and the lion’s share of the profits. SNES would be continuing the use of the audio chip designed by Sony. The PlayStation- apart from games can read as well as play CDs. It can orderly playback songs and repeat either one song or the entire disc (Wolf 57).
The home video game Wii of Nintendo is a 7th generation console and competes with Xbox 360 of Microsoft and PlayStation 3 of Sony. Its uniqueness is that it aims at wider demographic consumers then the previous two. March 2010 sales show that Wii is leading over Sony and Microsoft in this field in one month. The distinctive feature of the console is that it has a controller that is wireless. The remote is a pointing tool and has three dimensions. Moreover while on a stand-by mode it can receive updates and messages from the Internet. Wii is the 5th console of Nintendo. The console was first mentioned in 2004 and a prototype was shown at the time of the Tokyo Game Show in 2005. It won many awards in 2006 and was launched in four important markets. The man behind the game designing is Shigeru Miyamoto. The Wii is 1.5 to 2 times more powerful than Nintendo GameCube. Wii sounds like “we” indicating that it is meant for everyone (Perkins 113).
Works Cited
Marks, Aaron. The Complete Guide to Game Audio: For Composers, Musicians, Sound Designers, Game Developers. NY: Focal Press, 2008.
Perkins, Todd. Nintendo Wii Flash Game Creator’s Guide: Design, Develop, and Share Your Games Online. NY: McGraw-Hill Professional, 2008.
Wolf, Mark. The video game explosion: a history from PONG to Playstation and beyond. London: Greenwood Publishing Group, 2007.
Monopolistic competition is characterized by multiple firms that sell differentiated products. Advertising is a technique used by firms in monopolistic competition to create product differentiation. The goal of product differentiation and advertising in monopolistic competition is to make sure the the market is under control, and as a result, charge a higher price. Excessive advertising will serve to inform consumers about the physical difference in the product, and the perceived difference will lead to increased product differentiation.
If advertising in the long run convinces customers that the product is superior to the competitor’s, then the firm would charge a higher price (Arnold 241).
What role does advertising play for monopolistically competitive firms? Advertising will increase demand and reduce demand elasticity. As seen from the short-run equilibrium graph, Q gives the current profit-maximizing output at a price P. Therefore, advertising will increase the quantities of the product the consumers are willing to purchase, leading to a shift or a move in the demand curve to a higher level. The new demand curve will correspond to higher levels of quantity demanded and the prices given by Q1 and P1 (Arnold 245). As such, the role of advertising in monopolistic competition is monumental.
In monopolistic competition, the firm faces a comparatively elastic demand, and this limits the prices that can be charged on the product. To reduce demand elasticity, the demand curve will be relatively steeper, implying that consumers are likely to change their quantity demanded as a result of a change in price. As illustrated in the diagram, the firm can now charge a slightly higher price P1 for the same quantity, and this means the firm can collect more revenues for the same quantity Q sold at a profit-maximizing level of output (McConnell and Brue 494).
However, a monopolistically competitive firm cannot maximize profit when faced with inelastic demand because the marginal revenue (MR) is negative, implying that the marginal cost (MC) would be negative. Such a situation is not possible, where marginal revenue (MR) and marginal cost (MC) are both negative (Arnold 246). Excessive advertising could lead to inelastic demand, and the firm will have to increase the price to make demand elastic because profit is not maximized when demand is inelastic. (McConnell and Brue 489).
Advertising is expensive, and the firm will keep on advertising as long as the revenues generated from advertising are more than the cost of advertising. Monopolistic competitors advertise because the demand may increase and become inelastic, and, on the other hand, the marginal cost (MC) and average cost (AC) are likely to rise at the same time.
Advertising in monopolistic competition is excessive, and as long as revenues per product are more in comparison to an increase in average cost per product, it may not result in loses. One of the characteristics of monopolistic competition is relatively easy entry. Firms in a monopolistic competition market will use advertising to maintain their profits because advertising affects the products of the firm by increasing its demand.
Advertising in Oligopoly
The oligopolists can increase their market share through advertising, and they compete based on advertising rather than on pricing (McConnell and Brue 492). Excessive advertising by the Oligopolist is used as a barrier against the entry of other firms.
It is also used to inform consumers of new products in the market. Oligopoly advertising also leads to increased output pushing down the average total cost (ATC) curve towards the productive efficiency point, where the average total cost (ATC) is minimum. Advertising may also lead to manipulation as opposed to informing consumers.
Unique feature of oligopoly is mutual interdependence. To understand the interdependence behavior of oligopolistic firms, the technique of game theory is used as illustrated in the diagram, and it shows that the two firms are better off colluding than competing. At the top left shows that both firms A and B could earn 200 dollars profit each if they choose to advertise. At the right lower quadrant, the two firms can receive 250 dollars each if they both decide not to promote because there are no costs for advertising (McConnell and Brue 496).
At the lower-left quadrant, firm B decides to advertise while firm A does not advertise and, therefore, firm B will earn 350 dollars in profits, and firm A earns 100 dollars in profits. This is because advertisement attracts customers from firm A to firm B.
At the top right quadrant firm B does not advertise while firm A decides to advertise, therefore; firm A receives 350 dollars profits while firm B receives 100 dollars in profits because customers are attracted away from firm B. On the other hand, if the two firms chose to collude to advertise they would each receive 250 dollars profits.
In an oligopoly, there are few dominant players in the market, and each cannot fully influence the market independently unless they collude to influence and affect the price and demand. The use of advertising by oligopolists increases both market share and total demand.
In an attempt to gain a more significant market share, an Oligopolist will engage in fierce advertising competition trying to outdo each other. (McConnell and Brue 494). This scenario makes advertising in the oligopolistic markets to be extremely high. It is difficult to tell if advertising leads to improved consumer benefits and efficiency. However, if advertising results in more sales and increased output, this could lead to the efficiency of the firm.
It is costly to advertise and may lead to improved efficiency if costs are less than the benefits from sales. Advertising in monopolistic competition and oligopoly may have no direct relationship with the benefits to the consumer. However, if increased sales arising from advertisement leads to reduced prices, then customers will enjoy some benefits (McConnell and Brue 487).
Works Cited
Arnold, Roger A. Micro Economics. 10th ed. Washington, DC: Cengage Learning, 2010. Print.
McConnell, Campbell R. and Stanley L. Brue. Economics: Principles, Problems, and Policies. New York, NY: McGraw-Hill/Irwin, 2005. Print.
Within the last few decades, the general nature of strategies used in learning and evaluation of students’ progress in American schools has dramatically changed to coincide with changing educational needs and rapid advances in technology.
Consecutive studies have revealed that performance of students in educational tasks is affected by a multiplicity of influences that includes the social economic status, language barriers, school experiences, ethnic orientation and learning styles.
To date, the established explanatory models of educational performance have remained centered on internal characteristics to explain academic achievement, including unconstructive self concept, unproductive cultural attitudes and values towards education, bilingualism, low intelligence capacity, and apathy (Madrid et al, 2007, p. 155).
However, many educators are of the opinion that these explanations are not supported by available literature. In this respective, a significant debate interested in looking at how students can be assisted to achieve more optimally in class has been in the offing. It is the purpose of this paper to detail and compare cooperation and competition approaches in relation to learning and evaluation of student achievement.
Competition, Cooperation and Human Nature
Many of the challenges that plague education in the 21st century can be better comprehended when viewed within the context of competition-corporation framework. Before getting into educational matters, it is imperative to note how the two concepts influence human nature. It is indeed true that many of the greatest accomplishments made by Americans as a society can only be credited to their strong and passionate competitiveness.
This view can greatly be supported by the US enterprise system that instills competitive views into the human nature. According to Astin (2000), “individuals [should be] given the maximum opportunity to compete with each other for the largest possible share of resources and rewards in society” (p. 182). In cooperation, human progress is viewed as a manifestation of our capacity to cooperate with each other towards the realization of some common objectives.
This view holds that achievement in every faculty of life must never be perceived as a conquest in the struggle with other individuals or as a triumph of the environment (Astin, 2000, p. 183). Within cooperation activities, people work together to achieve shared outcomes that are beneficial to themselves as well as other group members (“Cooperative Learning,” n.d., para. 1).
Brief Overview of Cooperation and Competition Learning
Educators and policy makers have used the concepts of cooperation and competition to understand the learning process and evaluate students’ progress or achievement. Cooperative learning is the instructional utilization of group dynamics in the learning process, which enable the learners to work together in the effort of enhancing their own benefits as well as that of other students within the group (“Cooperative Learning,” n.d., para. 1).
In cooperative learning, students are organized into small groups after getting the learning materials and instructions from the teacher. Learners are then supposed to work on the given task until they comprehend it as a group, not as individuals. This concept reinforces the view that success in the learning process or achievement of students must never be perceived as a conquest in the struggle with other students.
Rather, students must work hard to achieve mutual benefit by helping each other in the group and learning from each other’s efforts. In other words, success must be seen to benefit all students within the group since they share a common objective, “knowing that one’s performance is mutually caused by oneself and one’s colleagues” (“Cooperative Learning,” n.d., para. 1).
Competition learning exists when one learner is able to achieve his or her own objective while all the other students fail in their attempts to realize that objective (Gurien, Henley & Trueman, 2001, p. 192). Competition learning can either be interpersonal or inter-group.
The practice of competition learning is based on the philosophy that students must compete in a class setting for them to be competitive and be able to comprehend their learning objectives. Competition learning is a rather conservative approach towards education that seems to suggest that a student can be assisted to achieve optimally in learning through engaging in active competition with other students.
For decades now, conservatives have been in the forefront in stressing the significance of competition among students, schools, administrative districts and states to bring out the maximum achievable performance among learners in school (Ediger, 2000, p. 1). The school voucher system and charter schools in the US are good reference points of how competition continues to be used in our educational system to ignite student performance.
Competition & Cooperation in Learning and Evaluation of Student Achievement
Educators believe that both cooperation and competition learning can be used in tandem to achieve high performance though they seem to conflict each other. According to Gurian, Henley & Trueman (2001), “brain-based research indicates that the ultimate classroom be based on both” (p. 192).
However, the function of this research paper is to detail and compare the concepts with the view of coming up with the best concept that can be used in learning and evaluation of student progress. Consecutive studies have revealed that cooperation learning achieves greater success than competition learning.
The capacity of students to learn and comprehend the instructions passed to them by teachers is fundamentally important. In the same vein, evaluation activities direct the progress made by students towards the realization of objectives outlined by their respective teachers.
Therefore, the capacity to learn and evaluation are indispensable facets of instruction at all levels. Evaluation is specifically important since it offers the mechanisms whereby the quality of classroom tasks and activities can be continually maintained and improved (Kolawole, 2008, p. 33).
It is also used to establish the level of understanding of the tasks taught. Evaluating the performance of students is the cardinal duty of teachers. In most occasions, learning and evaluation processes are time-consuming, cumbersome and requires a highly technical expertise and proficiency on the part of teachers. Despite their enormity, these are indispensable tasks that form the core of any instructional activity. Teachers generally use several techniques to influence successful teaching and learning processes.
Despite its many limitations, most educational systems globally are based upon competition among learners for marks, recognition, educational scholarships and admittance to high performing schools (Kolawole, 2008, p. 33).
Consecutive studies reveal that many societies and educational frameworks around the world still favor competition over cooperation. In this type of learning approach, students are overly concerned with their individual achievements and their place in the grade curve. The emphasis is put on achieving higher grades than everyone else.
Essentially, competition thrives in a win-lose relationship where high-performing learners reap all the benefits and recognition upon evaluation while low-achieving learners reap none. Traditionally, this was thought to be the best form of instruction strategy. In many educational systems, competition learning has been viewed as a stimulant to the growing brain (Gurien, Henley & Trueman, 2001, p. 193).
Proponents of competition learning argue that this strategy enables students to notice achievement through comparing their performance. This assertion validates the existence of the grading system that is immediately done after evaluating the students (Ediger, 2000, p. 12). It suggests that a student who receives the last grade may notice his failures and pull up his socks.
Proponents of competition learning also argue that it encourages teachers to work harder to reduce the gap in student achievement among diverse ethnic backgrounds and socioeconomic levels, not mentioning the fact that this strategy is instrumental in raising the test scores of students (Ediger, 2000, p. 12). Here, competition is perceived as a motivating factor towards optimal achievement in the learning process.
Advocates of this strategy assume that statewide testing and evaluation as well as local and international comparisons among schools and countries need to be made. Typical teaching paradigms comprise of individual students learning effort, differentiated by competitive evaluation to appraise student achievement and develop an evaluation hierarchy based on individual grades (Kolawole, 2007, p. 34).
Voices of criticism regarding the strategy have been heard from many quarters. Educators are concerned that this strategy fails all the other students in evaluation since there is only one winner. In many countries around the world, this strategy has been related to frequent student strikes as it is directly correlated to high anxiety levels and self-doubt especially when the students are sitting for their examinations (Astin, 2000, p. 184).
It is also related to selfishness and aggression among the students. Educational psychologists argue that the technique hinders the student’s capacity to solve problems not mentioning the fact that it promotes cheating. In the light of these disapprovals, it should be the prerogative of teachers to identify the types of competitive activities that are more likely to bring positive outcomes. Accordingly, competitive learning is most suitable when learners need to assess learned material.
In cooperative learning, there exists a positive interdependence between the learning procedure and the overall attainments of goals and objectives set by both the students and teachers. The basic philosophy is that “students…can reach their learning goals if and only if the other students in the learning group also reach their goals” (“Cooperative Learning,” n.d., para. 1).
The success of any particular project that may be used for learning or evaluation purposes is dependent on both individual contribution and the efforts of other students within the group to contribute the required knowledge, expertise and resources. Consequently, cooperation is viewed as a strategy of learning in which learners of diverse levels of ability and knowledge works jointly in small groups to achieve a specific purpose (Kolawole, 2007, p. 34).
Cooperative learning involves utilizing a multiplicity of learning activities to progress the students understanding of a particular subject. Here, learners in a group cooperate with each other, share opinions and information, search for additional information, and present their findings to the entire class (Kolawole, 2007, p. 34). Cooperative learning places special emphasis on the fundamental objective of learning rather than performing to achieve the set goals.
In this perspective, the technique encourages instructors to utilize alternative evaluation procedures, further curtailing the emphasis on competitive evaluations. Cooperation learning is fundamentally different from competition learning in that the latter demands students to work against each other for purposes of accomplishing an objective that only one or a few students can attain (“Cooperative Learning,” n.d., para. 2).
The cooperation concept has many advantages in relation to learning and evaluation of student performance. Educators argue that this technique helps to enhance student accomplishment and retention, not mentioning the fact that it increases self-esteem and intrinsically motivate the students to develop a more positive outlook towards learning and social skills (Kolawole, 2007, p. 34).
These are important achievements in the quest of transforming students to become better performers in educational and social fronts. In competition learning, there exists a negative correlation among goal accomplishments since students are made to believe that they can only achieve their objectives if and only if other students fail in the quest to achieve their objectives (“Cooperative Learning,” para. 2).
This is not good for the education system as it reinforces norm-referenced and criterion-referenced assessment in the achievement of goals. In competition learning, students must either work extremely hard to claim the top positions or fail to put in the needed efforts due to their own perception that they cannot be victorious over their counterparts. Cooperation learning is therefore superior since it brings all students along in the learning experience.
In cooperation learning, the instructors have the capacity to notice within the ongoing classroom activities what the students have learned and what needs to be learned. This is successfully done without the use of standardized evaluation tests or the above mentioned criterion-referenced tests (Ediger, 2000, p. 12).
Still, cooperation learning has the capacity to assist students contextually and chronologically in ongoing study lessons without necessarily having to rely on standardized evaluation tests as is the case with competition learning. It goes against the grain of focusing on self-interest and individual success that are the trademark characteristics of competition learning. What’s more, cooperation technique offers teachers the capacity to work together cooperatively in the quest to develop quality set of goals for students to accomplish.
Some disadvantages have been mentioned regarding cooperation learning. Educators have stressed the need for students to be allowed to learn at their own individual speeds. Some students are also known to take over the whole group at the expense of other students, while quiet students within the group may feel uncomfortable (Middlecamp, 1997).
This means that learning activities may be compromised or biased towards certain students if precautionary measures are not taken. Group dynamics suggest that individuals may not get along in a number of issues. This applies to the learning groups. Finally, some students feel that this technique lacks fairness as lazy students may take advantage of the hardworking students
Conclusion
According to Astin (2000),”human kind would certainly never have attained its place on the evolutionary ladder if it had not evolved through corporative as well as competitive learning” (p. 192). This statement shows the importance of both techniques in learning and evaluation of student achievement.
However, educational needs as well as socio-cultural and technological changes witnessed in the modern world demands specific adjustments in our educational systems if they are to remain relevant in the 21st century. The traditional model of competition learning may have served the needs of the education systems resoundingly well during the formative years.
But presently, corporation learning seems to have ready answers to a multiplicity of issues and challenges facing the education system. Educators need to filter the good outputs of competition learning and mix them with the good outputs of cooperation learning to come up with a hybrid system that will ensure the needs and requirements of education are met in the most comprehensive manner possible.
Reference List
Astin, A.W. (2000). Competition or corporation? Teaching teamwork as a basic skill. In:
D. Dezurre (Eds), Learning from change: Landmarks in teaching and learning in higher education. Routledge. ISBN: 9780749433963
Ediger, M. (2000). Competition versus corporation and pupil achievement. College Student Journal, Vol. 34, Issue 1.
Gurien, M., Henley, P., & Trueman, T. (2001). Boys and girls learn differently: A guide for teachers and parents. John Wiley and Sons. ISBN: 9780787953430
Kolawole, E.B. (2007). Effects of competitive and cooperation learning strategies on academic performance of Nigerian students in mathematics. Educational Research and Review, Vol. 2, Issue 1, pp. 33-37. Web.
Madrid, L.D., Canas, M., & Orteha-Medina, M. (2007). Effects of team competition versus team corporation in class wide peer tutoring. Journal of Educational Research, Vol. 100, Issue 3, pp 155-160.
Middlecamp, C. (1997). Students speak out on collaborative learning. Retrieved from <https://wcer.wisc.edu/>
Hayek (103) believes that when economists overemphasize the importance of perfect competition, they are actually ignoring the solution when the situation is imperfect. In fact, the concept of competition is even more important when the market is imperfect so they should strive at offering a solution to that situation.
Competition
A good solution to an economic problem should be one that gives answers to problems as they are and not as they should be. To this end, any prescriptions that start from the situation as it should be would not be very useful. For instance, in perfect competition, it is assumed that the products and services in the market are identical.
However, this is quite untrue in reality; people’s needs and knowledge vary tremendously so suppliers must respond by offering heterogeneous products. Additionally, human skills will keep varying from time to time with a high number of them changing for the better.
This means that the nature of services and goods will also alter in response to these skills changes. In essence, no two doctors can ever be the same and the services they offer may not always be the same. Therefore, studying a theory that assumes these doctors to be the same would be very appropriate academically but would not be very useful in the real economic environment.
Hayek (106) believes that competition is all about the spread of information. If people are aware of the possibilities within a certain market then they will be motivated to make efficient use of the resources. However, for that to happen, then the information being taken around must be constantly altered.
Economists advocate for a theory that presumes that these factors do not change and this defies the very essence of competition. In this regard, it may not be wise for economists to continue depending on the perfect competition model which must always leave all factors constant.
In order to place a certain argument in context, it is always crucial to understand the agents involved in the matter and time frame affecting them (McNulty, 81). For example, economic theories and models were created and propagated by certain individuals who analyze their economic environments within a certain timeframe. In essence, what this implies is that the theories they had created may have ceased to be relevant because the times and the environments they were analyzing may have altered.
Human behavior is never really constant so certain theories may soon become outdated or passed with time. Hayek’s argument that competition is always altering indicates that most of the information collected by economists would simply be outdated even within the span of one day. This casts doubt on a perfect competition model that presupposes no change in the market (Rizoo & White, 43).
The market is never filled with absolutes. In other words, it is rarely characterized by monopolistic conditions or perfectly competitive conditions. The former term refers to one end of the spectrum where no competition exists. Such a firm would be the only one offering a certain service and its output curve would be equivalent to the demand curve. However, such a situation rarely continues for long because other firms will leverage on the technology and methods used by the monopolistic firm in order to get a reasonable market share.
This implies that a producer may only be a monopoly for a while because other players in the field will always be willing to get involved. On the other side of the scale is perfect competition where new volume purchases for the products offered by each firm are quite low. The conditions for this to occur are: freedom to enter or exit the market by market players and offering homogenous products amongst other things.
The real market rarely falls in either one of these scales. Most of the time, suppliers will find themselves in between. Most of them seek monopolistic situations hence explaining why they always in engage in the process of research and development. On the other hand, when a near monopoly appears in the market, it is often the laws of competition that will intervene in order to let an organization know that there are certain advantages to be enjoyed through the use of technology.
Consequently this balancing of interests between the concerned groups eventually leads to a mixture of companies that are neither actual monopolies nor perfectly competitive firms (Ackerlof, 4). It should be noted that in a highly dynamic market, there are always challenges of developing a product or service that would be sufficient for monetary monopolistic tendencies. In other words, firms would simply need the conditions of a monopoly to last for an adequate period.
This would allow for the completion of a certain transaction. A new condition or prerequisite for being a monopoly may arise but at least this had allowed an organization to continually improve. Most organizations are often created as profit ventures. In other words, their major aim in the long run is to bring in profits. However, the perfectly competitive model assumes that in the long term, firms make negligible profit. This implies that most of them will not have an incentive to exist in the perfect competition model.
There would be no point for companies to use their creative genius in order to improve because there would be no profits to accompany these changes in the long run. When economists assess the market using a mechanical and unchanging method then they are largely ignoring the dynamic character of it. Effective solutions always tend to be those ones that embrace the continuum of firms between being perfectly competitive to being perfectly monopolistic.
This creates a flexible and creative way of solving the problems of the market. In fact, when the market is thought of as an open system then chances are that there would be greater accuracy in offering solutions. What this implies especially for today’s dynamic systems is that the market would be better understood when handled that way than when handled in the neo classical or traditional manner.
Hayek therefore believes that the free market in itself possesses the ability to deal with its imperfections. Therefore, contrary to certain understandings by adherents to economic models, it is possible to still handle the inconsistencies and dilemmas that arise out of an imperfect model of competition.
Hayek believes that this is best done through price. He claims that price contains an indication of practical knowledge within any specific market. Most often, this is related to the optimum costs of the goods and hence the actual optimum prices that they need to be (Stolyarov, 50).
Conclusion
In essence, neo classical economists who rely on the perfect competition model may have failed in their most central quest- to give actual solutions to real problems. Hayek (106) believes that it would be better to be more concerned with the analysis of the imperfect scenario because this would reflect actual facts. When economist can determine ways in which diversity in the market is combined with gaps in skills and information then that would be a more feasible direction.
Also, when economists can know how to tackle mistaken notions and their corrections in imperfect competition then this would also be more applicable. Finally, because the market possesses so many players with various expectations, it would be more informative to demystify the process of uniting these differences. In essence, when the market is thought to be a process instead of a system, then more tenable answers may be found.
References
Stolyarov, George. Austrian economics and Hayek’s view of the market process. Western man journal, 63(2005): 50
Hayek, Friedrich. Individualism and economic order. Chicago: University of Chicago press, 1948
Rizzo, Mario & White, Lawrence. Foundations of the market economy. London: Routledge, 1996
Microeconomics is the study of individual firms, consumers, and their market behaviors. As such, competition is one of the central aspects in a study of firms and their market choices. The leader of the international ice-cream market, Baskin-Robbins is faced with numerous challenges. Depending on firms’ marketing capabilities, rivalry can be a serious barrier to achieving their strategic objectives or the source of unique market opportunities.
The ice-cream market is run by few large firms, with millions of consumers purchasing ice-cream products on a daily basis. Apparently, Baskin-Robbins operates in conditions of oligopolistic competition, when “the market is dominated by a few firms, each of which recognizes that its own actions will produce a response from its rivals and those responses will affect it” (Rittenberg & Tregarthen, 2009). Really, interdependence is the distinguishing feature of oligopolistic competition.
Companies similar to Baskin-Robbins closely monitor the actions and decisions of their competitors. Moreover, in the ice-cream industry, which is worth unprecedented $20 billion in the U.S., increased gains from one ice-cream manufacturer are necessarily scooped from another one (Anonymous, n.d.). Therefore, each and every ice-cream producer, especially in the premium ice-cream sector, is willing to retain and expand its market share, to make sure that other rivals do not outperform them.
It goes without saying that Baskin-Robbins faces fierce competition in the U.S. and internationally. At the international level, Ben & Jerry, Wall, and Haagen-Dazs are its main rivals. The premium ice-cream sector is growing, too: in the United States alone, dozens of ice-cream producers are trying to beat Baskin-Robbins and win a better place under the competitive sun.
Haagen-Dazs, Carvel, Cold Stone, Dippin’ Dots, Dairy Queen, and Oberweis Dairy are fighting to become the next leader in the super-premium market niche. It should be noted, that Baskin Robbins faces three different types of competition.
First, direct competition is that which occurs among manufacturers of one and the same or similar products (Kurtz, McKenzie & Snow, 2009). Simply put, this type of competition normally occurs between Baskin-Robbins and its closest rivals, including Haagen-Dazs and Ben & Jerry.
Second, Baskin-Robbins is bound to fight with indirect competition, which comes from products-substitutes (Kurtz et al, 2009). For example, some people may prefer candy to ice-cream, and even the long history of ice-cream traditions in the United States will not secure Baskin-Robbins from these competitive risks. Eventually, Baskin Robbins constantly competes for consumers’ purchases (Kurtz et al, 2009).
More specifically, the firm competes for limited funds consumers are willing to spend on ice-cream (Kurtz et al, 2009). Given the tough economic conditions in the U.S. and the rest of the world, not everyone is ready to say good-bye to their dollars and spend them on ice-cream. Baskin-Robbins must be particularly compelling in its advertising messages, so that customers choose its products over those of its competitors.
How to increase Baskin-Robbins’ market power is a difficult question. The concept of market power in economics denotes firms’ ability to be profitable and charge prices above market equilibrium in long-term periods (American Bar Association, 2005).
Firms choose to increase their market power through acquisitions and mergers, changes in organizational structure, sophisticated branding strategies, and competitive pricing (Sawyer, 1985). In case of Baskin-Robbins, aggressive advertising and international market expansion will contribute to and strengthen its market position.
For example, Baskin-Robbins has recently signed a deal with the leading supermarket network of Great Britain: together with Morrisons, Baskin Robbins will market its best flavors in 500ml tubs all over England (Reynolds, 2010). As of today, Baskin Robbins is doing everything possible and impossible to acquire a major say in the international ice-cream industry, and most of its competitive strategies have already proved to be a remarkable strategic success.
References
American Bar Association. (2005). Market power handbook: Competition law and economic foundations. NY: American Bar Association.
