Microeconomics: Differentiating Between Market Structures in an Essay

Microeconomics: Differentiating Between Market Structures in an Organization

Microeconomics

Electronics Industry

The electronics industry has become one of the largest and fastest growing industries which generate billions of dollars every year. The major products of this industry include personal computers, laptops, mobile phones, televisions, digital cameras, music players, telephones, speakers, recording media, and all types of accessories for these products. The operations, performance, and profitability of the participants of electronics industry is affected by a large number of market forces like technological advancements, competitive pressures, consumer behavior, governmental policies, and economic situations of the target countries.

Sony Electronics Corporation

Sony is one of the top market leaders in the electronics industry of the world. It manufactures, promotes, and sells a large variety of electronics and technological products at very competitive prices. The Sony products are recognized all over the world for their quality, reliability, and a real value for the customers' money. The success of Sony can be attributed to its focus on innovation and quality management which enables it to produce world class products after extensive research and development. The world's electronics market in which Sony operates is dominated by a few large competitors that compete with a large number of small and medium scale local and international brands. These large competitors create an oligopolistic competition in the industry. However, the presence of a huge level of competition has transformed the market structure of this industry from oligopoly to monopolistic competition where manufacturers offer the same product line with differentiation and variations. The biggest market force which has helped in this transformation process is the rapid advancements in the field of Information Technology and Computer Sciences.

The monopolistic market structure has been created because there are a large number of manufacturers that produce heterogeneous products with slight variations with respect to their features, functions, quality, and raw material.These variations enable the manufactures to charge different prices for their products as compared to their competitors (Hall & Lieberman, 2010). Converse to the monopolistic competition at a larger scale in the electronics industry, there is a perfect competition and oligopoly for a few product categories. These alternative market structures are not adopted because the competitive pressures have made it impossible for the firms to compete just on the basis of prices while keeping the products identical. Therefore, companies have to regularly introduce new products to the market which are different from any other similar products available in the market. Monopolistic competition also allows no barriers to entry or exit for new and existing firms respectively. There is an open competition in the world's electronics and IT market which largely facilitates the new entrants by offering attractive growth opportunities and potential market segments. On the other hand, oligopolistic competition is avoided in this industry due to tight barriers to entry and low growth for small and medium scale competitors.

Strategies to use in the Long run

1. Differentiation Strategy:

In order to operate in the presence of a strong competition in the most competitive and profitable fashion, Sony should use differentiation strategy for all its electronics and technological products. The competition from the local and international electronics brands has thrown numerous identical and heterogeneous products in the market which has significantly increased the choice of customers among different brands. The differentiation strategy will enable it to manufacture, promote, and present its products in a unique way (Ferrell & Hartline, 2011). It will distinguish its products from all the available alternative choices. For example, improvements in the product design (exterior look, features, etc.) and process design (performance, quality, software compatibility, performance, etc.) will bring new products to….....