Examining the Market Structure of Barbershops - 1606 Words

E x t e n d e d e s s a y I n h l e c o n o m I c s T o p I c : Examining the Market Structure of Barbershops in West Amman I n t r o d u c t I o n For a male living in Amman, getting a decent haircut is quite an undertaking. I myself have witnessed this first hand, having tried over ten different barbershops and even trying to cut my own hair at one point but to no avail. The main problem I find here is the lack of expertise in most of these barbershops. None of them seem to have the appropriate training or the skills needed to be able to fully satisfy their customers and give them the perfect haircut. Looking at it from an economics point of view, I was very interested in finding out the market structure which†¦show more content†¦The demand curve for a monopolistically competitive firm is downward sloping but highly elastic due to limited price control. Firms will operate where their marginal revenue curve meets their marginal cost curve Ââ€" at their profit maximization point. Contrary to monopolistic competition, oligopolies involve much less competition with only a few large firms dominating the market and controlling most of the market share. High barriers to entry are set up which allow these firms to maintain their dominance as well as their profits. This market structure is characterized by the interdependent nature of its firms. In order for one firm to survive, it needs to closely monitor the behavior of its rivals. Each firm must consider the reactions of other firms when making their own decisions on output and price. This interdependence between firms is the main reason why oligopolies rarely compete over price. Firms are afraid of starting a price war . If one firm decides to lower its prices, the others will probably do the same in order to remain competitive, so they each manage to maintain the same market share relative to each other, but each one loses some revenue. Also it is not wise for a firm to raise it prices because consumers will t hen automatically switch away to buying cheaper substitutes from rival firms, and so its market share will fall drastically. Thus an oligopolistic firm faces not one but two demand curves, each with a different elasticity.Show MoreRelatedPlanning Is The Process Of Determining Appropriate Goals And Courses Of Action1401 Words   |  6 Pageswell as what the company does (i.e. selling goods or services) and who they do it with (i.e. people of certain demographic or geographic location). The next phase in the planning process is formulating a strategy. Formulating a strategy is done by examining a company’s present situation and creating strategies to overcome any challenges facing the company. This method gives people from different departments direction which is advantageous when attempting to achieve the company’s desired future stateRead MoreDiageo Marketing Strategy2798 Words   |  12 Pagesbrands than any other drinks company and market leadership in many of the major growth markets around the world. Diageo’s unique STP strategy has allowed it develop into a globally renowned brand with an operating profit of over  £2 billion in 2005. With its headquarters in London, Diageo has experienced rapid expansion with over 80 offices worldwide employing around 20,000 workers. The firm’s recent success can be largely attributed to its efficient market segmentation and product diversificationRead MoreMarketing Strategy and the Contemporary Challenges in Marketing Effectivness: a Case Study15886 Words   |  64 PagesTransport would be taken. Some of the theory revealed that organizations that engaged in strategic management generally outperform those that do not. The attainment of an appropriate match or â€Å"fit† between an organization’s environment and its strategy, structure, and processes has positive effects on the organization’s performance. For example, a study of the impact of deregulation on U.S. railr oads found that railroads that changed their strategy as their environment changed outperformed those that didRead MoreQmb 360013075 Words   |  53 Pagesprice break by buying ice in bulk. Second, the cost of larger iceboxes can be spread over more units (sales), keeping the cost per sale low. Text problem p. 279 also asked for conditions that might lead to diseconomies of scale. PROBLEMS 1. Bill’s Barbershop a. B3-a = 10+8+15+20+9 = 62 minutes B3-b = 10+8+10+20+9=57 minutes b. B4 c. process cycle time is 20 min./60 = 3 customers/hr. (8 hrs) = 24 customers per day 102 PART 2 Managing Processes 2. Barbara’s Boutique a. 3 [the bottleneck is