Group Name- Success Hunter Group No- 5 Name ID MD. ABUL KASHEM 106 MD. AHIDUZZAMAN 107 MD. ZIAUL HUQ 130NIMAI KUNDU 131MD. ASHKUR RAHMAN 137 MD. NOMAN HOSSAIN 141MD. SAHED ALI 155G.M. SORWAR HOSSAIN 162
Meaning of market power Market power is the power held by a firm over price and the power to subdue competitors. Market power is the ability to control the terms and condition of exchange. Market power is the ability to raise prices without losing all one’s customer to competitors.
Importance of Market power Infinite Buyers/ Infinite Sellers. Zero Entry/ Exit Barriers. Perfect Information. Zero Transaction Code. Profit Maximization. Homogeneous Products. Efficiency of Perfect market. Existence of a general equilibrium.
What is monopoly market Monopoly is the situation in which a single company owners all or nearly all of the markets. In such an industry structure, the producer will often produce a volume that is less than the amount which would maximize social welfare.
Characteristics of Monopoly Price control. Increased scope for mergers. Legal sanctions. Predatory pricing. Price elasticity. Lack of innovation. Lack of competitor. Monopoly litigation.
Competitive Market and its typesA market in which there are enough small buyers and sellers of an identical product that no single buyers or seller is sufficiently large to affect the market price.Types:(1)Monopolistic Competition.(2) Oligopoly.
Characteristics of Competitive Market Many buyers and sellers. Standard product. Easy entry and exit.
Arguments for monopoly Advantage of Economic of scale. Advantage regarding Research and Development. Advantage regarding Extension of Consumption. Trade Cycle. Low or no Advertising Cost.
Arguments for monopoly Regarding extension of consumption Trade Cycle Advantage of Economics of scale. Advantage regarding research and development. Advantage Low or advertising cost
Arguments against Monopoly Disadvantage regarding redistribution of income Allocate inefficiency Lack of efficiency. Setting up more prices. Produced goods may be of low quality Political unfairness Hamper the advantage of technology Reduced employment opportunities The price of material is always poor abnormal profit
Arguments for Competitive Market Market power. Product Differentiation Number of Competitors. Barriers to entry. Elasticity of Demand. Excess Profits. Profit Maximization Price quantity and profit issues.
Arguments against Competitive Market Profit is Main Motto. Unhealthy Competition. Excessive product differentiation. Free excess in the market. High cost of advertisement Cheating.
Threats for Monopoly Breaking up monopolies. Business ethics in the face of monopolistic market Law
Threats for Competitive Market Easy Access. Government intervention. Homogenous products. Global market place Syndicate. Customer Choice. Political preference
Present Market Power of Bangladesh The economy of Bangladesh is constituted by that ofa developing country. Its per capita income in2008was est. us$1500(adjusted by purchasing powerparity) significantly lower than India, Pakistan , bothwhich are also lower than the world average of$10.497According to the gradation by theInternational Monetary Fund, Bangladesh ranked asthe 48th largest economy in the world in 2008, with agross domestic product of US$224.889 billion. Thehas grown at the of 6-7 percent over the past fewyears.
Agriculture• Rice and Jute are the primary crops• Tea , vegetables are assuming greater importance.Manufacturing & Industry• 1.5 million were employed in garments sector.• Bangladesh has overtaken India in apparel exports in 2009.• In 2001-2002.garments export was 52 percent of total export.Textile sector• It includes knitwear and ready-made garments along with specialized textile product.• It is the nations number one export earner.• Bangladesh is 3rd in world textile export.
Foreign RemittanceFiscal Year Total Export Total Import Foreign Remittance Earnings2007-2008 $14.11b $25.205b $8.9b2008-2009 $15.56b $22.00b $9.68b2009-2010 $17.6b N/A $10.87b
Macro- economic TrendYear Gross Domestic U.S Dollar Inflation Per Capita Product Exchange Index(2000 Income as % =100) of USA1980 250.300 16.10TK 20 1.791985 597.318 31.00TK 36 1.191990 1.054.234 35.79TK 58 1.161995 1.594.210 40.27TK 78 1.122000 2.453.160 52.14TK 100 0.972005 3.913.334 63.92TK 126 0.952008 5.003.438 68.65TK 147
MergerMerger refers to the combining of two or moreentities into one, through acquisition or apooling of interest.
Causes of Merger• To perform better• To reduce competition• To get momentum• To change their position in the market• To use competitive advantages• Greater value generation• Economics of scale• Market Share• Cost efficiency• Tax gains
Importance of Merger Administrative benefits• Financial leveraging• To improve profitability• To increase EPS• To increase higher competitiveness• Introduce new product in the market• To get distinctive advantages• To get monopolistic advantages• Positioning• Skilled human resource
Dangers of Mergers• Age of firms• Size of firms• Technology• Management style• Type of employees• Legal expenses• Cost of takeover• Bad impression• Decline price in equity price & investment value• Suppressing of competing business
AcquisitionAn acquisition is also known as a takeover or abuyout, is the buying of one country by another.
Causes of Acquisition• To expand activities• To acquire new business• Good image• Demand in the market• Reduction of cost• Increase depth of product line• Limiting opportunities for key customer• Public relation• Keeping present management team busy
Importance of Acquisition• Strong market position• Complementary skill set• Improved profit• Geographic expansion• Access to new customer• Cost reduction
Danger of Acquisition• Concealed problem• Costs of acquisition• Inadequate valuation of firm• Integration difficulties• Style of management• Large or extraordinary debt• Inability to achieve synergy• Unqualified human resource• Volume of activities