GECO6410-M1-Wang

ShiYi Wang (Angie), Student No. 3105989, Total page: 10
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Individual Case Study Paper
Case Study
The Competitive Analysis of farming, car and restaurant
industry in various market structures
.
Lecturers name: Allan McHarg
Name: Wang Shi Yi
Course Code: GECO6410
Course name: Economics of Competitive Advantage
Assignment Number/Name: MA1

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Table of Content
1 Executive Summary_______________________________________________________________________3
2 Current Competitive Situation _________________________________________________________3-7
2.1 Introduction ____________________________________________________________________________
2.2 Farming in Perfect Competition _______________________________________________________
2.21 The nature of competition in farming industry __________________________________
2.22 Profit Maximization for the Perfectly Competition Market_______________________
2.3 The restaurant industry in Monopolistic Competition_________________________________
2.4 The car industry in Oligopoly____________________________________________________________
2.5 The comparison of nature of competition_______________________________________________
3 Critical Evaluation _______________________________________________________________________7-9
3.1 Company’s competitive variable and strategies in farming industry______________
3.2 Company’s competitive strategy in car industry_______________________________________
3.3 Company’s competitive strategies in restaurant trade________________________________
3.31 Differentiation strategy_________________________________________________________________
3.32 Market Segmentation____________________________________________________________________
4, Recommendation______________________________________________________________________9-10
5 Conclusion__________________________________________________________________________________10
6 References______________________________________________________________________________10-11

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1 Executive summary
The aim of this paper is to evaluate the nature of competition in the farming, the car and
the restaurant industry with different competitive variables in the various market structure
models-perfect competitions, Monopolistic Competition, and Oligopoly. With respect to the
competitive situation analysis, the major competitive variables and a critical evaluation of
the company’s competitive strategies are made in farming, car and restaurant industry.
Finally, Recommendation for strengthening the competitive differentiation, cutting cost,
doing more research and using SWOT analysis are strongly suggested.
2, Current Competitive situation
2.1 Introduction
Competition is a contest between individuals, groups, nations, animals, etc. It arises
whenever a goal is aimed by two or more parties which can’t be shared. In economics, it
refers to the rivalry in supplying or acquiring an economic service or goods, it is like Sellers
compete with other sellers, and buyers with other buyers (Answers, 2010, P.2). In general,
competition can generally be classified into four main market structures by economists:
perfect competition, monopolistic competition, oligopoly, and monopoly (Boyes. W, 2004, P.
127).The basic differences are summarized by table 1 among these four types of
competition as follows:
Table 1:
Types of Competition and comparison
Characteristics Perfect Competition Monopolistic
competition
Oligopoly Monopoly
Number of
competitors
Many Large Very Few One
Entry Condition Easy Easy Impeded None
Similarity of Identical Differentiated Similar or different No directly competing
products
Examples Farming Restaurant Automatic Power company

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2.2 Farming in Perfect Competition
2.21 The nature of competition in farming industry
The perfect competition is best reflected by the Farming industry in real life. Perfect
competition is also called pure competition, which exists when a large number of sellers
produce products or services that seem to be identical, and any firm can entry and leave this
industry easily (enotes, 2010, P.1). There are very few industries would fall in this group,
agricultural products can be of considered to be the closest example in today's economy
(enotes, 2010, P.1). Take corn for example, each farmer grown virtually identical corn, the
corn are just generic products and no brands, and it is no difficulty for farmers to entry and
leave this industry.
2.22 Profit Maximization for the Perfectly Competition Market
When a Marginal revenue is equal to the marginal cost: MR=MC, the profit is at a maximum.
The figure as below illustrated the company maximizing its profit in a perfectly competitive
market (Boyes, W, 2004, P.129)
2.3 The restaurant industry in Monopolistic Competition
Monopolistic competition is a form of imperfect competition where the competitors sell
different products. Barriers to entry are not too high and it is easier for new companies to
entry this industry. Many companies fall under this group. Products can be differentiated
and more attractive by using the different competitive variable such as price, quality,
advertisement, packing, promotion, and service etc.The best example in monopolistic
competition is the restaurant business. There is a huge variation in the type of food served
by restaurants, both in quality and regional variety. The restaurant owner try to make better
quality, more delicious food and design to serve customers and get more market
competitive advantage. At the same time, this also implies that restaurant owners, unlike
farmers, have some control over price in this market structure. The restaurant owners can
make lower price to attract more customers, and the selling price can be altered as long as
consumers are still willing to buy its product at the new price.

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This exhibit as below illustrates in the monopolistic competition, when a Marginal revenue
is equal to the marginal cost: MR=MC, the profit is at a maximum (AmosWEB, 2000-2010,
P.1)
2.4 The car industry in Oligopoly
There are very few competitors in oligopoly and it is difficult for competitor to entry or leave
this industry because a large investment is required to enter this industry. The auto industry
is closer to an oligopoly because there are very few dominate brands such as Ford, Chrysler,
Toyota, Buicks and Nissan. The products offered by automakers in an oligopoly are
differentiated, each brand has their own feature and advantage, and for example, Buicks
differ from Fords and Nissans. In the auto industry, it is very difficult for the new brand to
entry this market because the high barriers and large investment required in the oligopoly
markets.
Oligopolies interact among themselves. When one company changes a price, it must
consider how other firms will respond in this industry. In an oligopolistic industry, if firms
cooperate and trust with each other, then they can theoretically maximize industry profits
by setting a monopolistic price. If oligopolies collude successfully, they will set price and
output at MR = MC for the industry overall. Pa and Qa is depicted as the figure below, when
the price and output move to Pb and Qb, the profit maximization will be achieved in a
competitive market (AmosWEB, 2000-2010, P.1).

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Oligopolistic Profit Maximization
2.5 The comparison of nature of competition and competitive variable
Product differentiation distinguishes a perfectly competitive market from a monopolistically
competitive one. In perfect competition, there are many competitor, they produce the
identical product, and the market is pretty easy to entry. It can be shown in the farming
industry. In the farming industry, take wheat for example, the product is same provided by
different competitor, the market is easy to entry, and no brand to be compared by
customers. But if one farmer has the better market facilities, more market information,
agricultural knowledge, technology and good cooperation with production and transport,
then this farmer will has more competitive advantage in the market.
When the company enter a monopolistically competitive market, they produce the different
product, for instance, in restaurant industry, there are large competitors, but the entry is
very easy, so each restaurant owner use the different competitive variable to attract
potential customers, then increase the competitive advantage. The competitive variable is
outlined clearly by table 2 under five mainly factors of the Service Quality, Existing
Feasibility, Personnel MGMT, Supplier Relation (Economic & Business Studies,2001,P.11).

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Table 2:
Five mainly factors
Competitive
Variable
Service Quality Feasibility Personnel
MGMT
R&D ACTIVITIES SUPPLIER
RELATION
Product Quality Efficient
personnel
number
Training Specialised products Cooperation with
supplier
Advertisement Personnel wages Marketing research Flexibility of suppliers
promotion Workplace Size Variation of product Cost of product
Packing Technology
on time delivery Personnel cycle
speed
Comparing with the perfectly competitive and monopolistically competitive market, it is
more difficult to entry into an oligopoly (Boyes,W,2004,P.135).In the oligopoly competition,
there are very few competitors, and the product offered by the firms in an oligopoly may be
differentiated or same, company take the various competitive variables to increase own
competitive advantage. The product quality, advertisement, promotion, evaluation of
Customers complaints, personnel training, and technology are also the competitive variable
suitable for auto industry, but the branding, scale, and production efficiency and flexibility
can be more essential competitive variable to benefit the car industry and increase its
market competitive ability.
3, A Critical evaluation of the company’s competitive strategies in farming, car and
restaurant industry
Given the above situation analysis, there appear several major success factors in company’s
competitive strategies of farming, car and restaurant industry.
3.1 Company’s competitive variable and strategies in farming industry
The farming industry exist in the perfect competition. Many competitor product same
products and service, and It is pretty easy for any firm to entry and leave the industry. In this
industry, several competitive strategies and variables can be considered as follows:
First of all, improving marketing facilities, strengthening the marketing and agricultural
knowledge. After that, famers can improve the agricultural productivity. Most of the

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farmers suffer from the productivity loss because of inadequate marketing facilities such as
no-availability of the inputs, lack of basic infrastructural facilities, price fluctuations and
fundamental knowledge in the field of agriculture (World agricultural group, n.d, P.1).
Secondly, Ensuring the efficient coordination between production, transportation,
communication and storage facilities (World agricultural group, n.d, P.1)
Lastly, Market information is another important aspect. The Information of production,
market arrivals and day to day prices are essential for farmers in order to withstand the
prevailing situation.
3.2 Company’s competitive strategy in car industry
In the auto industry, there are very few competitors, and the products are differentiated. In
order to increase own competitive advantage, reach more customers, get more market
share, there are top three drivers of competitive advantage for car manufacturers can be
used. Beside the competitive variable of advertisement, promotion, packing, customer
service, technology and employee training used in restaurant industry, the branding, scale,
and production efficiency and flexibility are also the key strategic drivers in the automotive
industry (Booz Allen, 2004, P.1). It is essential for the automaker to focus on more in brand
communication and product development.
3.3 Company’s competitive strategies in restaurant trade
3.31 Differentiation strategy
In the restaurant industry, there are many competitor in this industry, as well it is very easy
for the competitor to entry this industry, so the company should constantly differentiate
their products and service to create a competitive advantage. The business owner in
restaurant industry uses various competitive variables to improve the competitive
advantage. It is like mentioned before, this specialty can be associated with advertisement,
design, packaging brand image, promotion, technology, features, dealers, network, or
customers service, supplier relation etc.
3.32 Market Segmentation,
In the market segmentation, the company focuses on a few target markets. The products
depend on the needs of the selected segment and the resources and capabilities of the firm
(Wikipedia, 2010, P.1). This strategy can be applied in the restaurant industry. The
restaurant owner can introduce the special meal such as vegetarian meal, diet meal to the
target customers who more care about their health and body weight.

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4, Recommendation
According the analysis of competition, a number of recommendations are suggested:
4.1 Strengthen the Competitive differentiation.
Competitive differentiation is used extensively in the monopolistic form of competition and
can also be applied in Oligopoly. In order to compete, company must find their ways to win
consumers. Competitive differentiation is the one way for businesses to accomplish this.
When the product or service offered by a company is different from another competitor,
then the competitive differentiation occurs (enotes, 2010, P.1). In the auto industry,
Competitive differentiation may be an actual difference, such as a longer warranty or a
lower price, but often the difference is only perceived. Difference in perception is usually
accomplished through advertising, the purpose of which is to convince consumers that one
company's product is different from another company's product. In the restaurant industry,
a better-quality product, better service, better taste, or just a better image are all the ways
to differentiate a product or service of with others.
4.2 looking for ways to cut costs and increase productivity.
In order to increase the productivity, the company must constantly be looking for ways to
cut costs whatever in farming, car or restaurant industry (enotes, 2010, P.1). One way to
create competitive advantage is through the use of technology to speed up the production
process, such as the use of robots or production lines (enotes, 2010, P1). The use of
computer system in the car, farming and restaurant industry can bring more accurately and
quickly information, as well as assist in research and development proceedings.
4.3 Doing more research and using SWOT analysis
It is recommended to do research and development and being the first to provide a new
product or service can give a company a competitive advantage in the marketplace (enotes,
2010, P.1). In restaurant industry, if one restaurant did more research and learn more
about the demand of customers, then develop one new food with best quality, lowest prices
or best customer service, after its competitive advantage must be increased greatly ,then
get more customers.
To determine an area where a company might have a competitive advantage, a SWOT
analysis is often done to identify the company's internal Strengths, Weaknesses, the
external Opportunities and Threats (enotes, 2010, P.1). In the restaurant industry, there are
many competitors, and the market is easy to entry, so it is very important to use a SWOT

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analysis and lets the company know in which areas it has a competitive advantage, so it can
concentrate on those areas in the production and marketing of its products or services.
5 Conclusion
The nature of completion in farming, car and restaurant industry has been discussed and
evaluated by this report in relevance to applicable market competitive theory. Also, the
report has been explained how company use effective competitive variable and strategies to
increase the competitive advantage in the different industry.
6 Reference
Boyes, W. (2004) The New Managerial Economics. Houghton Mifflin Company: Boston.
eNote.com, Inc (2010) Encyclopedia of Business and Finance –Competition, Retrieved April 5,
2010 from
http://www.enotes.com/business-finance-encyclopedia/competition
Wikipedia (2010) Porter generic strategies, Retrieved April 9, 2010 from
http://en.wikipedia.org/wiki/Porter_generic_strategies
World agricultural group (n. d) Rural Agricultural Marketing Competitive Strategies and
Effective Infrastructure, Retrieved April 9, 2010 from
http://www.world-agriculture.com/agricultural_marketing/rural_marketing.php
Booz Allen Hamilton Inc (2004) Strategic Competitive Advantage in the Global Automotive
Industry, Retrieved April 10, 2010 from
http://www.boozallen.com/consulting/industries_article/659305
AmosWEB (2000-2010) Monopolistic Competition, Profit Maximization, Retrieved April 10,
2010 from
http://www.amosweb.com
Economic & Business Studies (2001) the Fundamental Competitive Strategy in Service
Industry, Retrieved April 2, 2010 from
http://fbe.emu.edu.tr/journal/doc/1/1Article01.pdf

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