This document discusses different types of market structures: - Perfect competition has many small competitors, identical products, easy entry and exit into the market, and competitors have little control over price. - Monopolistic competition has many competitors but differentiated products, easy entry and exit, and competitors can control price to some degree. - Oligopoly has a few large competitors offering similar or differentiated products, difficult entry and exit, and competitors have significant control over price. - Monopoly has a single dominant competitor, barriers to entry, and full control over price. The document analyzes Walmart's market structure and impact on suppliers and concludes it exhibits characteristics of both oligopolistic and monopolistic competition.

1. TYPES OF
COMPETITION
Introduction to Business
2/2009

2. MARKET STRUCTURE
PERFECT
MONOPOLISTIC
OLIGOPOLY
MONOPOLY

3. PERFECT
• NO• SAME
• MANY• EASY
Ease of
Entry
COMPETITORS
CONTROL
OVER
PRICE
PRODUCT
S

4. PERFECT

5. MONOPOLISTIC
• YES• DIFFEREN
TIATED
• MANY• EASY
Ease of Entry COMPETITORS
CONTROL
OVER PRICE
PRODUCTS

6. MONOPOLISTIC

7. OLIGOPOLY
• YES• SAME-
DIFFERENT
• FEW• DIFFICULT
Ease of Entry COMPETITORS
CONTROL
OVER PRICE
PRODUCTS

8. OLIGOPOLY

9. MONOPOLY
• YES ( under
LAW regulation)
• -
• NONE• DIFFICULT
Ease of Entry COMPETITORS
CONTROL
OVER PRICE
PRODUCTS

10. MONOPOLY
A monopoly is a company
that dominates and controls
a specific industry.

11. QUESTIONS & ANSWERS
From Wal-Mart ‘s case study

12. 1. What industry Wal-Mart
is competing in?
GENERAL
MERCHANDISE
RETAILING
INDUSTRY

13. 2. Which market structure should Wal-
Mart be considered?
Monopolistic
• There are a lot of retailers (competitors) like Wal-Mart in the market.
• It is easy to be general merchandise retailers.
• Wal-Mart can control over the price by dumping it down while
others(small retailers) cannot.
• The products are differentiated by product testing tactics to
let the customers perceived that they are The new, improved Great
Value products and redesigning Great Value packaging graphics
although it may be still similar or same.
According to
theory

14. Wal-Mart
might be
considered as
“Oligopoly”
Wal- Mart is the 1st in
retailing market.
In a world where most
retailers are categorized as
having a monopolistic
competition market
structure, Wal-Mart Stores
Inc. appears to have an
oligopoly market structure.
Nevertheless, because
there are far too many
retailers to deal with, then
they also have a
monopolistic competition
market structure.
Regardless, Wal-Mart would
rather have it this way
because it has not hurt them
at all by having competition.

15. The other general merchandisers cannot exist.
The customers buy the cheaper products at only Wal-Mart.
More convenience More services
The other small retailing businesses can’t cut their price like Wal-Mart
( cannot compete with Wal-Mart’s dumping )
When the prices at Wal-Mart are much lower.
3. Which determinant of demand/supply is affected causing change in
demand/supply of products in the general merchandise industry? How? Explain
and draw the diagram to illustrate the effect.
PRICE
DETERMINANT

16. 4. As the result of Wal-Mart’s action, which determinant of
demand/supply is affected causing change in demand/supply of
superior products? How? Explain and draw the diagram to illustrate
the effect.

17. LEVI top brands had
declining sales
Levi hooked up with Wal-Mart to
produce a low cost jeans.
The price pressures meant that Levi
Strauss has ceased all manufacturing
operations.
Resells Asian-made jeans under its
trademark. Its quality is far inferior to
the original one.
They're cannibalizing sales of Levis top
brands.But the new jeans are cheap.
EXAMPLE OF EFFECTS from Wal-Mart to Superior Products
Wal-Mart has
squeezed suppliers till
they scream, and
forced them to move
jobs abroad to keep
cutting costs