How to Find, Capture, and Control the Most Lucrative Markets in Any Assignment

How to Find, Capture, and Control the Most Lucrative Markets in Any Business - Assignment Example In order to compete effectively, the business unit needs to adopt the strategy which motivates the customers to buy the product and use the service of this business unit.   For example, the product line can be very differentiated or innovative, the appealing marketing campaigns, the exclusivity of the service, and, of course, the price should be maintained lower than competitors.   Nevertheless, the lowering of price does not guarantee success on the market.   The monopolistic or perfectly competitive firms do not have to consider the price setting of the rivals but the oligopolistic or the monopolistically competitive firms do.  If the company is producing the unique good and no substitutes exist, and the other firms are prevented from participation in production by some barriers, such as patent rights, the market for this good becomes monopolistic. The perfectly competitive firm has an influence over the market price by deciding how much the good should cost – the pr oducer does not have to adjust the price of the good to the market price. Monopolistic firms are price seekers, not price takers (Lele 2005). Therefore, monopoly grants the right to control the market, even though the firms still have to find the optimum price for their product – the buyers can refuse to buy at the price they consider too high for the value they get.  The monopolistic business unit has the strategy of finding the level of output that maximizes the profits and minimizes the losses – the same for perfectly competitive firms. The most profitable level of production in monopoly is when marginal cost equals marginal revenue – in the case with perfectly competitive firms, the marginal cost should equal the average revenue (price). Monopolistic firms are profitable, but unlike competitive firms, the new firms are not attracted into the industry. If the market is competitive, the new entrants ensure the increase in output and, as a result, the fall in price. Monopolistic market structure blocks such entries and therefore the price remains at the most suitable for the firm level (Kreps 1990).