There are various elements you must meet in the Overall Market section of your paper. I will summarize these requirements here, and then you can use the corresponding numbers (in bold) to find examples of each within the sample paper that follows.
Market Share
Market share is the percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. You’ll need to cover the following in your paper:
(1) Discuss the market share of the firm and its top competitors
(2) Provide detail on the current percentages for your firm and its top competitors (For more detail on finding market share data, take a look at this post.)
(3) Present the data graphically
(4) Describe the trend over time
Barriers to Entry
Barriers to entry represent something that keeps new firms from entering an industry in which firms are earning economic profits. The most common barriers to entry are economies of scale (when a firm’s long-run average costs fall as the firm increases output), ownership of a key input, or government-imposed barriers (such as patents). You’ll need to cover the following in your paper:
(5) Analyze the barriers to entry in this market
(6) Illustrate the potential for new competition and the impact on the firm’s future in the market
(7) Provide specific examples of successful and/or failed entrants into the market
Market Structure
There is a chart on page 392 of your text that shows the characteristics of the four different market structures. Ideally you will cover the categories that define market structure (ease of entry, type of product, and number of firms) to justify your choice of market structure. You must decide whether your industry represents perfect competition, monopolistic competition, oligopoly, or monopoly, while making sure to use proper terminology. You’ll need to cover the following in your paper:
(8) Describes the market structure for this firm
(9) Accurately analyzes how the market structure affects the firm’s ability to influence the market
(10) Provide specific examples to demonstrate the market structure and firm’s influence
Here is a sample of an exemplary paper on The Hershey Company:
Overall Market
(1) The confectionery market consists of about 150 U.S. candy makers with “Mars and Hershey controlling around 75% of the national chocolate market, and 60% of the US candy market overall” (Kahn, 2013). As illustrated in the graph below, Hershey is shown as the top leader with 44.2% of the U.S. market share. (2 and 3 in graph below)
Figure 2. U.S. Chocolate Market Share, 2014. Adapted from U.S. market share of chocolate companies, 2014 | Statistic. (n.d.). Retrieved from http://www.statista.com/statistics/238794/market-share-of-the-leading-chocolate-companies-in-the-us/
In the global market, Hershey is one of the top ten leaders’ with continuing efforts to expand into the emerging global market to support consumer demand and improve international sales.
Figure 3. Top Ten Global Confectionery Companies, the symbol * includes the production of non-confectionery goods. Adapted from The Chocolate Industry. (2015, January 23). Retrieved from http://www.icco.org/about-cocoa/chocolate-industry.html
(4 and 10) In the 1960s, when consumers wanted to purchase chocolate, they would head down to their local candy maker. The owners had such passion for making chocolate they would spend long hours coming up with unique original recipes specific to their shop. As the market grew, so did the pressure to compete against the big players. The neighborhood candy makers slowly found themselves being bought out by these big companies. In 1963, Hershey purchased Reese’s and then bought Almond Joy. Nestle jumped on board and bought Goobers and Bath Ruth. For the local shops that resisted the takeover, they were now struggling to stay afloat (Kahn, 2013). In the 1970s, a popular candy named Heath Bar caught Hershey’s interest and when the company offered to buy them, Health declined. Hershey ended up buying the “original recipe from another company and introduced the Skor Bar to compete head-on” (Kahn, 2013). As a result, Health sales plunged and in the end, Hershey bought the company. It was through strategic planning and financial leverage that the big players were able to consolidate the market by bringing the number of candy makers down to around 150 producers (Kahn, 2013). (8 and 9) Now, with only a few companies dominating the market and the high entry barriers for new firms wishing to enter the industry, the confectionery industry is viewed as an oligopoly market structure. (10) The four-firm concentration ratio for the confectionary industry is 84.3%, which makes it clear that the confectionary industry is dominated by a few major players.
(5 and 6) It’s not easy for small candy makers to enter the marketplace mainly because they lack the funds and leverage needed to promote their products on store shelves. Also, they are not in the financial position to offer discounts or deals, which is often expected by the retail chains (Kahn, 2013). (7 and 9) Hershey is the dominant player in the U.S. market and is working towards gaining more market share in the international arena. The company is now opening a new facility in Malaysia, “one of the fastest-growing regions for its products, and they invested $250 million USD representing the single-largest investment in Asia during the company’s 18-years history in the area” (DailyFinance, 2013). The new facility location was deliberately chosen to provide “easy distribution access to more than 25 markets across Asia” (DailyFinance, 2013). To keep up with consumer demand, the company will utilize proprietary equipment and systems designed specifically for their production needs. The company’s strategic plan for global market success is to “produce high-quality products tailored to local taste preferences and to meet rapidly growing demand” (DailyFinance, 2013).
References
Kahn, L. (2013, November 1). Why So Little Candy Variety? Blame the Chocolate Oligopoly | TIME.com. Retrieved from http://ideas.time.com/2013/11/01/why-so-little-candy-variety-blame-the-chocolate-oligopoly/
U.S. market share of chocolate companies, 2014 | Statistic. (n.d.). Retrieved from http://www.statista.com/statistics/238794/market-share-of-the-leading-chocolate-companies-in-the-us/
The Chocolate Industry. (2015, January 23). Retrieved from http://www.icco.org/about-cocoa/chocolate-industry.html
Hershey Building State-of-the-Art Confectionery Plant in Malaysia to Serve Asia Region - DailyFinance. (2013, October 3). Retrieved from http://www.dailyfinance.com/2013/10/03/hershey-building-state-of-the-art-confectionery-pl/
Market Share
Market share is the percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. You’ll need to cover the following in your paper:
(1) Discuss the market share of the firm and its top competitors
(2) Provide detail on the current percentages for your firm and its top competitors (For more detail on finding market share data, take a look at this post.)
(3) Present the data graphically
(4) Describe the trend over time
Barriers to Entry
Barriers to entry represent something that keeps new firms from entering an industry in which firms are earning economic profits. The most common barriers to entry are economies of scale (when a firm’s long-run average costs fall as the firm increases output), ownership of a key input, or government-imposed barriers (such as patents). You’ll need to cover the following in your paper:
(5) Analyze the barriers to entry in this market
(6) Illustrate the potential for new competition and the impact on the firm’s future in the market
(7) Provide specific examples of successful and/or failed entrants into the market
Market Structure
There is a chart on page 392 of your text that shows the characteristics of the four different market structures. Ideally you will cover the categories that define market structure (ease of entry, type of product, and number of firms) to justify your choice of market structure. You must decide whether your industry represents perfect competition, monopolistic competition, oligopoly, or monopoly, while making sure to use proper terminology. You’ll need to cover the following in your paper:
(8) Describes the market structure for this firm
(9) Accurately analyzes how the market structure affects the firm’s ability to influence the market
(10) Provide specific examples to demonstrate the market structure and firm’s influence
Here is a sample of an exemplary paper on The Hershey Company:
Overall Market
(1) The confectionery market consists of about 150 U.S. candy makers with “Mars and Hershey controlling around 75% of the national chocolate market, and 60% of the US candy market overall” (Kahn, 2013). As illustrated in the graph below, Hershey is shown as the top leader with 44.2% of the U.S. market share. (2 and 3 in graph below)
Figure 2. U.S. Chocolate Market Share, 2014. Adapted from U.S. market share of chocolate companies, 2014 | Statistic. (n.d.). Retrieved from http://www.statista.com/statistics/238794/market-share-of-the-leading-chocolate-companies-in-the-us/
In the global market, Hershey is one of the top ten leaders’ with continuing efforts to expand into the emerging global market to support consumer demand and improve international sales.
Figure 3. Top Ten Global Confectionery Companies, the symbol * includes the production of non-confectionery goods. Adapted from The Chocolate Industry. (2015, January 23). Retrieved from http://www.icco.org/about-cocoa/chocolate-industry.html
(4 and 10) In the 1960s, when consumers wanted to purchase chocolate, they would head down to their local candy maker. The owners had such passion for making chocolate they would spend long hours coming up with unique original recipes specific to their shop. As the market grew, so did the pressure to compete against the big players. The neighborhood candy makers slowly found themselves being bought out by these big companies. In 1963, Hershey purchased Reese’s and then bought Almond Joy. Nestle jumped on board and bought Goobers and Bath Ruth. For the local shops that resisted the takeover, they were now struggling to stay afloat (Kahn, 2013). In the 1970s, a popular candy named Heath Bar caught Hershey’s interest and when the company offered to buy them, Health declined. Hershey ended up buying the “original recipe from another company and introduced the Skor Bar to compete head-on” (Kahn, 2013). As a result, Health sales plunged and in the end, Hershey bought the company. It was through strategic planning and financial leverage that the big players were able to consolidate the market by bringing the number of candy makers down to around 150 producers (Kahn, 2013). (8 and 9) Now, with only a few companies dominating the market and the high entry barriers for new firms wishing to enter the industry, the confectionery industry is viewed as an oligopoly market structure. (10) The four-firm concentration ratio for the confectionary industry is 84.3%, which makes it clear that the confectionary industry is dominated by a few major players.
(5 and 6) It’s not easy for small candy makers to enter the marketplace mainly because they lack the funds and leverage needed to promote their products on store shelves. Also, they are not in the financial position to offer discounts or deals, which is often expected by the retail chains (Kahn, 2013). (7 and 9) Hershey is the dominant player in the U.S. market and is working towards gaining more market share in the international arena. The company is now opening a new facility in Malaysia, “one of the fastest-growing regions for its products, and they invested $250 million USD representing the single-largest investment in Asia during the company’s 18-years history in the area” (DailyFinance, 2013). The new facility location was deliberately chosen to provide “easy distribution access to more than 25 markets across Asia” (DailyFinance, 2013). To keep up with consumer demand, the company will utilize proprietary equipment and systems designed specifically for their production needs. The company’s strategic plan for global market success is to “produce high-quality products tailored to local taste preferences and to meet rapidly growing demand” (DailyFinance, 2013).
References
Kahn, L. (2013, November 1). Why So Little Candy Variety? Blame the Chocolate Oligopoly | TIME.com. Retrieved from http://ideas.time.com/2013/11/01/why-so-little-candy-variety-blame-the-chocolate-oligopoly/
U.S. market share of chocolate companies, 2014 | Statistic. (n.d.). Retrieved from http://www.statista.com/statistics/238794/market-share-of-the-leading-chocolate-companies-in-the-us/
The Chocolate Industry. (2015, January 23). Retrieved from http://www.icco.org/about-cocoa/chocolate-industry.html
Hershey Building State-of-the-Art Confectionery Plant in Malaysia to Serve Asia Region - DailyFinance. (2013, October 3). Retrieved from http://www.dailyfinance.com/2013/10/03/hershey-building-state-of-the-art-confectionery-pl/
Comments
Post a Comment