Improving Business Performance

An oligopoly is a market condition in which the production of identical or similar products is concentrated in a few large firms. Being a part of an oligopoly affects a company’s competitive behavior, in a competitive market situation that is not an oligopoly; firms compete by acting for themselves to maximize profits without regard to the reactions of their competitors. In an oligopoly, a firm must consider the effects of its action on others in the industry for example, if one company in the oligopoly attempts to undersell the others, then the firms will respond by also lowering prices. As a result, price cuts in oligopolies tend to result in lower profits for all of the forms involved.

Anheuser-Busch is an example of Oligopoly Company; they are the largest brewing company in the United States. The company operates 12 breweries in the US and nearly 20 in other countries. Because Anheuser-Busch competes domestically and internationally, as well as in multiple segments, it has many competitors, the majority of which are in the brewing business. Anheuser-Busch holds 48.3% of the US market followed by its major competitors Miller Brewing Company with 20.9% and Coors Brewing Company with 11.5%. (Anheuser-Busch.com)

Anheuser-Busch has always set high standards for other breweries to follow, specifically gaining positive name recognition. The company has a huge strength that rests solely in its own name, along with its popular beers. It has become extraordinarily renowned, with very few companies carrying the same fame of Anheuser-Busch.

A perfect competition is a market condition where in no buyer or seller has the power to alter the market price of a good or service. Characteristics of a perfectly competitive market are a large number of buyers and sellers. Perfect competition is a theoretical market structure; It is primarily used as a benchmark against which other market structures are compared. E-Bay auctions can be often seen as perfectly competitive. There...