Microsoft Outsourcing Xbox Production

ANALYSING GLOBAL INDUSTRIES

Introduction

Definition of a market

The market and industries

To analyse global industries or market we need a detailed knowledge of all the firms in the industries, their goods and services as well as geographic location.

Identifying firms of the same industries

1. Cross elasticity of demand: - If a product price increases consumer buys the cheaper alternative.

2. Company that react to the action of others.

3. Companies whose action are restrained by others by others with regards to pricing , advertising , sales promotions e.t.c.

4. Company may produce similar goods in SA and USA but compete in different markets.

Industry analysis and market analysis are two different ways to look at the environment in which a company competes. Although related, these two types of analysis differ in their scope.

Market concept

* Define by three characteristics

* Defining which goods/services involved

* Defining which firms are present

* Deciding geographical location.

Industry concept

Market implications

* Geographic/location- effect on transport cost

Market structure

This are explored with their implications for competition and company performance. We look at the market concentrations, how it is measured and its implications to distribution of market power to firms.

Market structure can influence the behaviour of the firm, performance the nature and the intensity of the competition

* Market structure refers to the physical characteristics of the market within which firms interact

* This involves the number of firms in the market and the barriers to entry.

* It relates to the selling environment in which a firm produces and sells its product

* Defined by three characteristics:

* The number of firms in the market

* The ease of entry and exit of firms

* The degree of product differentiation

Types of market structure

* Perfect competition- with...