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General Motors Oligopoly Market Structure

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Research Analysis for Business It is my responsibility as a Business Consultant officer for General Motors Corp. monitoring all activities of the company and then review them thoroughly to be able to device more cost-effective and profitable business plans for the organization. General Motors is one of the principal auto makers in the United States and across the globe marketing their automobiles and innovative style. According to “General Motors” (2014). During the earlier years General Motors only held Buick Motor Company, several years later the automaker obtains more than 20 companies including Oldsmobile, Cadillac and Oakland, today known as Pontiac.” (History & Heritage). This Research Analysis will examine …show more content…

State of limited competition, in which a market is shared by a small number of producers or sellers. Meaning the market only has a handful of companies functioning in the same structure. The substitution of a product for another product or one vehicle for another it is completely possible in an Oligopoly market only from one of the few companies in the Oligopoly market structure. In the United States these companies would include Ford, GM, and Chrysler (Grunert n.d.). It is extremely difficult for any new Company wanting to enter into an Oligopoly market structure. One of the main barriers is the initial investment or start-up costs, any person wanting to start a company will either have to be financial stable, or have a collateral to request a loan from a Financial …show more content…

Variable costs are those that vary with the amount of production. For example, at General Motors, variable costs go up with each car produced. If a Transmission costs $7,000, for each car produced by GM variable cost goes up $7,000. If five cars were assembled the variable cost for the engines would be $49,000. Fixed costs do not fluctuate in reference with the quantity of production. They are called fixed costs since they are fixed regardless of the quantity of manufacture. The costs of facility payment are cover under the fixed cost. Every month is the same regardless of how many cars General Motors produced during that period of time. Elements that can influence variable cost are; supply and demand, task difficulty, location and effectiveness. Factors Affecting Fixed Costs Any equipment or technology obtained, specialty built to producing electronically fueled vehicles that can't be modify and utilized for some other new item for generation, is a fixed expense. In manufacturing electronic hybrid vehicles, over the long haul there are no fixed expenses. Be that as it may, in the short run if electronically hybrid vehicles were not popular, the funds spent to buy the equipment utilized exclusively to deliver these vehicles would be an aggregate misfortune. According to, Teisl, Rubin, and Noblet (2006)

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To understand expenses, a manager has to understand the difference between these two costs (Willson, 2014). Fixed costs are constant, which means that no matter how much Home Depot is producing. Fixed costs include rent or utilities. Variable costs are costs that change depending on the amount of output. As total expenses increase for Home Depot, their fixed costs remain the same, which in return will decline profitability.

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This also causes involving price-fixing and market-division arrangements. It usually involves the private parties and the government which would also be the Department of Justice or the Federal Trade Commission. This is a firm has done something anti-competitive in order to stay ahead in the game or stay ahead in the monopoly. Monopolies without any anti-competitive behavior aren’t usually illegal. An example of these cases was in 1911 and the Supreme Court ruled abuse on John Rocketfeller's Standard Oil Co. because they had abused its monopoly power to keep other companies from going against it and it also divided into thirty-four separate companies.

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Thus, with cars being mass produced, manufacturing costs

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3. Threat of new entrants High barriers to entry in the industry. Licensing requirements are high. There is a minimum size requirement to achieve profitability and the initial investment is required and fixed costs of operating. How much of the control is in the hands of existing players of the market or key resources?

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Also, various methods of controlling costs such as standard costing system and flexible budgets have close relation with the variable costing system, in turn making it easy to use those methods. 3. Companies using variable costing system are able to prepare income statement in contribution margin format that provides necessary information for cost volume profit (CVP) analysis. On the flip side, this data cannot be directly obtained from a traditional income statement prepared under absorption costing

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In the following essay I will be analysing and discussing Porter’s five forces. Created and named after Michael E. Porter, Porters model of the five forces helps a “company understand the structure of its industry and stake out a position that is more profitable and less vulnerable to attack” (Porter, 2008) The five forces that shape an industry are the following; Threat of new entrants, Bargaining power of suppliers, Threat of substitute products or services, Bargaining power of buyers and finally, Rivalry among existing competitors. (Porter, 2008) This analysing tool can help determine your position in the market, help create strategies and determine the industry’s long run profit potential.

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Market Structure - Oligopoly Oligopoly is a market structure whereby a few number of firms owns a lion’s share in the market. This market structure is similar to monopoly, except that instead of one firm, two or more firms have control in the market. In an oligopoly, there are no upper limits to the number of firms, but the number must be nadir enough that the operations of one firm remarkably influence and affects the others (Investopedia, 2003). The Walt Disney Company is categorized under an oligopoly market structure.

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Question 2: To do a resource-based analysis of any organization, it needs to go through different steps, first identify the three categories of the resources , the tangible ,intangible, and the human resources , second identify the capacity of the organization to put its resources for a desired end and in good use, third to decide on suitable strategy for the organization we need to do SWOT analysis to determine the organization strength and weakness compared to the competitors, third what are the key successful factors of the organization that can be determine by identifying the customers of the organization and their needs, and what the organization will do to survive the competition ( Hall&Keynes,2015) also audit analysis to Ford resources , and value chain analysis to Ford activities . In the next section, there will a brief explanation about the steps mentioned above , followed by an application to each step to, Ford motor which was incorporated in Delawae in 1919, it is a global automotive industry leader in Dearborn and Michigan, distributed vehicles across six continents the core business of Ford , designing and manufacturing cars, marketing , financing and servicing a full line of Fords cars, trucks, SUVs, and electrified cars, and Lincoln luxury car (Ford annual report,2015). Resource-based view (RBV) is an essential theory for strategic managers , considering the organization resources the assets , capabilities organization

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The oligopoly market is set up in a way so that competitors can survive because each is unique and there are so few competitors that they are virtually indispensable even if some ethics atrocity

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This market usually exists when there is only one firm in the sector/industry. A monopoly usually has no close substitutes. For example: a local electricity company, or a railway service in a city. In order for these firms to be able to maintain their monopoly

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With the increase of gas prices in the past couple years, cars with better fuel economy were in high demand. The hybrid car started to become popular because of its fuel economy. A hybrid cars fuel economy is in some cases twenty percent more than its gas counterparts. The hybrid car had several people changing their minds about gas cars. Numerous went out and bought a hybrid car because of the car’s fuel mileage in the hopes of saving money.

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