Economics Essay on Market Structures
Market structures play a fundamental role in determining the influence of a business in both the local and international market. The primary agenda of a business is profit maximization and hence the management of the business works towards creating avenues for the business to maximize performance. The market structure includes a number of factors including demand conditions, cost of operations, industry, adopted technology, and the size of the firm. Each of the mentioned factors plays a critical role in allowing a business to compete effectively, acquire market share, and increase the overall profit.
The size of a firm determines its profitability in the market. Firms cannot be of the same size even if they operate in the same industry. This is because every firm adopts a specific system as far as decision-making is concerned. The larger the firm, the higher the sales translating to high profitability compared to the competitors. A report by Forbes revealed that Walmart is the largest firm in the United States. Since 2016, Walmart has consistently pushed to increase trade and acquiring other digital-native companies such as ShoeBuy, Moose jaw, and ModCloth( Shen). In 2016, Walmart made a huge investment in acquiring Jet.com. The acquisitions played a fundamental role in increasing Wal-Mart’s sales and revenue . The size of the firm implied that Walmart had the capacity to acquire other small retail companies and improving its chances of becoming a pacesetter in the industry.
The industry also plays a critical role in determining the market structure. The market has competitors implementing strategies with the aim of pushing the organization to realize its goal of profit maximization and maximum performance. A firm, therefore, has to be cautious about the strategies it implements for marketing its products or services to the market. Competition is one of the key concepts in the industry considering that companies are competing for the same customers and therefore must take a deeper look to understand the needs of the target market.
In full realization of the level of competition in the retail industry, Walmart has been critical about laying the best strategies despite the vicissitudes in the economy to appeal to the customer demographics. Amazon is one of the primary competitors for Walmart pushing Walmart to make surprise acquisitions including Whole Goods and Bonobos as a strategy for protecting the company’s future and power in the market. The acquisitions have proven a successful strategy for accelerating Walmart’s growth in the market.
Additionally, Walmart has also been able to acquire huge assets that have played a fundamental role in allowing the company to improve physical infrastructure and position itself to acquire the largest market share (Nusca).
As competition between Walmart and Amazon intensifies, Walmart has been sound in empowering its employees. The employees have played a fundamental role in Wal-Mart’s success. The company has created avenues for the employees to be rewarded for their contribution in pushing Walmart’s agenda to become the best retail company in the industry. Walmart has created an environment and culture that allows the employees to be creative in coming up with strategies that increase market size and leverage competition with Amazon and other companies in the industry(Nusca).
From the article, I have understood that competing in the global market is not an easy task for a business. A firm has to position the right market structure that allows it to compete effectively and maximize performance. Companies like Walmart have realized the significance of embracing strategies that allow the business to become a pacesetter in the industry. A large firm has a lot of influence on the events and activities in the global market. Walmart is, therefore, investing a lot of resources and strategies to make acquisitions as part of protecting its future and increasing its influence in the global markets. Although local market is relevant in determining the profitability of a firm, acquiring regional and international market is more important because it increases the market scope, sales, profitability, and the influence of the firm in the local and international markets.
Works Cited
Nusca, Andrew. “5 moves Walmart is making to compete with Amazon and Target,” (2017). Accessed from http://fortune.com/2017/09/27/5-moves-walmart-is-making-to-compete-with-amazon-and-target/
Shen, Lucinda. “Here are the Fortune 500’s 10 most successful companies,” (2017). Accessed from http://fortune.com/2017/06/07/fortune-500-companies-list-top/
