3) Barriers to entry:

4) Price competition:

5) Non price competition:

· 3 firm concentration ratio- 58 

· 4 firm concentration ratio-69.5

· 5 firm concentration ratio-  80.5

Barriers to entry
· Very high start up costs

· IT system costs

· Branding and Advertising

Price competition
· Due to firms being interdependent, the best strategy for one firm genuinely depends on the actions of the competitors. Assuming that a firm wants to attract customers, firms will tend to charge at a lower price. However, lowering the price influences other firms to also lower their price, causing price wars. For example, if British Gas  decides to lower their average kilowatt hour price from 12 pence to 9.875 pence, this acts as an incentive for competing firms to also lower their prices.

· Tacit coordination- achieved through indirect interpretation between the parties, but without any formal arrangements. The main objective of a tacit coordination is to limit rivalry; the reason for this to occur is mainly if the two firms are mutually interdependent. For example, suppliers arranging price increases.

Non-Pricing Strategies 
· Advertising in order to gain consumers.

· Making offers for loyal consumers.

· Quality of customer service 

3 firm concentration ratio - 61.4%

4 firm concentration ratio - 72.2% 

5 firm concentration ratio - 78.1%

Barriers to entry:

Price competition:

Non-price competition:

Motor Fuel Industry 2016

Tesco, BP, Shell, Esso, Sainsbury’s

 

Concentration Ratio

3 Firm Concentration Ratio: 44.7%

4 Firm Concentration Ratio: 56.1%

5 Firm Concentration Ratio: 66.3%

 

Barriers to Entry

High Barriers.

High start-up costs to install pipelines and fuel stations.
 Some consumers in this market tend to be brand loyal.

Allot of costs in importing and extracting the fuel. 

 

Non-Price Competition

Have loyalty programs.

Offer premium standard fuel.

Additional goods inside the fuel stations.

Many sponsorships with motorsport events.

Franchising.

 

Price Competition

Premium Pricing with certain types of Premium Fuel.

Physcological Pricing as it is prices to the ‘p’.

Price Wars 

Asda - 15.3%

Morrison’s - 10.4%

Aldi - 7%

Barriers include : 

Large economies of scale of competition 

High set up costs

High advertising costs

Exposed to predator pricing 

Price competition may be shops offering to compete prices e.g. price matching. Also discounting products against firms so customers go to their stores instead

Non price competition include better customer services so customers go back. 24 hour services such as Asda is another feature that entices customers. 

Samsung  — 23.3%

Apple        — 14.7% 

Huawei.    — 10% 

OPPO.       —  7.5% 

Vivo.          — 5.5% 
3 firm concentration ratio — 48%
4 firm concentration ratio — 55.5%
5 firm concentration ratio — 61% 

Barriers to entry 

Firms compete on price as they try to create ‘super-high-end devices for budget prices’

Other factors firms can compete on include increasing market share( sales revenue maximisation) advertising, profit satisfaction growth (keeping stakeholders happy) new technology. 

Packaging and labeling
Advertisement 

Market Share (2017 up to October)

Ford 14.36%

Toyota 12.56%

Chevrolet 11.95%                3CR: 38.87%

Honda 8.7%                        4CR: 47.57%

Nissan 8.44%                     5CR: 56.01%

Barriers to entry

Price Competition

Non-price Competition

 

Pharmaceutical industry

 

Concentration ratio of 55.8 in the uk.

 

Barriers to entry are: need a license to operate in uk, mega-high start up costs coupled with high R&D costs because off all the tough rules and regulations placed on testing of new drugs, long time-lag between initial investment into business and ultimate gains; patents, other companies may have placed on certain products and lastly the high sunk costs the firm may face if it decides to leave the market.

 

Price competition, is a part of this oligopoly, as most drugs sold by most companies are sold at similar prices. As well as non-price competition taking place, such like strong advertising.

3 firm concentration ratio - 44.7%

4 firm concentration ratio - 56.1%

5 firm concentration ratio - 66.3%

High start up costs as large specialist pumps and pipelines need to be installed. Large quantity of fuel is expensive as the costs to extract it and import it are high as well as it being a non renewable and highly demanded good. Non-price competitive market. Able to sell a premium product as well as standard and small shopping items available in kiosk. Opportunity for sponsorship, largely in motor sport, to improve brand name and loyalty. Loyalty reward systems can also be implemented. Large advertising signs showing pence per litre. Small price increase leads to bigger total price. Could lead to price wars if brand loyalty is high enough.

Concentration ratios:

Huge barriers to entry due to costs of setting up cables and wireless services, which requires large amounts of investment. Brand loyalty would also be a problem for new firms - unless they came up with a new specialised product, it would be hard to attract consumers. This makes it easy for established firms to force newcomers out of the market.

Not much price competition occurs due to the 5 big firms being able to follow price trends. This would only force down revenue for all companies involved.

Lots of non-price competition takes place. Huge advertising campaigns are created by firms in order to grow market share and increase clientele. Service providers are also likely to offer deals such as early renewal of contracts, better, more widespread 4G service or package deals in order to set themselves apart from other firms in the industry.