Challenges encountered by economical manager on

Excellent Competition

Introduction

According to Arnold (2013), financial supervision entails the understanding, evaluation, analysis, and forecasting of economic, legal and regulating issues. As a result, financial managers have the responsibility of operating in ways that improve organizations’ profitability. Within their responsibilities, the financial managers experience various challenges in several market structures. As such, to get a proper understanding of the issues that monetary managers confront today, you ought to understand the standard characteristics with the different industry structures plus the impact of competitiveness, market liquidity, and efficiency on financial managers. A logic of the marketplace structures shows the basic circumstance in which economic managers work.

The video discusses four market constructions. The 4 market buildings identify the varied types of markets in the wonderful world of business. The four industry structures are, oligopoly, monopolistic competition, perfect competition, and monopoly. This kind of paper is going to discuss the different types of market constructions and two of the major problems that economical managers confront in these marketplace structures. Additional, this paper will assess and review two academic articles that deal with economic managers’ challenges including competitiveness, market liquidity, and performance.

Perfect competition

Underneath this market framework, the homogenous market items, and solutions. Under this structure, no single firm can be allowed to collection the prices of products solely. The structure offers five main characteristics which can be, buyers know about all the goods and prices collection by every firm, every one of the firms possess small servings of the industry shares, each of the organizations are price takers, the companies have the attributes of free entry-and-exit, and all the organizations offer similar merchandise. However , based on the video, a great competition would not exist inside the real world.

Problems faced by simply financial managers in excellent competition marketplace structure

The first and significant challenge that financial managers face in the perfect competition structure is usually price environment. Financial managers have the responsibilities of establishing prices for his or her firms’ products. While undertaking this task, they must consider several factors including the cost of creation and the top quality of the items (Moyer ainsi que al., 2011). However , in the perfect competition market composition, the prices which the financial managers set should concur together with the general price in the market. Underneath this market structure, if a economic manager models a price that may be higher than the marketplace price, no person will follow the products. As such, price setting is a vital challenge facing financial managers in the perfect competition industry structure.

The second challenge that economic managers deal with in the best competition marketplace structure with the maximization of profitability. Economic managers have the task to ensure higher earnings for their businesses. The various attributes of the industry structure limit the maximization of profits by the firm. For instance, firms cannot set prices to increase their revenues. Likewise, the firms can only serve a very small portion of the market share, that means the firms cannot create in huge scales to relish economies of scale.

Monopolistic Competition

The video recognizes a monopolistic competition being a market structure where there are many firms that produce different products in an industry which has minimal obstacles to entrance. Under the forex market structure, the buyers place special focus on what they value most regarding the organizations from which they will buy products. Below this market structure, the price that one firm sets do not impact the prices of other companies in the industry. All of the firms happen to be price manufacturers and have a low amount of market electric power. Firms with this type of market structure often advertise greatly, and the demand is delicate to changes in price.

Challenges facing economic managers inside the monopolistic competition market framework

One of the major challenges that face financial managers within a market having a monopolistic competition is regarding advertisement. Monetary managers have obligation of ensuring that the business products will be well-known by simply potential buyers. With the extensive emphasis of advertisements in the monopolistic market framework, financial managers may find it difficult in prioritizing the resources intended for advertisement and product top quality improvement. In that market composition, if a financial manager does not pay enough emphasis on a great advertisement, the firm’s profits may drop as buyers become more captivated by additional firms’ products.

The 2nd challenge encountered by monetary managers through this market framework is about the competitiveness of the industry. With all the relatively little entry boundaries, any organization can easily your industry and produce identical goods by lower prices. The differentiation of products also allows the production of substitutes simply by other companies. As such, economical managers have the responsibility to ensure an extensive advertising of the business products.

Monopoly

A monopolistic marketplace structure arises when there is only one retailer of a particular product in an industry. Below this composition, one organization dominates the market and may control entry in the market, which makes it extremely hard for additional firms to operate in the industry. Considering the fact that the monopolistic firm is the only seller in the market, the firm’s require curve is definitely the market require curve. The firm also sets the costs.

Challenges confronted by financial managers in the monopolistic marketplace structure

The first challenge encountered by economic managers in the monopolistic market structure is usually regarding application. Financial managers have the responsibility of ensuring which the products developed provide value to the customers regarding the economical consideration. However , since, you cannot find any completion through this type of marketplace structure, the firms will not significantly spend money on research and development. Therefore, it contributes to lack of creativity and poor products.

Another challenge faced by simply financial managers is concerning pricing. Monetary managers tend to be tasked with setting the correct prices pertaining to the firms’ products. Provided no competition in the industry, the amount paid set by the firm end up being the market price. With little pressure on the prices of products, financial managers often have challenges in setting rates that echo the firm’s input within the manufacturing of the products as well as the utility the fact that buyers would derive from your products.

Oligopoly

A great oligopoly is known as a market framework where there is a small number of firms that have the best majority of the marketplace share. An oligopolistic companies are similar to a monopolistic market, only that, in an oligopoly, two or more firms dominate industry.

Challenges faced by financial managers in an oligopoly

The initial major challenge that economic managers deal with in the oligopoly market framework is competition. Having hardly any firms on the market, there is strong competition among the list of firms. As such, every major decision that the financial administrator makes regarding prices or other factors affects the decisions of other organizations in the industry. As a result, financial managers are tasked with the responsibility of keeping an eye on the competitors. In a few circumstances, obtaining intel from the other firms prove course of action could be difficult, disguising uncertainties to the financial managers.

Under this market framework, financial managers also encounter challenges relating to differentiation of goods and prices. Having few businesses in the industry, there exists an enormous need for differentiation. In the work of difference, financial managers have to helps to ensure that the types of products and the prices set do not reflect from the demands and anticipations of the customers.

Conclusion

Both the content articles imply that two of the biggest challenges facing economical managers today in the varied market buildings are establishing prices and competitiveness. The prices of products happen to be derived from the particular buyers are going to pay for the items, considering the finish cycle of every process involved in the production from the products. The ease where a firm can make the assets into cash is known as marketplace liquidity. Monetary managers need to consider the sort of market composition that their very own firms are operating in to understand the possible impact of other businesses involved in the same market. The impacts that other organizations have in both the quality of the companies the price in the same companies are known as competition (Moyer ainsi que al., 2011).

Regarding the different types of marketplaces structures, monetary managers ought to understand the problems associated with the competitiveness. For instance, in a perfect competition market framework, the level of competition is above in other marketplace structures. The ease when the market buildings operate with all the correct selling price, demand, and provide is known as industry efficiency. On this factor, financial managers need to have an extensive understanding of the effective elements in the market buildings in which they will operate in order that the firm’s performance (Arnold, 2013).

Tweet