KODAK CASE STUDY:
MONOPOLY TO OLIGOPOLY
BUS 525: ECONOMICS IN THE FIRM
Casey Fogerson: 11527549
Nicholas Kramer: 11779949
Maher Yassine: 11776418
Sichao Wang: 11480118
Woo Jung: 10989969
Yi-Chun Lin: 11753536
MARCH 10TH, 2014
I. EXEC SUMMARY
Kodak dominated the amateur pictures market generally through their innovative products: color go film and color photography. Seeing that Kodak monopolized industry, the United States government stepped along with the 1921 and 1954 consent decrees. These restrictions helped make certain that lesser businesses can grow in the sector and provide competition. Thus, the industry experienced evolved from a monopoly to a oligopoly; Fujifilm became the second largest firm. The government terminated both decrees due to Kodak losing its market share in the usa and its incapability to contend globally. Kodak is now capable to fully contend in the aggressive market both equally nationally and globally with new promoting tactics. 2. STATEMENT IN THE PROBLEM
Kodak is an American technology company that focused on imaging alternatives and providers for businesses. In 1994, there have been five businesses in the color negative film industry in the us: Kodak, Fuji, Konica, Agfa, and 3M. It's a good illustration (according to Kodak) of an oligopoly. In an oligopoly, only a few firms control the complete market. These kinds of firms happen to be in a remarkably concentrated sector. Oligopolies can easily result from numerous forms of entente which decrease competition and lead to larger costs to get consumers. Once a company in an oligopoly changes price or strategy equally profit and also other companies are influenced. In other words, the businesses in this industry will change simultaneously, especially faced with a challenge. Inside their current market location, Kodak maintains the highest business. Kodak obtains 75% of film sales in amount and 67% of unit sales. For instance , Kodak provides 241, 1000 retailers to market its products, and Fuji, while the main competition of Kodak, only provides 71, 000 outlets. The main reason Kodak provides this market superiority is because competitive advantages help them keep their high market share. The initial advantage is usually customer loyalty. Fifty percent of shoppers will not transform their purchasing habits regardless of high the price tag on Kodak is definitely (within reason), and one more forty percent of consumers can consider Kodak products initially. In fact , Kodak is making a higher perimeter in comparison to all their rivals. Its advanced technology and position available in the market influences buyers to trust their products. The second thing that makes Kodak stand out can be its coverage on sellers. Kodak provides rebates to dealers whom sell extra or just Kodak film. For example , Kodak can provide a type of instant rebate, which means that retailers will receive a few discounts or perhaps cash back after they order Kodak products. Thus, dealers are drawn to these benefits and wish to partner with Kodak. However , the government did not need Kodak to obtain such a huge impact on the market. Based on the government, it really is harmful pertaining to the development of film industry in fact it is also unfair for the other companies. The 1921 and 1954 decrees issued simply by court essential Kodak to create changes thus they do not possess such dominance. The 1921 decree prevented Kodak by buying competitors and practice special coping with retailers. The 1921 decree also restricted Kodak coming from selling” exclusive label” film under a distinct brand name. The 1954 rule is there to be able to up Kodak's technological dominance of color film photofinishing by necessitating Kodak to license and offer assistance to photofinishing competitors. � Although Kodak sells goods at a higher price, the price exceeds its limited costs by simply two. If the company would like to get optimum profits, it may produce a certain amount where minor revenue equates to marginal costs. Marginal revenue is associated with price elasticity of demand. Price flexibility of require is a way of measuring the responsiveness of the...
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