Market Competition Timing and Risks while entering or exiting a market Essay

Market Competition Timing and Risks while entering or give outing a grocery - Essay ExampleThe researcher states that for example, Amazon.com started its business as an online bookshop unless as gradually the demand for the grocery items had increased, Amazon.com adhering to that demand and started its first online grocery shop. As we see in the elusion of Monopoly where there are no competitors and therefore firms set a price to maximize profit and bring the first mover advantage. Whereas in a perfect competition there are no accounting entry and exit barriers so the role of time in deciding the entrance or exit from the market is minimal and perfectly competitive firms are free to enter and exit an Industry and so in the case of monopolistic competition in which there is a relative freedom of entry and exit out of constancy entirely a difference between those two terms is that in Monopolistic competition the firms are not perfectly mobile but they remain unrestricted by an y government rules and regulations, start-up termss or any substantial barrier to entry which is the total opposite of Oligopoly in which there are significant barriers to entry where time plays a major role in ascertain the entry and exit from the market. A firm has to evaluate several factors in order to determine the risks of sensitive entrants and the reasons to exit a market which include economies of ordered series, product differentiation, gravid requirements, access to distribution channels, cost disadvantages self-directed of scale and government policies... The term Economies of scale refers to increase the production of a commodity due to which the per-unit cost is of a commodity is reduced. This will create a risk for the modern entrant firms in a sense that they would have to produce a larger quantity at a lower price. Economies of scale encourage the firms to exit the market that cannot produce the required quantity and it deters the smaller firms from entering into the market. These bigger firms forces the new entrants to either come in on a large scale or to accept a cost disadvantage (Porter, 1979). Product differentiation is a risk for entering into the market because it requires incurring spending and great deal of money to make the product differentiate among its competitors. Another type of risk is capital requirement where new entrants are required to invest larger amounts to compete efficiently in an industry particularly if the capital is required for the research and development. The initial cost to operate can be so large that it restricts all but the larger firms. The capital is not only required for fixed facilities but also for the inventories and absorbing start-up losses. While bigger firms have the financial resources to tap any industry but the huge capital investments in industries such as mineral extraction and computer manufacturing has major risks and limits the pussy of entrants. Even the big firms do compete in t his trio there is still no tell for success. Access to distribution channel is another type of risk in which a firm needfully to obtain distribution for the channel and the distributors are not likely to deliver the product until they are paying good incentives and that will lead to profit reduction for the firm. For example, a new food product enters