ECO201-MicroEconomics Mod 5 CBT Essay Example | Topics and Well Written Essays - 750 words

ECO201-MicroEconomics Mod 5 CBT - Essay Example With higher profitability, the company is able to have the financial capacity to improve its technology through additional investment. Improvement in technology and bargaining power over its suppliers make it harder for small-scale players to compete with the existing large-scale companies. Not only will the company with highly improved technology be able to produce more product to meet the market demand but also offer a better quality product to the consumers. Therefore, it is more likely that the market structure with cartels is an oligopoly – also known as having a fewer big-time players in the market. Basically, a cartel prohibits a perfect competition to occur since big players within the same industry are able to openly discuss about the fixed price big multinational companies will impose on homogenous products. to compete more on improving the quality of homogenous products they offer to the consumers aside from its marketing and promotional activities. In the process, these companies are required to compete in the market through product differentiation and product diversification. (Salin, 1996: pp. 37 – 38) Basically, the profitability of a large multinational company that manufacture shampoo product may invest some money in research and development in order to enable the company to innovate new product that could stimulate the interest of its target consumers. A good example was when arometherapy gain popularity in the market. In line with aromatherapy, a well-known shampoo brand called Palmolive under Colgate-Palmolive started to produce shampoo with different scent of aromatherapy. (Colgate, 2008) Given that large-scale multinational companies that are into cartel situation still has to compete for the same market. For this reason businesses that are able to continuously develop new strategies and innovates new products that could arouse the interest of its target market are the