Assignment:
"Market Structures and Cost Management" Please respond to the following:
• From the scenario for Katrina's Candies, determine the appropriate type of market structure for the situation in question. Cite at least four defining characteristics that have helped you reach this decision regarding the appropriateness of the chosen structure.
• Imagine that you are a manager of a chemical company. An accident has occurred in which chemicals leaked into the ground water nearby. The community is unaware of the accident. Compare the primary costs involved in cleaning up the water immediately (and thus confessing) versus hiding your culpability now and possibly paying more in the future. Predict the impact on profitability in both situations.
Peer response:
In my opinion, I think the best type market structure for Katrina's Candies is Oligopoly. Oligopoly is a market structure in which a small number of firms has the large majority of market share. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly impact and influence the others. The characteristics that have helped me reach this decision are Interdependence: Katrina's Candies and other firms in same industry are interdependent because if Katrina's Candies starts advitising on a big scale or design a new product which immediately captures the market, it will provoke the countermoves of its rival firms. Advertising: is also a good characteristic of an oligopoly market. If one of the Katrina's Candies rival firms starts a very effective advertising with the motive of capturing a large part of the market, Katrina's Candies will quickly resist its advertising. Other characteristics are competitions and lack of uniformity.
It is the role of every organization to ensure maximum environmental protection of the community where it operates. As the manager of a chemical company, I believe it is more profitable to clean up the water immediately because if the community gets to know later they may drag the company to court asking for a huge sum of money as fine, ask the company to stop operating which can in turn affect the reputation of the company. It will cost the company more hiding the accidents.