The United States (U.S.) economy generates a great standard of living and a sense of economic well-being, as compared to other countries, for all people living in the United States (Colander, 2010).
This standard of living and well-being can be attributed to the economic system and market structure utilized by the United States. The U.S. economy is based on the market economy with a few socialism and capitalism concepts infused into the system. The United States economic system has evolved into the system utilized today. A market economy is built on the market and private property, where individual’s people or firms decide how, what, and for whom to generate goods and services (Colander, 2010).
Socialism focuses more on the goodwill towards others and not a business own self-interest. The society as a whole decide how, what, and for whom to produce (Colander, 2010).
A capitalistic economy is based on the market in which the control of the means of production rest with a group called capitalists (Colander, 2010).
China would be consider a Socialistic economy and Germany would be considered capitalistic economy (“Peerform”, 2014).
The United States uses a market economy where numerous businesses are formed every year.
This uninhibited creation of businesses can creates a lot of competition in the U.S. economy. Competition in the economy is the driving force behinds the strategy and market structure firms use to take away market shares from other firm or business in its industry. There are four type of market structures used throughout the world. A Perfect competitive market is where there are almost an infinite numbers of firms in the industry with no barriers for entry. A Monopoly is a structure where there is only one firm in the industry. There are no competitors and a significant entry barrier such as high startup cost may exist (Colander, 2010).
The Planned Economy which is the economy that the government “organises” is very different from the Free Market Economy where the private sector is in charge and owns firms etc… The planned economy is better in the sense that people are less stressed due to not having to worry about their next meal or other, due to the government supplying their basic needs like housing, medical ...
A monopolistic structure has many competitors and only a few barriers to enter the industry. Although there are many competitors, the products each firm provide may be similar but have slight differences. Examples like restaurants McDonald and Burger King. Both produce hamburgers but there are some differences in each.
The last is an oligopoly structure. An oligopoly structure has a limited amounts of firms involved with significant barriers to enter (Colander, 2010).
Without different markets there would not be any structure; therefore, it is important to understand and determine the different market structure and the barriers new firms have when entering the market. This paper will identify an industry and discuss a company within the selected industry. Explain why the firm decided upon the market structure and how it is different from the other alternatives. Also this paper will identify a three competitive strategies to maximize profits in the long run. Evaluate the efficacy of strategies on Ciena and make recommendations related to the strategies Ciena might consider. Identify an industry, organization within industry, market structure, why chosen, and how this market structure differentiates from the other alternatives.
The Ciena Corporation is a very large Company in Linthicum Maryland. Ciena was incorporated in Delaware in 1992. Ciena is in sector 51 information and three digit sector 517 telecommunication (Colander, 2010).
Ciena operates in an oligopoly market structure because there are only 19 companies in the United States in this industry and 60 throughout the world. Ciena chose this industry because they wanted to radically change the economics of telecommunications fiber optics networks. Ciena significantly advanced innovation by pioneering Dense Wavelength Division Multiplexing (DWDM) technology as a means to split light across fiber optic lines, thereby enabling the transport of greater volumes of information such as voice, video and data across communications networks (“History of Ciena”, 2014).
Judgments about what strategy to pursue should ideally be grounded in a probing assessment of a company's external environment and internal situation. Unless a company's strategy is well-matched to the full range of external and internal situational considerations, its suitability is suspect. This section examines the techniques of industry and competitive analysis, the terms used to refer to ...
An oligopoly is different than the other market structure in that it only has a few firms in the industry and a significant barriers to enter. The fiber network industry has a very high financial requirement for research and development, start up, and FCC regulation to enter the industry (“History of Ciena”, 2014).
Identify three or more competitive strategies possible used and evaluate the efficacy In an oligopoly there are a small number of firms in the industry, so any strategic decision made to maximize profit may directly cause a reaction from the other firms.
This expected reaction from the other firms must be taken into account. In 2001 the telecommunication fiber optics industry experience a server downturn. At the time Ciena had grown and was spending a lot of capital on different platforms in telecom networking. Three strategies that could have been used to survive the downturn and maximize profits. Ciena could have their procurement team find cheaper parts and look into outsourcing their manufacturing departments to agencies in countries who economy is lesser developed and provides low-cost labor. This move would save on production cost and increase the profit margin. Ciena could also move beyond its single point-product success as a vendor of optical networking equipment to become a provider of advanced networking solutions (“History of Ciena”, 2014).
This would provide a means to possible have attractive and innovated products once the economy changed; therefore, possible creating a possibility to gain more customers. A third option could be to look at acquiring or merging with a company that has innovative technology in the telecom fiber optical network industry already in the market. Acquiring a company that has a customer base will allow Ciena to consume those customers and increase their foot print and markets shares in the industry (“History of Ciena”, 2014).
The Saudi Arabian construction industry's growth prospects by market, project type and type of construction activity •Analysis of equipment, material and service costs across each project type within Saudi Arabia •Critical insight into the impact of industry trends and issues, and the risks and opportunities they present to participants in the Saudi Arabian construction industry Assessment of the ...
Make recommendations related to the strategies
Make recommendations related to the strategies the organization might consider to maximize its profits.
Colander, D. C. (2010).
Economics (8th ed.).
New York, NY: McGraw-Hill. History of Ciena. (2014).
Retrieved from http://media.ciena.com/documents/ History_of_Ciena.pdf Peerform. (2014).
Retrieved from http://peerform.com
University of Phoenix. (2011).
Differentiating Between Market Structures. Retrieved from
University of Phoenix, ECO/365 Principles of Microeconomics website.