Introduction

All of the markets at the global level can be noted for being operating under four key market structures, and these include: [1] perfect competition, [2] oligopoly, [3] monopoly, and [4] monopolistic (Courvisanos et al., 2016). This report shall focus on the market structure of oligopoly specific to the Australian context and the same shall be beneficial to determine outstanding features concerning these markets. The oligopoly market represents a structure wherein sellers shall be many in number yet there shall be few giants who shall dominate overall market. Some key features which are expected with respect to oligopoly structure entail differentiation in the products, pricing related strategies, nature of the competition, and others. There can noted to be varied industries across Australia which shall be considered to be oligopoly structure. The overall Australian economy has been noted to be oligopoly form of economy. The understanding of relevant structure using which a specific business shall be categorised shall be crucial form of decision making specifically with respect to those which shall influence the outputs and prices (Courvisanos et al., 2016). Specific to the context of this report, the analysis shall aim in finding out businesses within oligopoly structures employing strategies that could be dishonest which shall aid them in gaining market power. This paper shall in addition determine the profitability potential for running an oligopoly form of business or else other form of market structures. These findings shall aid the business decision makers for enhancing their business competitiveness and profitability.

Analysis

Large-sized companies shall at all times exist in any economy as some of the businesses shall grow faster, and on the basis of business owners, the expansion shall be experienced to be faster within specific instances (Pandya & Sisombat, 2017). In case of Australia, one amongst the largest of companies operate in the industry of air transportation. The national productivity of an economy shall not be added by bigger oligopolies. These big businesses shall inhibit growth in impeding innovators. While oligopoly firms shall be left for operating in their own, the companies can be often noted to misuse their power in the market. The other industry of oligopoly nature in case of Australia is the industry of telecommunication wherein dominance of one company is the outcome (Pandya & Sisombat, 2017). Within the Australian economy contexts, experiencing costliest and slowest system shall be evident. The same has been noted to inhibit innovations as well as growth relating to businesses. For the purposes of managing oligopolies, competition related regulations have been well-documented and effectively regulated. Within the contexts of Australia, the oligopoly structures can be noted to be regulated by Australian Competition & Consumer Commission (“ACCC”). The other various industries in Australia which fall under the oligopoly structure include banking and the insurance industry (Pandya & Sisombat, 2017).

Financial resources shall represent some barriers which shall prevent easy entry to the oligopoly markets. In addition, there shall be various requirements from government regulations that shall in addition act to be barriers. Further, competition within this market shall not be price based and rather be sales-based (Hartigan & Morley, 2020). The same is on account of goods that are sold by participants having high levels of differentiation at the product-level. The overall availability concerning close substitute shall make it highly impossible for sole participant in raising the price by their own as consumers shall shift the demand-levels to others who offer lower levels of price. The demand of a business shall fall, and in an eventual manner shall lead to losses (Hartigan & Morley, 2020). For avoiding the stated situation for losing specific market share, concerned participants shall at all times avoid deciding to raise price level. In addition, however, decrease in price shall not increase market share concerning the specific firm which shall employ the said strategy as all of the other firms will follow the same. Hence, the firms shall earn greater levels of profits solely by way of selling a greater number of units as they shall sell using same price. In case of competition in oligopoly structure, the decision of a firm with respect to the strategy for selling will affect the decision concerning other firms (Hartigan & Morley, 2020). Hence, there shall be continuous form of monitoring concerning all of the other participants from each firm.

Some strategies that have been implemented by largest players shall be aimed to get some smaller players to move out of specific market. It has to be noted that supermarket industry falls in the oligopoly structure (Sheen et al., 2015). The market share levels held by Australian companies, Coles and that of Woolworth (“WW”) together spans 70 per cent to 80 per cent. There have been various unfavourable allegations over the operations concerning these two supermarkets. A key allegation in this context has been the use of market power for buying required goods from the farmers using lower price levels. It has been noted that both Coles as well as WW have been linked to these misconduct and cases against them raised in court which indicates the instance of abuse using market power (Sheen et al., 2015). The regulators for the industry charged Coles as well as WW for discrepancies in-between actual weight with respect to specific product as well as what has been listed by them with respect to the products. They were fined for the same. The other example in misconduct illustrated by Coles entails an instance wherein Coles was charged by Fair Work Ombudsman to have made unfair treatments to trolley collectors. It has been strongly noted in that all of the oligopolies shall not necessarily bad, and they shall solely be bad in case they shall use poor policies (Sheen et al., 2015).

In this context, the greatest issue which faces Australian economy shall be with respect to enforcing competition rules being poor and ineffective (Sheen et al., 2015). To take an example, a firm which shall undertake an action of anti-competitive nature shall be allowed in a neglectful manner for doing so. When any company that buys another for slowing down competition shall be an example for the same. The ACCC has permitted certain actions of this nature, yet in real sense, the same was meant for reducing competition level. The reasons on why domination from oligopolies shall not be good in any economy will be that in case there is an industry being oligopoly, only fewer companies shall benefit and hence the same does not stimulate expansion in business (Sheen et al., 2015).

Recommendation & Conclusion

Apart from unfair domination from oligopolies, poor regulations in such market shall further lead to adverse impacts on national productivity, consumers, employees, suppliers and contractors (Allen et al., 2021). Hence, efficiency shall need to be enhanced by way of equipping ACCC with effective and action-focussed regulatory tools. The overall notions concerning Australia representing a home that favours corporate oligopoly can be noted to reaching an end since as to an increasing extent digital economy has been reducing entry costs to a market. In case entrance costs continue to reduce and the various competition regulations get enforced in an efficient manner, market structure of oligopoly shall be highly effective to the economy.

References

Ali, B. J., & Anwar, G. (2021). Marketing Strategy: Pricing strategies and its influence on consumer purchasing decision. Ali, BJ, & Anwar, G.(2021). Marketing Strategy: Pricing strategies and its influence on consumer purchasing decision. International journal of Rural Development, Environment and Health Research, 5(2), 26-39.

Hult, G. T. M., & Ketchen, D. J. (2017). Disruptive marketing strategy. Ams Review, 7(1), 20-25.

Kozlovskyi, S., Shaulska, L., Butyrskyi, A., Burkina, N., & Popovskyi, Y. (2018). The marketing strategy for making optimal managerial decisions by means of smart analytics. Innovative Marketing, 14(4), 1-18.

Lagat, C., & Frankwick, G. L. (2017). Marketing capability, marketing strategy implementation and performance in small firms. Journal for Global Business Advancement, 10(3), 327-345.

Mothersbaugh, D. L., Hawkins, D. I., Kleiser, S. B., Mothersbaugh, L. L., & Watson, C. F. (2020). Consumer behavior: Building marketing strategy. McGraw-Hill Education.