Business structures, according to macroeconomics, depend on how industries are organized in the market, on form that the relationship between the business structures of a company will determine the conditions of competitiveness. We can say that when competing in the sale of a product or service, we can find four types of market organization:
- Perfect competition
- Monopoly
- Monipolistic Competition
- Oligopoly
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Below we will briefly explain what one of them consists of:
Perfect competition.
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It becomes the most competitive market. Perfect competition is rare, in fact, in the purest sense of the term, it doesn't even exist. It is a very competitive system and difficult to maintain, mainly due to the fact that every small decision of a seller or buyer, in a system competition, could destabilize the entire organization, due to the tremendous impact that this action would have on the price of market. In this type of organization, an ideal state is produced for buyers and sellers: prices are standardized and products are homogeneous, in the same way, the information that is given and received is the same by all companies and the profit for each company is the same. If the profit increases for companies, the absence of an entry limit for new companies causes the profit price to return to normal.
Monopoly
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It occurs when a single company is responsible for the distribution and sale of a product, without any direct competition as there are no substitutes for that product. It is in clear contrast to the perfect competition, which we talked about earlier, since in this case, it is only one company that controls the price and sales. Usually little is produced but at a high price, and taking into account production costs and demand, the price is set.
In practice, there are no absolute monopolies, and Monopolistic Competition tends to occur more frequently. A monopoly can be found in companies with non-direct competitors, so that, if the company having a monopoly does not work efficiently, the customer may find other options Similar. On the other hand, in many countries there are laws that regulate monopolies and the control they have over the price, and therefore Therefore, many companies choose not to have an absolute monopoly, to avoid investigations and controls permanent.
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Monopolistic Competition
It would be the middle ground between perfect competition and the monopoly, it is also known as Imperfect Competition. It is the way in which many of the markets that we know work, a few companies compete perfectly in the market, but Each of them can differentiate your products from the others, you can also use advertising in different media to give information unique and new about your product, you can also use other small differences that make the product slightly different from your competitors. In this case, there are barriers for new companies that want to enter this sector, the benefits are usually higher, although the entry of a new company in the market, it can force brands to reduce prices to be stronger against companies of the competence.
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Oligopoly
The oligopoly occurs when a single brand dominates the market exclusively. Many times, they can also form a single monopoly, for example, by forming a corporate cartel, created, for example, to end competition. Oligopolies can also act non-aggressively, using non-price competition. In oligopolies, the decisions that one company will make are difficult for others to predict, since all The decision made in one company influences the others, but in this case, a single company is the one that controls the market. When they compete on prices, they can produce a lot and set low prices, as if it were Perfect Competition.
