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It has
a market share between 10-15% (the firm’s own estimate) .The degree of market
concentration is quite high that is the big book stores have a total market share of
between 40 - 60% (estimated figure) . Big book stores being those stores that are well
established, have been in the market for many years and are well known.
Firms in an industry compete for market share and the competition can be of many
types. Currently in this industry (bookshops) there is a mix between non-price
competition and branding. Those firms who have greater focus on marketing will have a
chance at getting more market share. Also branding does matter as people trust more
the stores that have been around for years on end like Aligarh or Iqbal or Anees book
store. These three book stores have operating in the market for near 10 years and are
well reputed stores.
Collusion most often takes place within the oligopoly market structure, where two firms
can collude and impact the market as a whole. Regarding this industry, collusion is not
present much between the book stores; every bookstore is working on their own and
there is not much cooperation present between the stores. However, there is a certain
level of interdependence present between the firms, publishers and suppliers. If there is
demand for a certain item which is not available with a certain bookstore or their
publisher, they will then contact another bookstore, publisher or supplier to get that item
Currently in the bookstore industry (specifically Lahore) the price leader is “Lala Book
Depo” in Dharampora .They cater to the government sector (this is all that we were told).
A firm’s abnormal or supernormal profit is a profit that outstrips the normal profit. In this
industry the firms are earning the normal profits that equal the opportunity cost of labor
and capital.
For every firm that tries to enter a new market and want to go global, there are certain
barriers which prohibit new firms from entering. If any local firm wishes to go global, then
it first of all needs to know about its international and globally dispersed competitors and
the barriers that it will face in going global.
Let us see some major players in the bookstore industry on the global level:
Barnes & Noble is a widely spread chain of book stores in United States. These stores
are smaller in size when compared with the other stores, being found in outdoor strip
malls and shopping malls and they sell magazines, newspapers, graphic novels, gifts
etc. Every store is different from the other in that they provide unique features that
correspond to the needs of the customers that they serve. Barnes & Noble also
publishes many books it sells, inexpensively reprinting non-copyrighted titles or acquiring
the U.S. or English language rights from another publisher.
Blackwell’s:
Blackwell is the Oxford’s biggest bookshop having more than 200,000 titles in stock that
have information regarding every subject, discipline and interest. Through out the region
it makes its books available to Oxford University and other learning institutions.
Waterstones:
Waterston’s is the largest retail booksellers in the United Kingdom - a UK based chain of
bookshops.350 shops of Waterstones are located in UK, Republic of Ireland and
continental Europe They are well known for their sympathetic reuse of buildings of
architectural and historical interest. A substantial number of the shops are close to
universities and offer a wide range of academic books as well as general books
Amazon:
Now moving on towards the barriers that this industry can face while going global:
• § Set up cost: This setup cost will act as a major barrier to the industry
as the industry has to setup new stores internationally that will definitely
require a huge sum of money and advertisements. There is also a substantial
set up involved in setting up a new bookstore locally as well.
So we can conclude that in the bookstore industry does reflect the theory of oligopolistic
market structures to some extent. We can say this by looking at the concentration ratio,
that market competition, presence of price leader, barriers to entry and some
interdependence which are the characteristics of an oligopolistic market structure. A true
oligopolistic market structure does not exist because there are no bookstores present
here that operate at the national level or in the manner that Barnes & Nobel or
Waterstones operate in their own regions.
References
Websites:
• http://www.answers.com/topic/barriers-to-market-entry
• http://en.wikipedia.org/wiki/Collusion
http://www.tutor2u.net/economics/content/topics/monopoly/oligopoly_notes.htm
• http://storelocator.barnesandnoble.com/find_a_store.do
• http://www.amazonfembks.com/
• http://en.wikipedia.org/wiki/Barnes_&_Noble
• http://en.wikipedia.org/Blackwell's bookshop
• http://en.wikipedia.org/wiki/Waterstone's
• http://en.wikipedia.org/wiki/Amazon_Books
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We would like to point out that our original intent was to get information from Saeed Book Bank in Islamabad. But when
we went to interview them, they refused to cooperate and said that they could not offer us any kind of information.
Therefore, we had to change our selected local firm.