Managerial Economics

COMPETITION IN THE REAL

WORLD & ECONOMIC ANALYSIS

PRESENTED BY,
GAURAV H. NANJANI
PGDBM. BATCH 09-11
RIZVI MANAGEMENT INSTITUTE.
BANDRA (w) MUMBAI
 INTRODUCTION
 Competition…


 Competition in economics is a term that

encompasses the notion of individuals and
firms striving for a greater share of a
market to sell or buy goods and services .


 Definition by Merriam - Webster …



 Competition is seen as a state which

produces gains for the whole economy ,
through promoting consumer sovereignty .

Competition in the Real
World
 Economics is a social science.


 There are various kind of competition existing in the

economy i.e. Pure, Perfect, Monopoly and
Oligopoly.


 It is a fight between the forces of monopolisation and

the forces of competition.
Example Health Care Industry

 Health care is on a collision course with patient

needs and economic reality. Without significant
changes, the scale of the problem will only get
worse


 The most pressing task for leaders in health care

is to create a new and better structure

 Economics Analysis
 Systematic approach to determine the optimum use
of scarce resources, involving comparison of two or
more alternatives in achieving a specific objective
under the given assumptions and constraints. It takes
into account the opportunity costs of resources
employed and attempts to measure in monetary terms
the private and social costs and benefits of a project to
the community or economy.

 Michael Porter's Five
Forces


 A framework for the industry analysis and business

strategy development


 It determines the competitive intensity and attractiveness

of a market.


 According to Porter, the five forces model should be used

at the industry level; and not at the industry group or
industry sector level


 E.g. The Airline Industry.

 Case Study
 BACKGROUD


 Excellent Ltd. is a company which into existence in

1996.


 The product manufactured by Excellent is isocyanides

which is an imported Raw material.


 Excellent Ltd. at the beginning adopted an focused

approach with differentiation strategy (quality).

 Cont….
 In 1998 as a part of its corporate level strategy it went
for a vertical and concentric diversification.


 It went into technical collaboration with Germany

Ricardo Ltd. to manufacture furniture.


 In 1999 the company entered into Bus-seat sector.


 Problems
 Improper strategic planning.


 Lack of proper Market Research.



 Over dependence on imported Raw – Material



 They could not even tap even the private fleet

owners since they had a sizeable market.

 Solution
 According to Michael Porter’s Five Forces Model.
THANK YOU!!!