Investigate the Behaviour of Organisations and the Market...

Introduction In this assignment I will identify the structure of markets within the economy and explain how they deviate from the model of perfect competition. I will also expand on which market forces dominate the market place, identifying the organisational responses to demand including the adoption of competitive strategies within the free market. Finally I will explain the role of the competition commission and regulatory bodies. Market Types The most important factor within any market is the number of rivals competing for a share of the business. Competition, as described by Stigler, G (2008) arises whenever two or more parties strive for something that all cannot obtain. Perfect competition is seen as a theoretical ideal and†¦show more content†¦Market forces Market forces are primarily concerned with the supply of and demand for goods and services within the free market. The demand for a good can be influenced by many factors such as price, available substitutes and a person’s income. Price can be one of the primary forces when looking at the demand for a product, it does however have limitations. Demand may not necessarily rise if the price drops below a certain level, people will automatically assume an inferior product and not purchase it. Similarly if a product that is essential to the consumer is priced higher the demand may not decrease, petrol is a good example of this. In order for us to predict how much someone is willing to buy at a given price, we must first create a demand schedule, which can be represented as a demand curve. (Fig 1.) Fig 1. It is apparent that as the price of an item increases, the quantity demanded reduces. This is an over simplification as there are many non price factors affecting demand. The Ceteris paribus clause can best used to describe this method of analysis. Non price factors affecting demand Product substitution occurs when the demand for one product affects the demand of another. Although price can influence peoples decision to buy a substitute, personal taste, brand loyalty and demography can influence decisions often more persuasively than price. People’s income can also affect their purchasing habits, often increasing theirShow MoreRelatedBussiness Environment1585 Words   |  7 PagesDiploma (Business) Level 4 ACADEMIC COLLEGE OF LONDON |Unit Number |1 | |Unit Title |Business Environment | |Name of the Assessor | | |Date of Issue Read MoreBussiness Environment1600 Words   |  7 PagesDiploma (Business) Level 4 ACADEMIC COLLEGE OF LONDON |Unit Number |1 | |Unit Title |Business Environment | |Name of the Assessor | | |Date of Issue Read MoreConsumer Decision Making Process And The Beverage Brand Products1421 Words   |  6 PagesConsumers buying decision making play an important role for the success of every company or organisation. 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