Daffodil International University
Faculties and Departments => Business & Entrepreneurship => Business Administration => Topic started by: Bipasha Matin on December 06, 2016, 12:25:53 PM
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Introduction
You may find industries dominated by only one firm. The largest share of
the market is occupied by the said firm and is known as the leader of the
market. The other firms operating in the said market enjoy only a
relatively small portion of the total market. They are always under
pressure by the leader because of their lack of strengths. In such a
situation, other firms continuously try to find out ways to hold their
positions and gradually increase it. They may go for changing their prices,
introduce new products, extend their distribution networks, or intensify
position to achieve this.
It leads to the conclusion that a firm does not always enjoy a monopolistic
position unless it is protected by the law of the land. Threats may come at
any time, from any corner, by any form, and in any intensity. To cope up
with this, the leader should always keep his eyes and ears open. The leader
should know that it has muscle (strength) as well as fat (weakness). His
competitors will try and do their bests either to cut his muscle or to exploit
him by taking advantage of his fat. If he is unable to hold his muscle and
reduce his fat, his position once may become vulnerable in the face of
competitive action. He may thus lose his position and fall back in the race,
whereas he was once leading the race. He should, therefore, foresee the
innovation that may be made by his competitors, no matter how small they
are; spend proportionately to his competitors to improve product and
related services to hold his market position; should not underestimate the
competitors’ strengths and abilities, and do the best to be most cost
effective. The leader, if wishes to hold his position, i.e., to remain number
one, may take action in three areas. They are: (i) action that may be taken
to expand total market; (ii) action that may be taken to defend market;
and, (iii) action that may be taken to expand market share. Each of the
above three can discussed in the following sections and subsections :