Do you think that a firms market structure can change overti

Do you think that a firm\'s market structure can change overtime? What happens to alter the market structure the firm competes in? Has the market structure your firm is in changed? Will it change in the future? Explain using examples.

Solution

When any firm enters the market, the firm is in its introduction stage, there a lot of other firms that are offering the same product. The industry has many products of the same type with a little product differentiations. As the firm spend time in the market, the firm enhances its product and also brings in innovation. By this time owing to the huge potential, there are several other companies that join in and the competition in the industry becomes huge. As the time progresses the firm now achieves the economies of scale and the smaller companies which could not survive the competition are washed out. The firm now focuses on product and process innovation the R&D as an effort of staying in the market. The firm in the maturity stage is all about the survival of the early product introduced by the company and the introduction of the new product. Thus we see that with the passage of time the market structure changes from a pure competitive market with large competitive firms changes to an oligopoly where only a few market leaders can sustain themselves.