Monopoly power is the ability of firms to create product differentiation, and if that product differentiation is accompanied by a high cost of entry into the market, then firms have greater leverage to raise prices. To prepare to complete this week’s discussion, review the following resource:

• Herfindahl-Hirschman IndexLinks to an external site..
• The Five ForcesLinks to an external site..

Context

For this discussion, the focus will be on examining Porter’s Five Forces as a tool for looking at the pressures on profits.

Specifically, how does Porter’s analysis examine the stress on profits from all directions and all dimensions of a firm’s environment? You will be applying this tool by specifically looking at the market structure in which a firm competes. You will need to be able to distinguish an oligopoly from a monopolistic competitive market structure.

Post a Response

In your discussion post, address the following:

1. Choose one of the following groups and use Porter’s Five Forces to analyze the pressures on profits for your chosen group’s firms.
   • Group 1: Firms in the retail sector (e.g., Amazon, Walmart, Target, Kohl’s, Sears, Macy’s).
   • Group 2: Firms in the wireless services industry (e.g., Verizon, AT&T, Sprint/T-Mobile; focus on telecommunication services, not on the sale of phones).
2. For each group determine and explain whether the group is monopolistic competitive or an oligopoly. Be specific in which market structures the firms operate.
3. Choose one of the firms from one group.
4. Using Porter’s analysis, what are the threats to profitability faced by the firm?