The influence of oligopoly on disneys behavior

Walt Disney is an American icon.

The influence of oligopoly on disneys behavior

Columbia Journalism Review Figure 5: Disney corporate structure 4. Such business practices normally develop certain characteristics inherent to the oligopolistic market structure. As Disney evolved into a conglomerate its business characteristics turned towards oligopoly. Its nature of business can be analyse to identify them with the characteristics of oligopoly.

Rea explained that an oligopolist must consider the reaction of other firms in the industry regarding its every decision and vice versa. Oligopoly pricing decisions can be so complicated and difficult to predict that theories of oligopoly price determination work best only in the short run anything can happen in the long run In fact, Katz and Rosen found that there is no one theory that describes the oligopoly behaviour for every market.

Expert Answers

Very often a firm subscribed to different oligopoly models for different products under different circumstances. If Disney lowers its prices, competitors are likely to follow and forsaking higher profits.

As an example, Jones and Robinette found that Disneyland Paris has significant impact on the theme park industries in France and Europe.

They believed that Disney will provide price leadership in the market because it has the lowest cost of production and others will price to Disney levels or risk being underprised and exit the market.

Figure 6 explains this situation. Here, Disney is shown as the dominant producer Figure 6b with its other competitors assumed to be the small producers Figure 6a. Therefore, at P1 or above, Disney will not sell anything.

Oligopoly and the Disney Company Essay Sample. 1. INTRODUCTION. The subsequent section proceeds to discuss the influence that oligopoly has on Disney’s strategies. It demonstrates how Disney develops these strategies under the oligopoly structure to remain competitive. Walt Disney Behavior and Communication Paper. . How does the government influence oligopolistic behavior? or. Describe how the ice cream industry fits the oligopoly model. The federal trade commission's approval of nestle's acquisition of Dryer. The subsequent section proceeds to discuss the influence that oligopoly has on Disney's strategies. It demonstrates how Disney develops these strategies under the oligopoly structure to remain competitive. In the final section, this report discusses the influence of oligopoly on Disney's behaviour/5(4).

Therefore, Disney can sell the difference between the quantity supplied by its competitors and the quantity demanded by the market i. Q3 — Q1 So, Disney sets its price, Pd, and its competitors must follow otherwise their sales will be limited Alternatively, if Disney were to increase its prices, the others might not in order to gain market share.

It is therefore prudent not to lower prices and only raise prices when knowing the other firms will do so. The largest or lowest-cost or most aggressive firm will often emerge as the price leader. This is totally an informal and unwritten collusion since any actual agreement would violate the antitrust laws.

Walt Disney: An American Icon | Disney's Vision for America

Apart from pricing decision, interdependence also lead to collusion. Oligopolists discover that sometimes in order to maximise profit it is best to collude among themselves and act like a group monopolist Mankiwp.

Overt collusion leads to a formal cartel setup whereas tacit collusion is an informal agreement among members on any business issue ranging from price and production to government issues Sloman For instance, Greypp.

A barrier to entry is a restriction on the entry of firms into a market or industry. According to the website AmosWEBthe primary barriers to entry are resource ownership, start-up and government policies. This simply means that their product is so much in demand that customers are willing to pay extra for them as shown in Figure 7 below.

Disney controls the family entertainment market because it has economies of scale in production, high fixed cost and low variable cost.

The subsequent section proceeds to discuss the influence that oligopoly has on Disney's strategies. It demonstrates how Disney develops these strategies under the oligopoly structure to remain competitive. In the final section, this report discusses the influence of oligopoly on Disney's behaviour. the walt disney company (disney) Walt Disney started out by producing short animated films in and in introduced Mickey Mouse, the world most famous cartoon character shown in Figure 4 below (Olsson ; Kramer ). Oligopoly and Collusion - revision video When this happens the existing firms engage in price fixing cartels. This behaviour is deemed illegal by .

The company knows what the target customer wants and has focused on market diversification with a wide array of products and services. In addition, Baum mentioned that in the media market, the high sunk costs required to establish a media outlet constitute a heavy barrier to entry.

This is true because Olsson discovered that competitors find it difficult to penetrate into the highly specialized industry in which Disney is operating due to the large initial capital investments required to enter the industry. They can erect entry barriers and challenge the theory of contestable markets by making the contest difficult Sloman Vertical integration allows media corporations to control and dominate the market by owning different media companies to produce and distribute their own products.

This control and dominance will subsequently lead to price stability even though there is a change in cost thereby maximising profit. This price stability was noted by Paul Sweeny in who developed the kinked demand curve shown in Figure 8 to reflect his observation Sloman According to SlomanSweeny argued that there is price stability even in a non-collusive oligopoly with the assumptions that competitors will follow price reduction set by the dominant player the inelastic part of the curve and will not do so when the dominant player increases price the elastic part of the curve.

Together with the marginal revenue curve and change in marginal cost curves, price stability is achieve anywhere vertically within the marginal cost curves.

Kinked demand curve Such is the impact of vertical integration that it is no wonder that media companies are accelerating their efforts lately.

Vertical integration means that businesses have a buyer-supplier relationship that represents stages of production Management Guru n. In other words it is the process where media firms own two or more distinct media sectors.

With vertical integration, media firms not only produce content but also own distribution channels to display their wares. Currently, vertical integration involves the combination of film and television show production with the ownership of cable channels, broadcast networks and stations, and motion picture theaters McChesney As McChesney noted:How does the government influence oligopolistic behavior?

or. Describe how the ice cream industry fits the oligopoly model. The federal trade commission's approval of nestle's acquisition of Dryer. The subsequent section proceeds to discuss the influence that oligopoly has on Disney's strategies.

The influence of oligopoly on disneys behavior

It demonstrates how Disney develops these strategies under the oligopoly structure to remain competitive. In the final section, this report discusses the influence of oligopoly on Disney's behaviour/5(4). This is an average exposure for the U.S. adult population of 75 hours per week, which gives the media industry incredible power to influence thinking, and behavior.

This explains why some corporate media arms are allowed to consistently run at a loss—the power to influence the citizenry's thinking and behavior is more important than the profits of an individual media brand.

theory that the media's influence resides in the "relationship between the larger social system, the media's role in that system, and the audience relationships to the media" social cognitive theory that people learn through .

Apart from that, these oligopoly traits have also influence Disney’s behaviour. Disney has reacted to the oligopoly media industry by being a conglomerate, diversifying, globalising and implementing new technologies. Disney behaves according to the industry trends to stay relevant and continuously in search of new foreign markets.

How does the government influence oligopolistic behavior? or. Describe how the ice cream industry fits the oligopoly model. The federal trade commission's approval of nestle's acquisition of Dryer.

Oligopoly - Wikipedia