Lowes in the Marketplace Essay

2545 Words Feb 14th, 2011 11 Pages
Lowe’s in the Marketplace ECO415 Applied Economics in Business Student’s Name: Instructor, Date: Lowe’s In the Marketplace Lowe’s was ranked 42nd in the Forbes 500 top companies in 2009. It has grown into the 2nd largest home improvement retailer in the United States. In constant competition with Home Depot and other stores, Lowe’s must find a way to remain competitive in an oligopoly marketplace. It is important to understand not only what type of market Lowe’s operates in but also the advantages and disadvantages when reviewing margin and profits. Four Market Types Before delving into the specifics of …show more content…
A monopoly structure can alter the price of a product at will. OPEC produces their entire market supply of goods and services. A monopolist determines their rate of output by using the profit maximization rule. In order for OPEC to maximize their profits, they must produce at rate of output where marginal revenue equals marginal cost. OPEC maintains its profits by having complete control over price. Because oil is a necessity, they have the option to hike their prices up or lower their prices. Consumers basically have no choice but to pay for oil prices created by OPEC since they have no competition. When looking at Monopolistic Competition, the clothing company Express is a good example. In monopolistic competition, the demand is relatively elastic because each store faces competition from a large number of other clothing stores. In order to maximize their profits, they should continue their coupon specials such as “spend $150 and get $30 off.” They must also stay ahead of the competition when it concerns customer service, which always plays a critical role in where consumers choose to spend his or her money Lowe’s is part of the oligopoly of home improvement retail stores. It seems as if Lowe’s and Home Depot the same tactics to stay ahead. In order for Lowe’s to maximize its profits in the case of oligopoly, they must continue to come up with new ways to keep the customers satisfied and know what their customers prefer.

Related Documents