Free Market Competition Essay Sample
The ‘Dog eats Dog’ cycle is a term commonly used to describe an intense market competition. The competition usually arises in a market where the goods and services availed have become commoditized in the sense that one company cannot create an competitive market for its goods apart from pricing. Due to technological innovation, frequent iteration and extensive education, goods become commoditized hence widely accessible. The complex and expensive commodities in the past become simple and normal commodities in the sight of the consumers or market. In an economic perspective the dog eat dog cycle often arises when the market structure for a product changes from monopolistic competition to perfect competition (Barnes 2008).
For instance, in the communication industry computer and phones have been commoditized. Revolutions over time have changed the industry for a better society. The computer technology was invented in the 20th century and was widely accepted for personal services. It then followed the digital revolution that converted the analog system to the digital configure. This advancement facilitated manufacture of several copies of computers that were similar and identical. In the 1980s, computers became familiar with the public in developed countries and millions of them were purchased for home use. By the end of the 1980s, knowledge on use of computers was necessary for those seeking jobs. In the 1990s, the use of computers was more popular leading to of the World Wide Web. Many companies were connected hence enjoying the privileges of wider market coverage. In the 2000s, cell phones became popular in western countries. After the revolution in western countries in the 1990s, digital revolution spread out to developing countries with over three billion people being connected. In the 2010s, there is a link of the internet with mobile devices. It is also important to note that over two billion people are in social sites and computer tablets and phones are expected to increase rapidly (Barnes 2008).
One of the companies engaged in the production of computer gadgets is the Dell Company. Having the head quarters in Texas USA, it has grown by increasing its customer base and through mergers and acquisitions. Due to the stiff competition faced from other companies like HP, Toshiba, Apple, IBM and Samsung. Dell has worked harder to ensure it retains its market share through producing advanced products that suit the ever-changing consumer specification. Commoditization of computers has greatly affected the overall marketing strategies of the companies in the industry. Most of the consumers for instance cannot differentiate products from Dell that have similar specification as those from Hp and other companies in the industry. The only factor that they determine the product to purchase is the relative price difference. Therefore, Dell will choose to reduce its prices in order to maintain its market share. Dell hence has to acquire some of the companies that are a threat to its market in order to reduce the on production and marketing costs (Barnes 2008).
Due to existence of a free market economy, a free market structure was adopted in the communication industry. Overtime communication gadgets were commoditized making the products indifferent in the eyes of the consumer. Therefore in order for the companies to maintain their market share they tried to acquire those companies they felt were strategic to reduce the production cost and create monopolies. The factor of creating a monopoly never came to be due to legal and ideological restrictions .The companies hence resolved to maintain their market shares through creating oligopoly markets whose demand curve was a kinked curve. The oligopoly market structure happens to be the structure currently in the communication industry since the prices of various products that seem to have similar specifications are sold at almost equal prices regardless of the producing company. For instance, laptops prices in Dell are relative to those from Hp or Toshiba. Day by day more innovations and modifications arise in the communication industry to meet the ever increasing consumers demand and improve on efficiencies. This is encouraging since efficient technology is critical for the development of any economy. We can therefore conclude that even though the Dog-eat-Dog competition is beneficial to the consumer, it is not favorable to the economy in general since it has adverse effects that in one way or another would affect the consumer at a later stage. For example, it would be useless to lower prices of communication gadgets to an extent it would cause to unemployment or collapse of an industry.