The success of a company depends on how well it knows to play with various tools of economics. A firm in its day to day business operates with the help of numerous economic policies. I have tried to relate five economic concepts to the company Cadbury.
· Monopolistic Competition
A monopolistic competition is such where they may be many or several firms with differentiated products, so is the case with Cadbury. The market in which it operates there is various other firms also like Nestle, Amul, ITC, Parle etc. And it also does differentiation of its products through widespread product lines.
· Economies of Scale
Based on the subjective demand, Cadbury has been taking the advantage of bulk production by anticipating the demand and then procuring raw material in bulk according to that, this, in turn, enables them to reduce the average cost of production.
· Economies of Scope
Economies of scope occur when products require similar inputs and the differentiation in products leads to a reduction in cost Similar is the case with Cadbury. The common components of its products are Cocoa, Sugar, etc and through different variants of its products, it brings in differentiation.
· Concentration Ratio
It adds up the market share of the four largest firms in the industry. The number of firms can also be 2 or 3 as it depends. In the case of Indian Chocolate market, the industry is dominated by 2 firms
1. Mondelez 46% market share
2. Nestle 12.8% market share
Therefore, the concentration ratio comes to 61.4% which can be termed as dominant.
· Product Differentiation
It is the process of making the products stand out from its competitors by distinguishing its product and services from others. Cadbury uses various tactics like presenting its product differently, Operating with a huge line up that offers various segments like dark chocolate etc and also provides various flavours. The above can be summarised as follows:-
1. Cadbury Celebrations.
2. Different flavours.
3. Gift Packs.
4. Bourneville.
No comments:
Post a Comment