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Analysis of Market Structures in Australia


Conduct a brief analysis of market structures in Australia


The site, where the goods and services are traded for cash or any other counterpart, is termed as a market. The term market is considered in the much broader term when narrating it in the prospect of Economics. In Economics the term market is not limited to a specific place or area, it extends to the area wherever the sellers and purchasers operate. In order to control and mould the market and its various zones, a good marketing structure is required. This will help in determining various parameters like the gravity of competition going on in the market for a specific product, the total figure of buyers and sellers along with their nature, and individuality and the way to enter and depart from the assignment. The market which is very competitive is less influential to the entities. In this assignment, the market of Australia is being considered to discuss its structure and analyze its characteristics. In this report a detailed analysis of market structures in Australia is conducted. Many types of markets are prevailing in Australia, of which the prominent ones are monopoly, duopoly, monopolistic competition, and oligopoly. The structure of the market should be vibrant and dynamic in nature which should be changed according to the demand of market and variation in competition level. While changing the structure of the market the characteristics and predilections of the buyer and the effect of market change on the product should be analyzed.

Different type of Market structures in Australia
In a market, if there is no alternate option for a certain product or a service, then it is termed to be a Monopolistic market. It enjoys the privilege and freedom to alter the price of goods and services without bearing in mind any marketing conditions or variation in the demand-supply curve since the certain product is only produced by the single producer. In this scenario, the enterprise can check the entry of new competitors since the control the production is only limited to them. In the case of Australia, the electricity supply, water supply, and the boards handling the public utilities are solely limited under the control of the government. The entities operating in the monopolistic market are generally termed as ‘price setters’ because of their high position in the market and ability to change the price of the product without considering any risk (Spence, 1976).

Apart from these entities, there are some monopolies enlisted in the ASX list and hence trading in Australia. Since these companies possess great power in the market, they are able to earn a large profit. For instance, Sydney airport can be considered as a monopoly asset possessed by the government of Australia because of its strategic position in the aviation market. Sydney airport is the sole airport Australia which offers sufficient and quality services to the citizens and the tourists and thereby contributing the Australian economy in an immense way. The monopoly of the Sydney Airport is safeguarded by the Australian government which prevents the entry of other competitors in the market.

A market which is being controlled by several entities, preferably a small group of market swayers, is termed as an oligopoly market. Because of its odd structure, it is also sometimes termed as an imperfect market. In an oligopoly market, there are only a limited number of entities who produce a similar type of products. In an oligopoly market, the entry of other competitors is controlled by the entities that are already in the market. In an oligopoly market, the entities alleviate the competition by buying the maximum of shares. Since the market is controlled by a small group, they sell all similar type products at a similar price to avoid unwanted competition among themselves. Though the products are sold at the same price the entities compete in selling more amounts of products to make more profit than others.

Major companies in Australia like Kellogg’s, Coca Cola, Dunlop, and Bridgestone can be considered as some of the major oligopoly companies. The telecommunication industry of the Australian market has currently risen as a major oligopoly market, which is making a great impact. Before the entry of other companies into the telecommunication market of Australia, Telstra was the sole giant company in this sector. Later two more entities, Vodafone and Singapore based company Optus entered the market jeopardizing the position of Telstra in the market. It was broadcasted that the Singapore telecommunication is delisting itself from the ASX and making the Optus company the part of the market to ensure the threat to Telstra. Although Vodafone was facing some problems at its early stage in Australia, after sorting out the network issues it also ensured its position in the market. It can be seen that most of the markets in Australia are subjugated by the oligopoly market. It is also being observed in the Australian market that each sector of the market is being controlled by the few leading companies and investors prefer to invest in these companies to get higher returns. It is being confirmed by a study conducted by UBS that the industries which are operating in an oligopoly market perform 4.9% better than other companies on an annual basis. The government of Australia has now established the Australian Competition and Consumer Commission to prevent the consumers from being exploited and oppressed by these monopolies and duopolies. Currently, it happened that ACCC has determined and fixed the cost that can be charged by Telstra to its competitors to use and access the Telstra’s network. It was a controlling measure taken by the ACCC to control and regulate the unreasonable price charged by the Telstra Company.

If in an oligopoly market the number if entities are limited to two then that market is termed to be Duopoly. It is just another variant of Oligopoly. Before the entrants of foreign entities from Germany, the grocery sector of Australia was a duopoly market. Around 80% of the market was being controlled by the two leading companies, Woolworths and Wesfarmers-owned Coles for decades.

The oligopoly market of Australia is now facing the risk of the demise of various sectors because of some inopportune events. The companies which controlled the grocery market of Australia is now facing heavy competition from other companies like Costco, Aldi, and the German-based company SPAR. This scenario will create the same result which happened in the United Kingdom market. Oligopoly market which was the main and prevailing market structures in the Australia for decades is confronting challenges and competition from other companies and facing the risk of being wiped out from the market.

The cases of Coca-Cola and Pepsi are used to explain the changing and mutable market structures in Australia. When compared, Coca Cola possesses market share three times that of Pepsi in the Australian market. Pepsi had declared itself insolvent at the time of great depression. In that situation the Coca-Cola company possessed had the ability to buy the Pepsi Company but it refrained from it. The Coca Company had an immense chance to buy Pepsi and ascertain its monopoly in the market which may have resulted in earning humungous profit in the coming years. Coca Cola refrained from this decision because even it doesn’t have the monopoly; the company had the possession of market share three times more than that of the Pepsi. Thus the Coke was available rather than any other products all over the world. Most of the consumers preferred for Cola rather than Pepsi, and the retailers kept providing the option of only these two colas. Thus Coca Cola had already conquered this duopoly market and preferred by its better marketing strategy, availability and the competitive price (Hull, 1991).

Monopolistic Competition market is another form of the market which is very much prevalent and predominant in the Australian market. In this market structure there no such limitations in the entry and the departure of entities into the market and hence it is termed as the perfect form of market structure. In this sort of market structures in Australia, the product has similar but its own differentiating characteristics. In the absence of one product, another product can be used as an alternate one. The monopolistic competition market is very vulnerable to the minute changes in the market trend and change in the price of the product. In this sort of market structure, most of the companies rely on advertisement to earn more profit than their customers. In monopolistic competition, the entities concentrate on increasing the goodwill of a product and hence increasing its brand value. It has been observed that the buyers are more inclined and loyal towards brands and are ready to spend extra money to acquire the product (Zhang and Duan, 2010).

The way of entry and departure in the monopolistic market is very easy and that is how Starbucks left the Australian market after functioning for eight years. In this sort of marketing structure, delineating the product plays a significant role in the success of the company. When analyzed in detail it was found that the collapse of the Starbucks in the Australian market was more of a localized nature. Starbucks had always provided their customers with standardized products and thus it failed to identify the tastes of the local people. Starbucks later introduced some variations in their product but the new strategy was very late to be implemented. Starbucks failed to identify that the preference of the Australians matched more with the Europeans instead of Americans.

Another factor which contributed to the downfall of Starbucks was the pricing of its product. The prices of the product were comparatively very high when compared to other local cafeteria companies. The customers of Australia didn’t find the product of Starbucks worth enough to pay high prices. Thus the largest coffee brand of the world botched in retaining the customers as they were unable to introduce anything new in the market. From this, we can observe that in a monopolistic competitive market, in order to maintain the sustainability and consistency in the monopolistic competitive market of Australia a company should analyze the taste and preferences of their targeted customers. Since this sort of market structures in Australia is very vulnerable and a small change in the market ratios will create a great impact, the company management should understand and attain thorough knowledge of the working of marketing curves and should adjust to a different type of market structure followed in different companies.

If observed, it can be noticed that the Markets of Australia are mostly following the market structure of oligopoly and duopoly. A monopolistic market is also present in the country, but they are mostly limited to public sectors and are very few in number. The monopolistic competitive form of market structures in Australia is very rarely followed in the country since it is a very competitive marketing structure and it is very hard for new entities to survive in this structure.

It can be hence concluded in the report that even though the competition is very severe at the global level, Australia is following the trend of adopting a monopolistic market structures in their market. Australia was the only company which remained unaffected at the time of slump in the international economy. The companies following the monopoly market structures in Australian prefer to invest their money in discovering different path changing innovative ways by conducting in-depth research and development activities. At present, the country possesses only two major airline industries and two retailers which show that the country has a strong predisposition towards duopoly market structure. The banks of Australia follow Oligopoly structure of the market in the banking industry which consist of only four major entities. Market structures in Australia assignments are being prepared by our marketing assignment help experts from top universities which let us to provide you a reliable best assignment help service.

Hull, J., 1991. Introduction to futures and options markets. Englewood Cliffs, NJ: Prentice Hall.

Spence, M., 1976. Informational aspects of market structure: An introduction. The Quarterly Journal of Economics, pp.591-597.

Zhang, J. and Duan, Y., 2010. The impact of different types of market orientation on product innovation performance: Evidence from Chinese manufacturers. Management decision, 48(6), pp.849-867.


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