Introduction
Understanding the nature of the industry is crucial for the survival of any business and Michael Kor is no exception. The company is among the top of the line fashion designers that is highly stocked in American malls. However, within the same malls there are other brands by leading fashion designers like Clavin Klein, Donatella Versace, Giorgio Armani, and Coc Chanel among others that Michael Kor has to compete against for maximization of profitability and retain its market share in the industry.
Four Firm Concentration Ratios
Since the firm operates in an oligopolistic market structure, it is evident that there are numerous sellers and buyers of the merchandise which are almost similar. Therefore, the four firm concentration ratios are essential in the determination of the extent to which the fashion design industry is oligopolistic (Henninger, Alevizou, Goworek, & Ryding, 2017). Moreover, the concentration ratios are significant in the establishment of the degree of market control retained by the four leading fashion design companies.
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Market Structure
Understanding the market structure is also vital in discussing the nature of the industry for Michael Kor as there are aspects of the market structure that influence decision making process within an organization. Such factors comprise ease of entry or exit into the market, conditions for demands, the cost of the demands, the concentration of the companies, and the number of competing firms (Henninger et al., 2017). Understanding these factors will provide Michael Kor the company’s managers with opportunity for making informed decisions.
Conditions for Oligopoly
Since Michael Kor’s market structure is oligopolistic, a good comprehension of the oligopolistic features such as the companies within this market structure produce merchandise that is similar or distinguished. Nevertheless, mangers at Michael Kor need to understand the settings of the market as their decisions could have an effect on the choices of other fashion design brands within the mall.
References
Henninger, C. E., Alevizou, P. J., Goworek, H., & Ryding, D. (Eds.). (2017). Sustainability in fashion: A cradle to upcycle approach . Berlin: Springer. pp. 57-86.
