- Created by: keithpettifer325
- Created on: 14-11-18 13:11
Increased market power, Market share and Profitability
Increased Market Power:
As businesses expand, they become more dominant.
As a result, rivals are left with a smaller market share, and some weaker businesses may even be forced to close down.
If a business is big enough, they can dominate 2 stakeholders; customers and suppliers.
Large businesses may be able to buy more raw materials / commodities from the suppliers, and therefore buy in bulk. This means they may become the supplier’s main revenue if they are a small business. Therefore the business may be able to develop a competitive advantage over the supplier, and then the business may be able to lower their raw material costs, meaning they will benefit from economies of scale. This means that the business can therefore dominate their supplier.
A dominant business can charge higher prices if the competition in…