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Economics - Example Papers

Economics

On the 14th of June Coca-Cola’s soft drinks were banned from the markets in Belgium and later also in Luxemburg and France. Two failures in the bottling system were the cause for the nausea that the people suffered. According to the article it would have been better if they would have acted fast and told the whole truth. Coca- Cola is in an ologopolistic market and therefore branding plays a great role. It is possible that the company ha lost market shares, due to this accident. In the ologopolistic market the firms don’t compete with price, but rather with advertising and other non-price strategies. Therefore one can predict that this scandal has shifted the demand ...

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According to the zero sum game, the lose that Coca Cola is making right now is directly proportional to the profits the other firms are making in the respected market. Coca Cola will need to take further actions to restore their brand name that they have established throughout all these years. This will significantly influences their total added costs. A strong brand has very few goods substitutes and it is very difficult for competitors to challenge the supremacy of the brand. This health scandal might have opened the doors fro new competitors. In the long run this can lead to Coca Cola’s costs for advertising to increase or furthermore they could lose control of the market and fall into a disequilibrium. The accelerator theory suggests that the level of planned investments varies with the rate of change of income or output rather than with the rate of interest. It will be hard for the big American company to fulfil their expectations of expansion in Europe with no ...

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Added: 4/21/2008 10:31:06 PM
Category: Miscellaneous
Type: Free Paper
Words: 1194
Pages: 5

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