Custom «Concentration Ratios in Manufacturing» Essay Paper

Concentration ratio is an indicator of comparative size of companies in compared to the entire industry. It indicates whether a firm is made of many small firms or few large ones. The commonly used concentration ratio is the four-firm concentration, which consist of the market shares [in percentage] of the four biggest companies in an industry. The concentration ratios are commonly used to indicate the oligopolistic degree of an industry extent of market control of the industry’s largest firms. The base for calculating the Concentration ratio is the market portion of the biggest companies in an industry.

The paper addresses the Concentration Ratios of The four common industries which are; fluid milk [311511], women and girls cut & sew dresses [315233], envelopes [322232] , and electronic computers [334111]. Regarding to the US census bureau, economic sensus [2002], this was the concentration ratios for the following industries; fluid milk [311511] is 42.6%, women’s and girls’ cut and sew dresses [315233] is 21.6 %, envelopes 322232] is 51.1% and electronic computers [334111] is 75.5%. According to the above data the industry that was retrieved from the economic census [2002] is the women’s, and girls’ cut dress manufacturing. It recorded a percentage of 21.6 out of the possible 100%. The competition involved in the struggle for market made the concentration ratio to be smallest. There are many firms that are struggle for the available market. This means that he market is monopolistic. A monopolistic market consists of several companies which are alike but do not sell identical products, customers has a perfect knowledge of the products and has a relative freedom to enter or exit the market.

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List at least three other industries which are characterized by a high level of competition. What are the four, eight and twenty firm concentration ratios for these industries?

Petrochemical manufacturing

Four firm concentration ratio-88.2

Eight firm concentration ratio-98.4

Twenty firm concentration ratio-99.9

Stationery, tablet and product manufacturing

Four firm concentration ratio- 57

Eight firm concentration ratio-67.1

Twenty firm concentration ratio-84.1

Sanitary paper production

Four firm concentration ratio-56.2

Eight firm concentration ratio-59.5

Twenty firm concentration ratio-73.8

List at least three other industrieswhichare characterized by a low level of competition. What are the four, eight and twenty firm concentration ratios for these industries?

Chemical manufacturing

Four firm concentration ratio-15.7

Eight firm concentration ratio-24.2

Twenty firm concentration ratio-40.1

Plastics and rubber product manufacturing

Four firm concentration ratio-21

Eight firm concentration ratio-30.2

Twenty firm concentration ratio-47.6

Nonmetallic mineral product manufacturing

Four firm concentration ratio-29.2

Eight firm concentration ratio-42.4

Twenty firm concentration ratio-52.6

Oligopolistic Industries

Oligopoly is a circumstance in which a specific market is dominated by a minute group of companies. In the case given, the oligopolistic industries include the electronic computer manufacturing and the Envelops manufacturing industry. Other oligopolies include chemical manufacturing industry, food manufacturing industry and cloth manufacturing industries. Oligopolies have several benefits especially to the firms because they are able to market their products with ease. They are however disadvantageous to the community or the consumers because oligopoly implies that wealth is concentrated at the pockets of a few individuals such as in the electronics computers. Emerging small business thus find it very challenging to market their products. Examples of firms operating in these industries include McDonald’s and Mission foods in the food manufacturing industry. Others operating in the electronic manufacturing industry include Actel and IBM.