Why Do They Exist?
The barriers to entry exist due within the supermarket industry due to dominant firms ability to easily drive out less powerful firms, therefore discouraging them. The high barriers to entry also exist due to the competition that exists between Woolworths and Coles. Their competition has led them both too not letting any other firms enter the industry as they may see it as a possible threat if they let it grow.
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What was their influence to our choice of an Oligopoly market?The high barriers influenced our choice of Woolworths and an Oligopoly market structure due to its heavy relationship with competition and the implications related to it. Its heavy relationship with competition (within this particular industry) has led to high amounts of difficulty for new firms to enter the said industry, and has also brought many implications along with it, especially the issue of continuous price-cutting.
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'Winning the battle, but losing the war'In an area of Tasmania, where the highest density of Coles and Woolworths stores are located, a small family owned business is prospering (within the same industry), which is unusual given its particular location. Although the family owned business looks like its prospering, the are failing to compete with the supermarket giants behind the scenes, as indicated by their statement, 'Winning the battle, but losing the war.' The supermarket giants are pushing out the family owned business through a method known as Greenfield Acquisition (which isn't entirely legal), which is where a particular firm buys land and leaves it vacant. This method has caused problems for the family owned business as they apparently have lost 10 out of their original 12 lettuce fields. This is a perfect example of the supermarket giants driving out their competition.
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