Holding the fact that oligopoly is the market that is dominated by a limited number of players (sellers and suppliers) who determine the amount or the rate of profit they expect irrespective of the economic situation. It is important for the government to regulate their operations in order to shield the common citizen’s interests.
In the oligopoly market structure, there is a possibility that the stakeholders might agree to fix a price of their goods and services without reflecting the customer’s economic interests. In other words, oligopoly market structure is controlled by few corporate institutions hence limiting a chance for others to enter the market (Robert, 2011).
The basic factors to determine who is to join and not to join the market are determined by the few players with an intention to avoid fair competition or allow natural price setting in the market where market forces dictate the prices of goods and services. In this case few companies in the oligopoly market structure strive to retain power of determining the prices of goods and services regardless of other factors in the market.
With this kind of a market structure, there is a possibility that citizens are subjects to extortion by the few companies. In addition, other interested players are denied or shortchanged their constitutional rights to do business anywhere and in any area of interests. It is therefore the role of the government to regulate these trends in the market (Robert, 2011).
The Government is therefore mandated by the citizens to control the pricing structures of such markets formations. By controlling the pricing structure, the government will ensure that the citizens are free from exploitation and their social interests are considered when fixing prices.
If the few companies are let to operate freely without government hand in price and operational control, then there is a possibility that they will control the market, as well as exploiting the locals. Considering the fact that some of the services are basic, the government should be interested in making sure that some of these services are available to all.
If government fails to control the operations of these companies, the country’s economy will be dented, hence putting at risk the economic growth projected and the job creation in the industry. If this happens, it is possible for the country to witness social unrest hence making the country ungovernable.
To avoid this, basic service providers, such as telephone service companies, should be regulated well to avoid inconveniences in the market place. considering the fact that the government promotes entrepreneurship, it is therefore important for the government to regulate the industry whereby it is expected to provide a platform where fair competition is enhanced.
In oligopoly market structure, price competition is not one of the elements and they set prices out of agreement between the stakeholders. Thus, it is important for the government to provide quality competition in prices and services as the way of promoting innovativeness and creativity in the industry.
Fair competition will enhance job creation and fair pricing structures emanating from natural price forces within the industry (Hyman, 2011). These provisions allow the government to intervene and control market despite of the economic consequences that are determined by government’s direct involvement in the market.
The United States economy is not healthy since the cost of living has gone higher than it was expected by its citizens. Euro crisis has also been felt in the United States economy. This therefore calls for the government to put all economic structures and requirements in order to protect common citizen’s interests.
To reduce human suffering and ensure that government prevents the loss of jobs, and instead supports a program where job creation is possible, the government must be willing and able to intervene in the operation of the oligopoly market structure in the economy. Oligopoly market situation is an exploitive system which does not support the government economic justifications.
To avoid the occurrence of economic crisis, the United States government stands to control the prices of goods and services in all areas of the economy. This will ensure that the cost of living is controlled and inflation rate does not go up from the expected. It is also important to note that the economy stands to grow by creating alternative means in all sectors of the economy.
With this regard, the government is expected to protect the upcoming companies. The entry of other players in a large basic services ensures job creation and standardization of the prices in the industry. By this, there will be competition hence providing better and fair prices to the locals.
This will lower the cost of living directly. With this respect, the government is justifiably entitled to the prices and operational intervention in an oligopoly market structure (Hyman, 2011).
Merger is a tricky decision which involves serious exposure of the two sides to avoid taking up liability of another corporate institution. Management issues are also a concern in a major situation where others feel that they should not lose the company control capacity.
Self-expansion therefore remains the only alternative in this case. Besides being the only alternative strategy, capital, management and sustainability issues also arise (Djankov, 2004). In addition, there should be a considerable reason that might be sufficient to bring t forth the need to merger with other stakeholders in the industry.
The challenge is whether the company has the capability to source enough capital to facilitate self-expansion. Another possible challenge is whether the company management will be able to control and manage the growth expected.
If the company management does not have the structures and capability to control and manage growth, than the company might face a challenge of attracting more customers, as well as retaining the present customers. There is a need to streamline the relationship between the internal stakeholders if growth control and management is expected.
Sustainability of growth also turns to be a challenge mainly when the company fails to raise enough capital. Sustainability means the ability to manage the growth, as well as making sure that the company business is growing positively (Djankov, 2004).
To streamline the relationship between the stakeholders, (i.e. managers and others) government must be willing and able to structure legislatives to harmonize their relationship. Decisions made by the management offer that stakeholders should be analyzed by several bodies to ensure that others’ interests are preserved.
This will create an organization culture where all stakeholders will work together for a common good of the organization. In addition, the motivation programs should be created to ensure that all stakeholders participate in the organization objectives and those who perform well are awarded accordingly without discrimination.
Managers should also consider the company product or service consumers by providing good prices for high quality goods and services (Epstein, 2008). The company management is expected to analyze the economic environment and the economic capacity of the targeted customers before fixing prices of goods and services they sale.
This will promote the relationship between the company and the customers where customers will find it necessary to associate with the company. To the other players, the management should ensure fair competition, as well as discouraging this motivation. This will enhance competition in the industry hence promoting creativity and innovation in the industry (Epstein, 2008).
To maximize the industry profits AT&T stands to lose the interests of other stakeholders. By having an objective of maximizing the industry profit, the company must charge higher for their services to make this objective realistic. This means that the targeted customers will seek fair prices in the industry, hence failing to associate with the company. The company therefore will lose its market share to others.
By adding value to the shareholders, the company might not be able to meet its objective in the future, where more resources are needed to cope with the ever changing business environment.
More value to the shareholders will only motivate them but will not be sustainable for long. It is important for the company to balance between its corporate objectives and the interests of its shareholders as a way of ensuring sustainability both, economically and socially.
Instead of the above two economic moves, the company should give more value to the targeted customers where fair prices and quality services are assured. This will ensure that the company’s future is guaranteed mainly because the company will manage its market share.
Another alternative is to provide additional services and products to form a portfolio of a well spread investment (Hyman, 2011). This will secure the company’s future in the telecommunication industry, hence a guaranteed prosperity of the company.
References
Djankov, S., McLiesh, C., & Klein, M. (2004). Doing business in 2004 understanding regulation.. Washington, D.C.: World Bank :.
Epstein, M. J. (2008). Making sustainability work: best practices in managing and measuring corporate social, environmental and economic impacts. Sheffield, UK: Greenleaf Pub. ;.
Hyman, L. (2011). Debtor nation: the history of America in red ink. Princeton, NJ: Princeton University Press.
Robert, J. (2011). Transactions and Strategies: Economics for Management. Princeton, NJ: Princeton University Press.