Unit 9
Market Structure & Competition
Class preparation
Read Ch. 9 "Market Structure & Competition"

Lecture Topics
Types of Competition
  • Perfect competition
  • Imperfect competition
  • Oligopoly
  • Monopoly
Markets
  • What is meant by "market"
  • Product differentiation
  • Barriers to entry
  • Control over prices
Antitrust Legislation
  • Sherman Antitrust Act of 1890
  • Clayton Act of 1914
  • What is a "Trust"
  • Why don't we like Monopolies

Classroom Activity
"Financing a Business" simulation using a modified Monopoly platform.
Objectives: How to finance several rounds of business operations, make decisions at the Board level, pay dividends or plough-back earnings, and manage a P&L statement
Homework questions
9._markets___competition_homework_questions1.docx
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iPhone Generation 1 patent.pdf
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Research a Corporation
Select one corporation from the Top-500 list, below. Do internet research and complete a 2-page report covering the following topics. Include pictures, figures and diagrams where appropriate.

Please take some time with this, and write a thoughtful and informative report!
  1. Where is the firm headquartered? How many locations in the U.S. or Worldwide?
  2. What is their principle product or service? If they have numerous products, summarize or categorize them.
  3. What is their basic business model? How do they make their money? This may be simple, or complex. Try to analyze their business. What do they actually sell to make money? Give this some thought before answering.
  4. List some of their competitors. 
  5. Refer to the Fortune 500 list:  What is their Revenue? What is their Profit? What is their Market Value?
  6. What is their Profit Margin: In other words, what is their "profit as a % of revenue"?
  7. Based on your research, do you think this company is a good investment? Would you recommend buying stock in this company as a long-term investment? Explain.
  8. Is there any "recent news" about this company that you can comment on?
The largest 500 U.S. Corporations
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Lecture Slides: Market Structure & Competition
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Addendum: Raising Capital for a Business
Broadly speaking, there are three (3) ways a corporation can raise capital to expand or carry out new projects:
  1. A corporation can issue and sell shares of stock. The money raised from selling stock goes into the firm's bank account, where it can be used to carry out the intended purposes. It doesn't go into the officers' pockets! The persons who buy the stock (now called shareholders) usually expect to share in the firm's profits by receiving quarterly dividends and capital appreciation of their stock. They can also participate in the firm's decision-making, by voting their shares of stock.
  2. A corporation can sell bonds. Investors can buy a bond for its "face value", typically $1,000. This money flows into the firm's bank account, as described above. In return, the bondholder is entitled to receive interest payments, called "coupon payments", at predetermined intervals - typically yearly, semi-annually, or quarterly. At maturity, the bondholder also receives his/her principal - the original $1,000 - back again. So if the coupon is 6% annually, and the bond term is 10 years, the corporation must pay each bondholder $60 per year in interest, plus return the $1,000 principal after 10 years. Note that the corporation only pays the interest during the 10 year term, and returns the principal only at the end.
  3. A corporation can borrow money from a bank. The bank lends the money to the firm, and the firm gives the bank a "note payable". Throughout the term of the loan (for example 1 year, 5 years, 10 years) the bank is entitled to receive monthly payments consisting of principal AND interest, and the loan is discharged by the end of the term.