Principles of Agricultural Management HW 3 - Structure-Conduct-Performance-Model-3 (Finished)

Principles of Agricultural Management HW 3 - Structure-Conduct-Performance-Model-3 (Finished)

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Kashney Welch AEB 3133 – Principles of Agricultural Management Fall 20110 Dr. Lurleen M. Walters 1.) Structure-Conduct-Performance-Model: What do we mean by this? Why is it important? What are the conditions? The Structure-Conduct-Performance Model is the fairness and the efficiency of the marketing system by examining the structure, conduct, and performance of individual markets in the economy. What we think of Structure, we think for a market to be fair and efficient, it must have a sufficient number of firms in the market and the firms that are large enough to have low operating costs per unit of out. It also must have few barriers to entry or exit as well as with those who differentiate form one another; they must have the inability to compete. The Structure determines whether a firm is oligopolistic, monopolistic, pure, or competitive. This also includes whether if there are few or many barriers to entry, its competitive edge, and whether or not a company is deemed “too big to fail.” The Structure of the marketing system is assessed using the concentration ratios, which places emphasis on the measure of certainty in the market. If a concentration ratio is greater than fifty percent, the firm is considered to be oligopolistic and less than fifty percent it is considered to be monopolistic. The Conduct in this model enhances the firm’s ability to maximize its long-term profits and measures whether it is beneficial to its consumers. The book speaks on the issue of having a certain amount of firms in the market they would form a monopoly. It also depends on the type of industry it includes. There are also cartels which are a group or parties, factions, or nations, united in a common cause; a bloc” as well as a combination of independent business organizations formed to regulate production, pricing, and the marketing of goods by the members.
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Within the oil industry, the most powerful cartel is the Organization of the Petroleum Exporting Countries (OPEC) in which they possess the technological advancements that will exclude third world countries and underdeveloped nations from dominating the
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Principles of Agricultural Management HW 3 - Structure-Conduct-Performance-Model-3 (Finished)

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