My Super Start Up.

Getting down to Basics

1. What kind of services or goods does your firm offer? Describe your business.

We are an infant firm specializing in organic skincare and cosmetic products, that aims to branch out into the lifestyle sector in the future

2. Which market structure is your firm likely to fall under? Explain why.

Monopolistic competition, as there are firms that have similar values like us, such as Jurlique and The Body Shop

3. What is allocative efficiency?

Allocative Effeciency is achieved at the level of output level where the Marginal cost curve cuts at the Average Revenue curve: The socially optimum level of output

4. What is productive efficiency?

Productive efficiency is achieved at the level of output where a firm produces at the lowest possibility cost/unit, the point where Average Costs are at a minimum

Staying in the Industry: Cost and revenue Models

1. Who are some of your competitors? Name these firms.

The Body Shop
Jason Shankey
Superdrug
Fruits and Passions
Jurlique
Aesop

2. When there are barriers to entry, it is difficult for firms to enter or exit the industry. (pg 106-109). In order to keep out new competition, your firm may want to erect barriers to entry. What kinds of barriers to entry are you going to erect for your firm? How do you go about doing it?

We are going to use anti-competitive behavior -> setting lower prices to attract new customers and maintain loyalty from old customers so that the new firm will be able to cover costs and hence exit the infancy stage

We are also going to create brand loyalty by giving big consumers discounts, vouchers and special previleges

We will also use advertising

We aim to use to employ Economies of Scale by using:
- Government regulations
- R & D
- multi stag production
- division of labour
- indivisibility
- marketing

3. Using economies of scale is also a form of barriers to entry. Which types of economies of scale will your firm be trying to reap from?

- Government regulations
- R & D
- Multi-stage production
- Division of labour
- Indivisibility
- Marketing

4. What kind of price or non-pricing competition (pg 123) will your firm engage in?

We will be engaging in non-pricing competition.

We will use 100% organic and natural products that are certified by the OTA. The ingredients that we use for our products are fresh and determined by the seasons. It does not use chemicals or perfumes so they are hypoallergenic. We also employ simple designs on products that customers can remember and can associate. Our products are slightly more expensive as we are practice fair trade and our products are non animal tested.

5. Are you going to practice price discrimination (pg 129) to gain more revenue?

No, as we believe in producing only the highest quality products, which naturally have to be slightly more expensive. Creating cheaper prices will not allow us to practice fair trade.

the peer grading and Q1. is shown later.