Answer to Question #291812 in Marketing for bloody

Question

1. What is market failure? Why do markets fail? Why is market failure common in developing countries? Discuss.

2. Discuss the advantages and disadvantages of leaving the allocation of a country’s resources to the price mechanism?

3. Distinguish between the rationing function and the allocation function of price system and practically indicate when and where can each be used.

4. What role do “barriers to entry” play in the Structure-Conduct-Performance theory? Explain.

5. Based on pros and cons discuss the differences between the three integration models.

6. Outline the role that cooperatives play in improving market performance and explain why public policies in many countries are in favor of the establishment of farmer cooperatives.

7. Discuss the nature of agricultural marketing from the small-scale and commercial farming perspective and describe advantages and disadvantages that exist in each case. Provide four types of satisfaction that will occur through the marketing in both cases of farming.

Answer 1

Market failure is a situation where is an insufficient distribution of goods and services in the free market. Market failure when the available cash can not meet the cost and benefits necessary to meet consumer goods and needs. The developing countries experience market failure commonly because they depend mostly on the export and import of goods and services. therefore in case, the commodity price is higher especially food and energy then the country will experience a shortage of goods and services resulting in market failure.

2. Advantages of leaving resources allocation for the price mechanism include, it providing quicker means of business transactions between consumer and vendor to create a balance between supply and demand to avoid surplus and shortages of goods and services. The disadvantage of resources allocation for the pricing mechanism is that it does not always operate smoothly because of the different abilities of individuals to consume goods and services depending on their income or wealth due to the unequal distribution of vital resources in the society.

3. Rationing function of price is the process of controlling the demand of goods and services to cope with the shortage of that particular goods and services. For example, when the products are limited in the market and the demand is high, the prices are increased to discourage the demand. On the other hand, the allocation function of price is the technique of distributing prices and resources depending on consumer demand and supply. For example when the demand is high and the products are plenty, then more resources are given to that product.

4. The role of barriers to entry in the structure - conduct performance is to sustain the market power and competitiveness advantage to prevent new competitors from entering the market. For example, a company can make use of market power to set a price for goods and services to generate vital economic value. However, when the new investors enter the market with different pricing strategies, may put the company into the threat of losing its potential customers.

5. The three integration model includes horizontal, vertical, and conglomeration integrations. Horizontal integration is the strategy used to expand business by acquisition of another company in the same businesses line, vertical integration is the technique used by the company to expand by taking control of one or more stages of production and distribution that companies, a conglomeration is the integration strategy where a combination of agency or activities that are not related.

6. The role of Cooperative in market performance is to increase the financial returns to their members through businesses transaction and sharing of ideas. Most countries promote farmer cooperation because it enables small farmers to improve their production by getting support and advice from other big farmer.

7. The nature of agricultural marketing involves all operation procedures of the movement of goods and raw materials from the farm to the end-user. Those procedures start from handling products on the farm, processing, grading, and finally packaging. The advantages of these procedures include lowering the overall cost of the production, shortening the delivery times, eliminating waste of products, and enhancing the quality. The disadvantage is that the suppliers and consumers may not be interested in the product resulting in huge losses to the farmers. the four types of satisfaction are planning, organizing, direction, and handling the firm products in a way that satisfies farmers, producers, suppliers, and consumers.