Cereal:The Manufacturing Industry :: essays research papers fc

Cereal The Manufacturing IndustryEveryday, more than eighty million Americans have some type of texture for breakfast. Cereal is one of the most popular breakfast foods and some brand is found in almost every home in America (Topher). This Brobdingnagian industry stems from the late 1800s when John Harvey Kellogg and C. W. Post began cereal production in Battle Creek, Michigan (Topher). Today, numerous types and varieties of cereal line the grocery store shelves. However, nevertheless a few select companies make every one of those different kinds of cereal.There are four different categories into which economists classify industries. These categories are perfect competition, noncompetitive competition, oligopoly, and monopoly. Each of these four categories has its own unique characteristics. Perfect competition has an unlimited turn of firms, while a monopoly has one single firm, and an oligopoly consists of a small number of interdependent firms. The demand curve of an oligopol y depends on how firms contract to deal with their interdependence with the other firms in the industry. A firm within an oligopoly market can choose to cooperate with other firms in the industry, which is illegal, or the firm can choose to compete against the other firms. An oligopoly produces either differentiated products or homogenous products. In an oligopolistic market, instauration barriers, which prohibit new firms from entering the industry, are present. Examples of entry barriers include patents, brand loyalty and trademarks. Long-run economic profits are possible for an oligopoly, and non-price competition is a significant way to compete with other firms in the same market. Most of the non-price competition in an oligopoly comes from product differentiation. The cereal manufacturing industry is an oligopolistic market because it exhibits many of these traits.An oligopoly consists of a small number of interdependent firms. The cereal manufacturing industry consists of fo ur different firms that control almost all of the market. These companies are ally Oats, Kellogg, Kraft Foods, and world-wide mill around (Lazich 68). In 2001, General Mills and Kellogg led the industry with a market share of 32.2 and 30.7 percent, respectively (68). Kraft Foods had a market share of 16.3 percent and Quaker Oats had a market share of 19.0 percent (68). The remaining 11.8 percent of the market share was held by other firms (68). In 2002, Kellogg took the lead with 32.7 percent followed by General Mills with a 31.8 percent market share (Reyes).An oligopoly consists of either differentiated or homogenous products.