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The Herfindahl index is used for determining market competitiveness and is regarded as a common market for measuring overall market concentration in the future. The index is used for developing a suitable evaluation of market share for each of the firms and develops a suitable utilization procedure for determining overall competition among the firms. This provides a measurement of appropriate position of the relative position of market position for relevant firms and develops a suitable position in the market. Herfindahl Index provides a relative position for measuring position of the firms present in the market and attain an overall advantage in operations.
In a three market, the three shares spilt is 50%, 30%, and 20% and the Herfindahl Index is calculated by squaring market share of each of the firm. The index takes into account the relative size and distribution of overall share of the three firms in the market. The calculation approaches zero during presence of the market of a large number of equal amount of firms and develops a strong competitive edge in the market. There is an increase in the total amount of percentage in the index with a decrease in the total number of organizations present in the relative market. It provides disparity in creating an appropriate size and measurement for managing calculation of the overall nature of the firms in the three markets for the firms.
In this case, Herfindahl index is calculated by measuring squares of the market shares for the respective three firms present in the market. The index calculated for the three market share spilt of the firm is 50*50+30*30+20*20=2500+900+400=3800=0.38%. The calculation shows that there is a presence of low market performance by the firm and manages to develop suitable position in the market. The percentage of index signifies that there is a presence of relatively low competition in the firm and achieve overall stability in the firm.
Economics of Scale is regarded as the situation where there is an increase in the total average costs per unit of the total decrease with the relative increase in scale or overall magnitude of the production being produced by the firm. This phenomenon is useful for evaluating various types of variable costs in the production line with an increase in overall output in the production of the firm. There is variation in between variables as a result of a fall in the total variable costs and also measure differences between operational deficiencies and variation in the synergies for the total production.
Economies of Scope is a concept where the total unit cost of the product will increase with a decrease in the variety of the overall product. There is development of suitable variety in the overall production line for the output of the firms and creates and continues to provide suitable resources in the market. This procedure covers a major part of the areas in providing an appropriate measurement of the output in the production unit and reduces inefficiency in the operations. Thus development of bulk amounts of similar products in the market results in a decrease in the efficiency of the operational process and also lower overall cost of the production. This creates a direct effect on the overall production process for the organization in the market.
C(50,0)=100 and C(0,100)=200 and C(50, 100)=400
Formula for determining economies of scope is as follows:
TC(QX, QY)<TC(QX, 0)+TC(0, QY)
Therefore, the total economies of scope is 100+200=300 <400.
Hence, it means that the total economy of scope for the form is less than the standard value of production. It provides a direct impact on the overall operations and creates direct impact on the operations. This depicts that the decrease in the overall standard of production for the company provides direct impact on the organization and reduces efficiency in operations.
3a.
Integration-Responsiveness Framework is a phenomenon that focuses on summarizing and analyzing two strategic needs of the value chain activities of the firm in the global scenario. This is used to develop a suitable responsiveness strategy for measuring effectiveness in the overall operations. It provides a basic platform for improving redundancies in operations and creates opportunities for developing strategic edge in the market. Besides, there is formulation of feasible strategies for managing balance in operations and procure global competition in the environment. The two-dimension of the framework are as follows:
Forces for Global Standardization
In developing global standardization process, it is vital for providing a suitable evaluation of the forces used for managing principles of global standardization. There is a presence of large amount of drivers in the market that provides a direct effect on managing the needs and wants of the customers, In this aspect, vital forces are drivers related to cots, competitive and governmental drivers which provides a drastic impression on the overall operations. This allows a sense of transparency in the globalized approach for conducting operations and maintains stability. The evaluation of appropriate forces that drives global standardization is used for formulating economic, strategic and operating aspects of the integration process. Moreover, the development of cost advantage principles and reduction in operational efficiency provides a direct impact on the operation globally. There is a need for developing suitable methods for procuring suitable utilization of raw materials and provide affectivity in the operations.
Forces for Local Responsiveness
In this dimension, there is extensive focus developed on managing strong differences in the overall demand of customers in the market. This might vary due to differences in the number of cultural tastes and preferences available for marinating appropriate position in the market. There is the presence of diverse cultural frameworks in various countries which provides a direct impact on the operations of the company and develops variation in the overall tastes and needs of the customers in the local culture. Thus, there is a need for procuring a systematic adaptation in the process and manage the existing process. The availability of total amount of labor varies due to fluctuation in the total needs and wants of the people in respective countries. This dimension is necessary for managing to tackle negative situations predominant in the local area and develop a large number of resources for the people. It also provides a direct effect on overall variances in the transportation and communication costs prevalent in the countries.
The utilization of Integration –Responsiveness Framework provides appropriate strategies for reducing inefficiencies in operations and procure suitable resources for improving current position for the firm in the market. The procurement of strategy requires lower costs due to the variance in the total amount of scale and scope of the economy of the firm. In addition, the development of a framework provides basic insights in managing overall production and also provides basic systematic operations for developing current value chain activities in the future. This allows in managing to provide suitable flexibility in the operations and reduces flaws by creating a wide range of strategies in the future. There is a development of increased customer proposition in the market and improves overall effectiveness of the firm.
Furthermore, this framework provides basic insight on improving efficiency within production lines and transfer best practices in the markets. This creates a sense of a systematic approach for managing to develop the most appropriate products in the market for the organization and create balance in operations. It provides an enhancement in the production system and develops affordable practices in the future.