Index The challenges faced by financial managers in the perfect competition market structure The challenges faced by financial managers in the monopolistic competitive market structure The challenges faced by financial managers in the Monopolistic Market Structure Challenges Faced by Finance Managers in an Oligopoly According to Arnold (2013), financial management involves understanding, evaluating, analyzing and forecasting economic, legal and regulatory issues. As such, financial managers have an obligation to act in ways that improve the profitability of organizations. As part of their responsibilities, financial managers face different challenges in different market structures. Therefore, to adequately understand the challenges facing financial managers today, it is necessary to understand the general characteristics of different market structures and the impact of competitiveness, market liquidity and efficiency on financial managers. A clarification of market structures shows the fundamental context in which money managers operate. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay The video discusses four market structures. The four market structures identify the different types of markets in the business world. The four market structures are; oligopoly, monopolistic competition, perfect competition and monopoly. This paper will discuss the different types of market structures and two of the main challenges that financial managers face in these market structures. Additionally, this article will analyze and review two academic articles that address the challenges of financial managers, including competitiveness, market liquidity, and efficiency. Under this market structure, homogeneous market products and services. Under this structure, no single company can exclusively set product prices. The structure has five main features which are; buyers are aware of all goods and the prices set by each firm, all firms hold small portions of market share, all organizations are price takers, industries have free entry and exit characteristics, and all organizations sell goods similar. However, according to the video, perfect competition does not exist in the real world. Challenges Faced by Financial Managers in the Perfect Competition Market Structure The first and foremost challenge that financial managers face in the perfect competition structure is price setting. Financial managers are responsible for setting prices for their companies' products. In undertaking this task, they must consider various factors including the cost of production and the quality of the products (Moyer et al., 2011). However, in the perfect competition market structure, the prices set by financial managers will have to agree with the general market price. In this market structure, if a financial manager sets a price above the market price, no one will respect the products. As such, pricing is a crucial challenge facing financial managers in the perfectly competitive market structure. The second challenge financial managers face in the perfectly competitive market structure is maximizing profitability. Financial managers are responsible for ensuring greater profits for their companies. The different characteristics of the market structure limit the maximization of profits by the company. For example, businesses cannot set prices to increase their revenues. Furthermore, companiesthey can only serve a very small portion of the market share; meaning that companies cannot produce on a large scale to enjoy economies of scale. The video identifies monopolistic competition as a market structure in which there are many companies producing slightly different products in an industry that has minimal barriers to entry. In this market structure buyers place a special emphasis on what they value most about the companies from which they purchase products. In this market structure, the price set by one firm does not influence the prices of other firms in the industry. All firms are price makers and have a relatively low degree of market power. Companies in this type of market structure tend to advertise heavily and demand is sensitive to price changes. Challenges Facing Financial Managers in Monopolistic Competitive Market Structure One of the major challenges facing financial managers in a market characterized by monopolistic competition concerns advertising. . Financial managers have an obligation to ensure that the company's products are well known to potential buyers. With the extensive emphasis placed on advertising in the monopolistic market structure, financial managers may have difficulty prioritizing resources for advertising and improving product quality. In such a market structure, if a financial manager fails to place sufficient emphasis on an advertisement, the company's revenues may decline as customers become more fascinated by other companies' products. The second challenge faced by financial managers in this market structure concerns competitiveness. of the sector. With relatively minimal barriers to entry, any company can easily enter the industry and produce similar goods at lower prices. Product differentiation also allows for the production of substitutes by other firms. As such, financial managers are responsible for ensuring widespread promotion of the company's products. A monopolistic market structure occurs when there is only one seller of a particular product in an industry. In this structure, one firm dominates the market and can control entry, making it extremely difficult for other firms to operate in the industry. Since the monopolistic firm is the only seller in the market, the firm's demand curve is the market demand curve. The company also sets the prices. Challenges Faced by Financial Managers in Monopolistic Market Structure The first challenge faced by financial managers in monopolistic market structure concerns product development. Financial managers have the responsibility to ensure that the products produced provide value to buyers in terms of financial compensation. However, because there is no completion in this type of market structure, companies do not invest significantly in research and development. This then leads to a lack of innovation and poor products. Another challenge faced by money managers involves pricing. Financial managers are often tasked with setting appropriate prices for companies' products. In the absence of competition in the industry, the prices set by the firm become the market price. Given little price pressure on products, financial managers often have difficulty setting prices that reflect the firm's input into producing the products and the utility that buyers would derive from the products. An oligopoly is a market structure in which there are a small number of firms that hold the large majority of the market share. An oligopolistic market is similar to a monopolistic market, except., 2013).