Assignment on Business and Economics

Running head: Business and Economics
Business and Economics
Name of the Student
Name of the University
Author Note
Course ID:

Business and Economics1
Table of Contents
TASK 1:.....................................................................................................................................2
Answer to a:...........................................................................................................................2
Answer to b:...........................................................................................................................3
TASK 2:.....................................................................................................................................4
Answer to a:...........................................................................................................................4
Answer to b:...........................................................................................................................6
TASK 3:.....................................................................................................................................8
Answer to a:...........................................................................................................................8
Answer to b:.........................................................................................................................10
TASK 4:...................................................................................................................................11
Answer to a:.........................................................................................................................11
Answer to b:.........................................................................................................................13
References................................................................................................................................15

Business and Economics2
TASK 1:
Answer to a:
The banking industry falls under the oligopolistic market structure. This is because
there are limited barriers to entry and exit into the banking industry. Banking or investment
institutions are crucial for every economy. They are the backbone of an economy. This is
because, for the growth and development of any sector, finances or funds are extremely
necessary. Thus, several reputable banks and financial institutions together form the banking
industry. Thus, banking falls under the classification of an oligopolistic market structure. This
industry uses advertising expenses as a tool to attract consumers to deposit money in the
respective banks. Additionally, as the criteria of an oligopolistic market suggest that there are
few larger firms, which dominate the entire industry or market system. Similar to these
characteristics, in the banking system, few large banks dominate the entire global banking
network (Forbes. 2020). On the other hand, in certain economies like in Australia, few large
banks collude to form a cartel with the help of an agreement. This formation of cartels helps
in increasing profitability and creating dominance in the entire market system.
In our case study, we have decided to focus on JPMorgan Chase &Co, which is one of
the largest multinational banks. Business firms know JPMorgan Chase for providing valuable
investment banking and financial services and several other forms of financial transactions
and asset management services (Germonprez et al. 2013). Other than this, JPMorgan Chase
provides commercial banking services and community banking facilities to consumers. This
banking organisation is usually situated in the United States, with its operations around the
globe. This public limited bank has successfully expanded its business in the global platform.
This bank can be said to belong to an oligopolistic market structure because of the presence
of a large number of firms in the banking industry. There is extensive as well as stiff

Business and Economics3
competition in the market system. Apart from JPMorgan Chase & Co, other American banks
rule the financial and investment system of the entire world. The four major banks of
America are dominating the banking industry, which is acting as a collusive oligopoly (Baily
Bekker and Holmes 2015). The other major and large banks or investment banks are the
Goldman Sachs Group, the Bank of America and Morgan Stanley.
Together with JPMorgan Chase, these form the largest and most dominant investment
banks in the world. They have the highest market capitalisation and asset size that proves
their dominant power. JPMorgan Chase & Co has successfully maintained its investment and
commercial banking services in different countries around the globe. This stiff competition
presented by the four major banks of the United States, which is a multinational firm, restricts
the entry of new banking institutions in the industry (Jagtiani and Lemieux 2016). Although
the considerable market share and the collusive nature limits competitiveness for JPMorgan
Chase in the entire banking industry, yet the size and share of each banking organisation
possess threats to the public limited multinational organisation. This is because a change in
the decision of a single institution affects the profitability and business performance of other
firms in the market. These attributes of the market relate to the oligopolistic nature of the
entire system.
Answer to b:
JPMorgan Chase & Co has planned to establish a joint venture in Chinese securities in
Shanghai. This strategy has been implemented to grab power in the Chinese market. The
investment bank aims to take advantage of the emerging market in China (Chen et al. 2016).
Additionally, China is bestowed with a developed economy with an attractive power for
investments. The owners of the company are interested in settling a joint venture in Chinese
securities to expand their operations in the market. This is expected to generate a fruitful