Economics Assignment: Oligopoly, Market Power and New Entrant Strategy

This essay provides a critical review of a newspaper article focusing on the oligopoly market structure of the toilet paper industry in Australia. The analysis delves into the dynamics of market competition, the significant market share held by a few major players, and the strategies employed by a new entrant, Solaris, to penetrate the market. The essay interprets the article through economic principles, highlighting the challenges and opportunities within an oligopoly. It examines how market saturation can create avenues for new entrants offering differentiated or luxury products, and it explores the effectiveness of promotional strategies and targeted discounts in capturing market share. The analysis emphasizes the importance of strategic planning in overcoming the market power of established competitors and stimulating demand in a saturated market. Desklib offers a wealth of similar resources for students.

Running head: ECONOMICS ASSIGNMENT
Critical review of newspaper article exercise
Name of the student:
Name of the University:
Author note:

1ECONOMICS ASSIGNMENT
Introduction:
Market of 21st century is largely driven by the economic principles and irrespective of the
national or global market economic thoughts are being utilized in order to enhance profit, growth rate
and sustainability of the business (Leigh and Blakely 2016). This essay is meant to perform critical
analysis of the selected article, which was published in Sydney Morning Herald with the headline “Can
toilet paper be a luxury product? Solaris attacks $1.4b oligopoly”. Through the analysis this essay will try
to understand the oligopoly market in real life scenario, then interpret the same with the economic
principles. Next to this the essay will portray personal understanding from the critical analysis of the
selected article and conclude with summarizing the findings.
Brief summary of the article:
The selected article portray the toilet paper market in Australia, which is a real life example of
oligopoly. According to the article there are three large player in the market who sales close substitute
product and possess considerable amount of market power (Evans, 2018). In addition to this, the paper
highlights that market of the toilet paper in Australia is presently flat due to the lower demand of the
said product. Lastly the report highlights that Solaris, which is new entrant to the market is willing to
sale toilet paper as the luxury good, and aims to double its revenue through stimulating the market with
their own market penetrating plans.
Economic interpretation of the article:
Oligopoly is a type of market where small number of sellers deal with large number of buyers
(Feng, Li and Li 2014). Considering the toilet paper market of Australia, it can be seen that there are
three major player. First is Kimberly-Clark Australia that enjoys 31.5% market share, then comes the ABC
Tissue that has occupied 28.6% market share and lastly Asaleo Care that has consumed 26.2% of market
share (Perini Journal, 2018). Other competitors of the market enjoys 13.7 % market share that highlights
the market power of large brands. Over the year consumers of the Australia has showcased very little

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rise in the demand of the toilet paper in the country, that highlights the saturated demand position of
the market. Under this situation Solaris paper, which is an Indonesian market giant is trying to penetrate
the market with their effective plans. Solaris is accounted for 50% market share in its origin country and
as the effective measure to penetrate the oligopoly market it aims to sale only luxury toilet paper in the
market (Evans, 2018). Their main focus if to see their products on the top rack of the supply stores like
Coles and Woolworths to double their revenue within next five year. Though there is considerable
market competition, yet the firm aims to achieve their target with promotion and with special discounts
to the female buyers. This highlights that under oligopoly market though close substitute product
produced by the competitors, yet new entrant can break the deadlock through effective planning while
mitigating the market power of the present market dominators (Yang, Ng and Ni 2017).
Macroeconomic learning from the article:
The article highlights the real life scenario and market competition under the oligopoly. It has
been learned that market competition in oligopoly comes from the considerable amount of market
share and next to this it helps the present competitors to deter new entrant (Lopez, Zheng and Azzam
2015). However, over the time customer satisfaction gets deteriorated with the same product and there
comes the market saturation that allows new entrants to penetrate market with effective market
penetrating programs (Lee, Matsumura and Sato 2017). In oligopoly market, sellers sale close substitute
product that leaves the seller with product promotion strategy as one of the best option to provide
stimulus to the market. Next to this, it has also been learned from the article that oligopoly market
allows new entrant with luxury good in order to provide substitute to enhance the saturated customer
demand and discounts can also be granted as one of the best way to entice the market share of the
present market competitors (Evans, 2018).
Conclusion:

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Selected article was based on the oligopoly market structure of toilet paper in Australia that
provided insight view of the real life scenario of oligopoly. The article highlights various points of the
oligopoly market and market competition as well as points out the strategy for new entrants.
Considering the amount of details of the article it can be stated that it clearly defines the
macroeconomic variables properly and helps the researcher to understand market strategies, market
competition and importance of supply chain in market framework.

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Reference:
Evans, S. (2018). Can toilet paper be a luxury product? Solaris attacks $1.4b oligopoly. [online] The
Sydney Morning Herald. Available at: https://www.smh.com.au/business/can-toilet-paper-be-a-luxury-
product-solaris-attacks-14b-oligopoly-20150415-1mlw8q.html [Accessed 7 Apr. 2018].
Feng, Y., Li, B. and Li, B., 2014. Price competition in an oligopoly market with multiple iaas cloud
providers. IEEE Transactions on Computers, 63(1), pp.59-73.
Lee, S.H., Matsumura, T. and Sato, S., 2017. A New Approach to Free Entry Markets in Mixed Oligopolies:
Welfare Implications.
Leigh, N.G. and Blakely, E.J., 2016. Planning local economic development: Theory and practice. Sage
Publications.
Lopez, R., Zheng, H. and Azzam, A., 2015, July. Oligopoly power in the food industries revisited: A
stochastic frontier approach. In AAEA and WAEA Joint Annual Meetings San Francisco, California (pp. 26-
28).
Perini Journal. (2018). Australian tissue market developments. [online] Available at:
http://www.perinijournal.it/Items/en-US/Articoli/PJL-44/australian-tissue-market-developments
[Accessed 7 Apr. 2018].
Yang, L., Ng, C.T. and Ni, Y., 2017. Flexible capacity strategy in an asymmetric oligopoly market with
competition and demand uncertainty. Naval Research Logistics (NRL).