Competition (BUSINESS 305 CASE ASSIGNMENT MODULE 3) Essay

Competition (BUSINESS 305 CASE ASSIGNMENT MODULE 3) - Essay ExampleWhile it may stand to reason that OPEC with its fair share in percentage of global cover production is able to effectively manage prices, it hasnt necessarily happened that way. increase pressure from other factor including competing regions outside OPEC such as North Sea and Central Asian states, has resulted in large fluctuations in oil prices in recent past.Formed primarily to look after the oil exporting interests of member countries, OPEC has a clear set of objectives where it claims to balance member country requirements with needfully to stabilize world oil prices. Its charter states that OPEC would strive to eliminate harmful and unnecessary fluctuations in global oil prices and ensure efficient, economic and regular come out to buying nations while at the same time coordinating among member countries to share and unify oil policies to protect their interests (OPEC Statute 1).Even though the oil cartel has been a major force in global economy for over 45 years, it has had its own set of shortcomings in vision. At least in two ways in the past OPEC tried to raise prices by reducing export of oil. In the first instance, in the early 70s, the prices spiked by around 50% and in the second case, the maximum increase was 34% in 1980. In each period of OPEC intervention, the price increase was short lived and could not be maintained.The reason for not being able to sustain the price increase is rooted in the simple definition of economy that it is governed by people and its port. This behavior then defines the supply and demand relationship that forms the basis for price stability and trends.The sudden rise in oil prices as a result of OPECs cutting of exports happened because the supply and demand of oil, like any other commodity, is inelastic in the short term. When the OPEC countries