A concentration ratio is a way . The European Union is currently active in a wide variety of policies from human rights to transport and trade; below is the list of some of the policy areas of the European Union. The objective of this report is to analyze on the market structure of the retail industry in the UK. In the United States economy most markets can be classified into four different markets structures. Tesco management aims to reduce the cost of purchases and operational costs through and a set of other measures in order to pass the cost advantage to customer as the main brand value. (http://www.oft.gov.uk/ about/what/#named2) You have to be 100% sure of the quality of your product to give a money-back guarantee. Tesco has already proven that they are committed towards being eco-friendly, "Tesco Plc, the world's No.4 retailer, plans to spend over 100 million pounds with British green technology companies over the coming year as it steps up its drive to halve carbon emissions by 2020.". Another company in the market structure of oligopoly has been analysed. The Commission can, does and has fined companies for all these practices. Now the focus is on putting policy into practice in to UK's market. The . Under the European Union the members can travel and trade freely without any constraints as long as the members are trading in euro (the single European currency). In the business model of Tesco, we have seen that it has organized its business model with the best strategies. Thus, the supermarket industry in the UK could be described as an Oligopoly Market. Not only is Tesco one of the most valuable brands in the . The stability pact (the main points of which were agreed at the Dublin summit of European heads of state or government in December 1996) will force EU countries into a system of fiscal responsibility which will enhance the Euros international credibility. Some exceptions to the general rules are possible. The four different types of market structure are discussed below: Perfect Competition Market Structure: In a perfectly competitive market, the forces of supply and demand determine the number of goods and services produced as well as market prices set by the companies in the market. Effective competition to provide goods and services cuts prices, raises quality and expands customer choice. I write a summary of market structure and how it affects the pricing and output decision based on Keat, P., and Phillip Young. Copy. Market Share: According to Kantar, Tesco has 26.9% of the grocery market share in Great Britain. There is no one big seller with any significant influence on the market. ?>, Order original essay sample specially for your assignment needs, https://phdessay.com/market-structures-tesco/, Similarities & Differences of Perfect Competition and Monopolistic Competition, Monopoly, Oligopoly, Perfectly Competition, And Monopolistic Competition, Monopoly, Perfect Competition, Imperfect Competition, Analysis and Comparing the Physical Storage Structures and Types, Organisational Types and Management Structures, Analysis Of Different Types Of Competition Economics Essay, get custom Tesco is headquartered in Welwyn Garden City, Hertfordshire, England in the United Kingdom. But, in economics, market is used in a wide perspective. Financial Turnaround: Thanks to the leadership of Dave Lewis, Tesco recovered from an annual loss of 6.4 billion in the annual report of 2015 to an operating profit of 1.9 billion in the annual report of 2020. The European Parliament (representing the people of Europe), The Council of the European Union (representing national governments). International business traffic is an important feature of the UK economys survival; almost 50% of UKs export is in the Non European Union zone, there fore international market has a vital role to play in UKs economy. What are its aims? How does OFT checks anti-competition? News 'Have a loaf on us' to celebrate One Stop's 1000th store. All the sellers of the market are small sellers in competition with each other. Type your requirements and I'll connect Oligopoly: The OFT has a 5 step method of keeping a good eye on business and other organisations these 5 steps start with Analysis, Prioritisation, Prevention, Partnership and Evaluation, the details of all the steps are on their website under 'What we do'. Perfect competition: Markets and Market Structures. Views 1142. Loss of national sovereignty is the most often mentioned disadvantage of monetary union. This will unleash a greater potential for growth. May 2010 showed a 2.9 per cent decrease in exports compared to April 2010 and a 21.3 per cent increase in exports compared to May 2009. From my understanding there are many possible reasons that the government should consider while joining Euro, joining Euro would reduced exchange rate uncertainty for UK businesses and lower exchange rate transactions costs for both businesses and tourists. This may lead to pockets of deeply depressed areas in which people cannot find work and areas where the economy flourishes and wages increase. The European Union has some of the highest environment standards in the world, developed over decades to address a wide range of issues. Managerial Economics, 6th edition. By continuing well assume youre on board with our Introduced in 2005, the scheme takes in about 12,000 factories and plants responsible for about half the EU's emissions of CO2. they will be extremely affected by any slowdown in the UK food market. As a result of uncertainty in the market, Tesco broadened its forecast of profits for this year to between 2.4bn and 2.6bn - less than the 2.84bn predicted by analysts. This describes us perfectly. Get any needed writing assistance at a price that every average student can afford. In this structure, multiple management systems operate to ensure that everything gets done with perfection. The total 2010 year to date value of UKs trade-in-goods imported excluding May was 59.2 billion, which has been upwardly revised by 96.7 million. European Union's rewards businesses and organisations, which reduce their CO2 emissions and penalises those that exceed limits. For Part 1 I will be describing the 4 different market structures that economist usually talk about are perfect competition, monopolistic competition, oligopoly and monopoly. Order your essay today and save 15% with the discount code ESSAYHELP, Don't use plagiarized sources. (https://www.uktradeinfo.com/index.cfm?task=euearlypub). However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a particular market. Market Collapse: Tesco has stores in different countries but still it is completely depending on the UK market. Under the system, European Union governments set limits on the amount of carbon dioxide emitted by energy-intensive industries and if they want to emit more CO2 than their quota, they have to buy spare permits but most supermarkets stores do not manufacture and this means that they will have to use eco friendly methods of business and equipment. The conditions for a monopolistic market are as follows: there is only one firm, which is large in size. Tesco trades on the London Stock Exchange and is part of the FTSE 100 index. OFT is a non-ministerial government regulator that was established by government in 1973. Using the 4 market structures I will illustrate using real life case studies and examples how a selected business of my choice has behaved/responded to its market . The Figure 2 below illustrates a typical organizational structure within Metro, Superstore and Extra formats. The single market benefits the firms, by making it easier & cheaper to do business in other EU countries. In 2007 Tesco received the Top online green award for their zero-emission delivery vans. Making it one of the best grocery store chains in the . To find the main sources of competitive advantage that Tesco has over its competitors an analysis of the structure of the industry should be under-taken (Porter, 1980). This essay was written by a fellow student. ", Tesco has over 4,000 stores across the world and out of those 4,000 Tesco has more than half of them in the UK around 2362 stores and this does not include all the Tesco metro and express stores. (Source: UK Jobs Dependent) The transfer of money and fiscal competencies from national to community level would mean economically strong and stable countries would have to co-operate in the field of economic policy with other, weaker, countries, which are more tolerant to higher inflation. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. This will unleash a greater potential for growth. The four leading supermarkets in the UK supermarket oligopoly are Tesco, ASDA, Sainsbury's, and Morrisons. . collected. Tesco is an oligopoly as it is one of the few dominant firms in the supermarket market. Market Structure Pricing and Output Decision. Pure monopoly in where the firm is the industry, for example Transport for London, the firm which owns all buses and underground tubes in and around London, this is where consumers have no or very limited choice. Oligopoly is one kind of market structure (Anderton. you to an academic expert within 3 minutes. - All firms are price takers - All firms have a relatively small market share - Buyers know the nature of the product being sold and the prices charged by each firm. An end to internal currency instability and a reduction of external currency instability would enable exporters to project future markets with greater certainty. They would be unable to devalue to boost exports, to borrow more to boost job creation or cut taxes when they see fit because of the public deficit criterion. The total equity consisted of the following items: 409M of share capital, 5 . It follows a hierarchical structure, which truly matches the demand of the huge size of the company. Tesco was founded in the East End of London, London in 1919. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. Aid for research and innovation, regional development or small and medium-sized enterprises is often allowable because these serve overall EU goals. Taxation Transport Justice, freedom Internal market Customs In May 2010 the total value of trade-in-goods imported to the UK from Member States of the EU was 14.7 billion. The European Union has some of the highest environment standards in the world, developed over decades to address a wide range of issues. Market structure is said to be the characteristics of the market. As a comparison the total value of UKs trade-in-goods exported to Member States of the EU in April 2010 was 11.6 billion and for May 2009 was 9.3 billion. In economics, market structures can be understood well by closely examining an array of factors or features exhibited by different players. The total value of UKs trade-in-goods imported for January 2009 to December 2009 was 162.7 billion, which has been upwardly revised by 238.0 million. Advantages: A single currency should end currency instability in the participating countries (by irrevocably fixing exchange rates) and reduce it outside them. The Council of the European Union (representing national governments) Market structures are the business orientated characteristics of a market; all businesses must focus on these characteristics of the market because these have an effect on the degree of competition in the industry and influence the business product or service pricing decisions. Many fast food franchises fit all or most of these characteristics. Under the new law, EU countries will have to reduce exposure to fine particles in urban areas by an average 20% by 2020. Though there are many companies operating chain retail shop . Among these three major entities, Tesco is the market leader in terms of global sales and its total market share. Actual monopoly is where the firm has somewhat majority of the market share in the industry, in this case Tesco is the most famous example, Tesco owns over 30.4% of the market share and is the leader in supermarket industry. As a comparison the total value of UKs trade-in-goods imported to the UK from Member States of the EU in April 2010 was 15.3 billion and for May 2009 was 12.2 billion. Below I have listed the advantages and disadvantages which were discussed by the chancellor Gordon Brown at the times of between 1999 and the year 2002 when the waves of countries in Europe joined the European Union and the currency: (http://news.bbc.co.uk/1/hi/special_report/single_currency/25081.stm). It can allow smaller companies to cooperate if this strengthens their ability to compete with larger ones such as Sainsburys and Tesco. 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. Make sure that this guarantee is totally transparent. Actual monopoly is where the firm has somewhat majority of the market share in the industry, in this case Tesco is the most famous example, Tesco owns over 30.4% of the market share and is the leader in supermarket industry. Loss of national sovereignty is the most often mentioned disadvantage of monetary union. In May 2010 the total value of UKs trade-in-goods exported to Member States of the EU was 11.3 billion. Austria, Belgium, Czech, Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland. cite it. In a recent investigation by the OFT has reviled that British Airways has been found guilty over the price of 'long-haul passenger fuel surcharges' and has paid a penalty of 121.5m to be imposed by the OFT, therefore enabling the OFT to close its civil investigation and resolve this case. But, each and every market in the United States is completely unique from the others.. EU has set binding limits on emissions of fine particles known as PM2.5. European Union policies ensure safer food and a greener environment, better living standards in poorer regions, joint action on crime and terror, cheaper telecoms and communication, millions of opportunities to study abroad and more. In economics, market structure is a term that describes the state of a market, with respect to competition. MARKET STRUCTURE MANAGERIAL ECONOMICS MBA SEMESTER 1 -PAYEL GHOSH 2. The firm needs to establish its price and output levels to achieve its business objective of profit maximization. We'll send you the first draft for approval by. In this sort of environment the businesses and trades people have somewhat control over their prices because of the products differentiations. TESCO SUSTAINABILITY REPORT CASE STUDY 4 Source: Thus, Tesco Inc. operates in an oligopoly market structure and competes with Asda and Sainsbury. Tesco and InterContinental plc are two UK businesses which get affected by market structures to adjust their output and pricing decisions. Patents promote innovation for inventors, which allow exclusive rights to do business for a specific duration. Founded in 1919 by Jack Cohen, Tesco has emerged to become the biggest retailer in the UK and more than 80 million shopping trips are made to Tesco stores each week (Annual Report, 2015). The four main types of market structures are perfect competition, monopolistic competition, oligopoly and monopoly. While the cohesion funds attempt to address this, there are still great differences across the EU in economic performance. The chosen organization for this study is Tesco Plc that operates in the retail industry of UK. Meaning of Market: Ordinarily, the term "market" refers to a particular place where goods are purchased and sold. The Commissions extensive powers to investigate and halt violations of European Union competition rules are subject to legal review by the European Court of Justice. Tesco and Sainsbury's had the largest share over the period . Because Tesco is a big company would have a lot of legal structures to make sure that business is operating properly. Did you know that we have over 70,000 essays on 3,000 topics in our Tesco realized, however, that changes in this particular marketing strategy had to occur. The stability pact (the main points of which were agreed at the Dublin summit of European heads of state or government in December 1996) will force EU countries into a system of fiscal responsibility which will enhance the Euro's international credibility. Buyers see different in sellers, products and will pay different prices for them. Examples of a perfect competition to its closest definition are in the financial market like stock exchange, currency exchange market and the bonds/certificates market. OFT gathers intelligence about markets and trader behaviour from a wide range of sources and then they respond to complaints about markets from nominated consumer bodies, where the OFT is able to see potential problems, the OFT undertakes market studies and recommends to take action respectively. 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