Pricing and Output Decisions under Different Market Structures and Impact of Market Forces on Organizational Responses

This presentation discusses pricing and output decisions under different market structures and the impact of market forces on organizational responses. It also covers the significance of international trade on UK organizations, the impact of global factors on UK organizations, the impact of European Union policies on UK organizations, and the impact of business and cultural environment on organization behavior.

TASK 3 and 4
Business Environment

3.1 Pricing and output decisions under different
market structure
Market structure refers to the number of organizations
who produce identical types of goods in the market.
Pricing and output decisions under different market
structure have been described here as under:

Types of market structure
Perfect market: Large number of buyers and sellers,
homogeneous products and high consumer
awareness are the characteristics of this market.
Moreover, competition level is very high henceforth,
prices are decided through considering competitor’s
product prices. On contrary, output decisions are
taken by analysing current sales and consumer
demand. It helps to determine the quantity which
firm needs to be produced to meet customer demand
for the future period. Any firm can enter and exit
from the market at any time.

Monopoly market: In this market, only a single producer
delivers products and services to large number of consumers.
Thus, firms own decide their product’s prices with the
objective of maximizing its earning and profitability. However,
current market demand is the basis for output decisions.
Oligopoly market: Only a few firms operate in this market
structure; henceforth price decisions are very much affected by
competitor’s product prices. In case, when rival firms change
their prices then the other organization will also need to change
prices accordingly. For instance, when a competitor falls their
prices and other firm does not change their prices then their
sales will be declined.
Contd.

3.2 Impact of market forces on organizational
responses
Market forces includes followings elements:
Supply and demand.
Elasticity of supply and demand.
Interest rates.
Governmental.
Political.
Technological.
Legal.
Environmental.

Contd.
Impact of changing demand and supply on the
product’s prices is described below:
Supply and demand: Quantity of goods which
consumer wants to purchase at a specified time and at a
fixed price is called demand. However, quantity of
available goods in the market is called supply. In
context to Global tech, increase in consumer’s demand
and fall in supply will result in increasing its product
prices. On contrary, reduction in demand and high
market supply will result in price reduction.

Contd.
Elasticity of demand: It measures the changes in demand
resulted due to price changes. High elasticity of demand creates
major changes in consumer demand by a little increase or
decrease in prices. For instance, demand for food is elastic
hence, a minor change in price will impact demand to a major
extent. However, inelastic demand creates no impact to the
demand while varying the charged prices. For instance,
demand for smoking goods such as cigarette is relatively
inelastic.

Contd.
Elasticity of supply: It measures the changes in
supply due to change in prices. High elasticity of
supply causes a major change in supply while prices
are changed by a little percentage. On contrary,
inelastic product demand does not bring any changes in
supply at high or low prices.

Contd.
Economies of scale: It refers to the benefits that
firms can be taken through large scale of production. In
context to Global tech, high production scale of mobile
handset and tablet devices helps to reduce per unit
product cost. Further, its recent diversification in fast
food outlets also brings large benefits for the company.
This in turn, it will be able to accelerate large revenues
and profit margin from its operations.

Contd.
Economical: Under the economical factors, purchasing
power, investment rates, trade rates and verying
interest rates affect Global Tech's organization in a
great extent.
Government: Unemployment rate, rate of inflation and
deflation also impact product prices. For instance, high
inflation rate will contribute to increase Global tech's
product prices and vice versa.

Contd.
Political: Tax rates, new political regulations, fiscal
policy and trade tariffs are the political factors which
affect gloabl tech in both the directions.
Technological: GT provide technological products to
the customer, thus, technological factors affect the
organization to a great extent. In the present
technological age, GT has to provide innovative
products to the customers which help to improve their
position.

Contd.
Legal: Government laws, regulations, policies and
standards impact Global Tech's operations in great
manner. This is because GT has to comply all the
legislations and standards.
Environmental: Recycilling of waste, reduce scrap,
provide safe and pollution free environment are the
environmental responsibility of gloabl tech.

3.3 Impact of business and cultural
environment on organization behaviour
Business and cultural environment impact McDonald's
operations in a great manner. In the age of globalization,
cultural differences has an significant impact on business
operations. McDonald operates at various continents
henceforth, it is very much affected by cultural changes of
different countries. In America, McDonald has gained a strong
and powerful corporate position in food sector. However,
cultural and food diversity can be seen among Indian people.
Their food consumption behaviours are highly influenced by
their culture. Food patterns are changed in Hindu and Muslim
communities. This is because Hindus prefer vegetarian food
while Muslims eat both the vegetarian and non-vegetarian
food.

Contd.
This in turn, McDonald does not attain a satisfactory position
in India as compared to America. On the other hand, under the
common business practices, its working styles, employee skills,
managerial efficiency etc. create great impact to the
organization. Thus, motivated and efficient staff provide
optimum services to the customers. Further, political,
economical, social, technological, environmental and legal
factors also impact the operations of McDonald. Stable
political situation, favourable economic conditions, improved
technology, environmental protection through waste
management, favourable laws and regulations etc. impact
McDonald activities favourably and vice versa.

4.1 Significance of international trade on UK
organizations
In the present globalization market, international trade plays a
crucial role in company’s success. It refers to the trading
operations across various countries which bring number of
benefits to the organizations. For instance, British Airways
(BA) is a UK aviation organization that provides airline
services at the national and international level. Through
international trade, BA is able to generate large revenue,
enhance profitability, increase number of customers and render
high customer satisfaction. Moreover, it provides assistance to
import such products that are available at cheaper rates. This in
turn, BA is able to reduce its product cost and gain competitive
advantage through improving strategic capabilities.

Contd.
Another UK established organization is Tesco which operates
in retail industry and provides services at distinct lands.
Advantageous of international trade for Tesco includes large
earnings, economies of scale, improved profitability, reduction
in cost, optimum use of resources, large market share and good
corporate position. Thus, it can be said that international trade
renders assistance to the organizations to improve its overall
operational performance and achieve long term business
success for the future period.

4.2 Impact of global factors on UK
organization
Political factors: BA and Tesco both the UK
organizations have to follow political rules and
regulations of all the countries. For instance, they
need to follow legislations related to licensing fees,
tariffs, import and export duties as well as others.
Economical factors: Different countries deal with
different economic conditions. In this aspect, it
includes factors such as interest rate and exchange
rates. Thus, varying interest rate, economic
condition, foreign exchange rate impact BA and
Tesco's operations in both positive and negative
manner. For instance, lower interest rate and
exchange rate will impose lower cost to the

Contd.
Social factors: Customer's preferences, buying pattern, their
purchasing power, income and spending behaviour etc. are
greatly influenced the company's operations. For instance,
high income group of people will be able to afford high
product cost and vice versa.
Technological factors: In the present age of competition,
BA and Tesco will need to make technological improvement
on the regular basis. They have to update their technology
which contributes to maintain high consumer satisfaction.
Along with the innovated products, companies also need to
make improvement in the operational technologies. Thus,
technological production process provides assistance to
enhance organization strategic capabilities.

4.3 Impact of European Union policies on
UK organization
Various policies have been designed by EU which UK business
organizations are strictly obliged to follow. It includes
liberalization policy, free trade policy, competition policy,
labour policies, taxation and spending policies, UK laws and
regulations etc. In context to BA and Tesco, liberalization and
free trade policy allow organizations to free removal of goods
across borders. However, competition policy prevents domestic
organizations from fierce competition in the respect of MNCs.
It prohibits unfair business practices and ensures fair
competition. Another, labour policies impose legal obligations
for both the organization to provide better working condition to
the workers. In addition to it, BA and Tesco need to pay taxes
on their profitability as per the taxation policies.

Contd.
Along with this, EU inflation policy make sure that
no sudden movement will be arise in company's
product prices. Thus, it maintain economic inflation.
However, its training and education policy impose
obligations that all the workers will be trained through
conducting an training programme. Furthermore, its
taxation policy make valuable contribution to the
community by the way of airport construction, road
development and providing education and medical
facilities.

References
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Bilotkach, V., Gaggero, A. A. and Piga, C. A., 2015. Airline
pricing under different market conditions: Evidence from
European Low-Cost Carriers. Tourism Management. 47. pp.
152-163.

Contd.
Feenstra, R. C., 2015. Advanced international trade: theory
and evidence. Princeton university press.
Krempel, L. and Plumper, T., 2015. Inter national division
of labour and global economic processes; an analysis
of the international trade in automobiles. Journal of
World-Systems Research. 5(3). pp.486-499.
Wallace, H., Pollack, M.A. and Young, A.R. eds., 2015.
Policy-making in the European Union. Oxford University
Press. USA.

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