Impact of Brexit and COVID-19 on Penny Market in UK

Contemporary
business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
DISCUSSION AND ANALYSIS ..................................................................................................1
The various market structures.....................................................................................................1
The Market structure of UK's Grocery industry ........................................................................1
Economic factors of UK and how they will affect penny market ..............................................2
Likely impact of Brexit on the Penny Market's Business in UK................................................2
Impact of COVID- 19 on Penny Market should it invest in UK................................................2
CONCLUSION................................................................................................................................3
RECOMMENDATION...................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business environment can be defined as all the factors, both internal as well as external
that affect the functioning of an organization. These can include customers, employees, supply
and demand, management and suppliers. For an organization to function in an effective manner,
it is important to take into account the various factors that can impact its business operations as
well as productivity within the market (Jabłoński, 2019). Organization chosen for this report is
Penny market, which is a Germany based grocery retail company. The company was founded in
the year 1973 by Leibbrand Gruppe. The report includes a brief explanation of the various
market structures along with the market structure of the grocery sector of the United Kingdom. It
also includes a description of the various economic factors and their effect on the chosen
organization. Lastly, the report also includes an explanation of the impact the Brexit can have on
the business of the respective company.
DISCUSSION AND ANALYSIS
The various market structures
There are mainly four type of market structure i.e., perfect market structure, monopoly,
monopolistic and oligopoly (Mushtaq and Khan, 2020). Explanation are as follows :-
 Perfect market structure – In this, there are many firms as well as many buyers.
Business firms which are working in perfect market structure there is freedom of entry as
well as exit (Ma, Gans and Tourky, 2018). Along with this, they are selling homogeneous
products which means all goods are perfectly substitute for consumers.
 Monopoly – In monopoly market structure there are single sellers and buyers are not
specific. It is not easy for companies to enter into market as well as products can be either
differentiated or non-differentiated.
 Monopolistic – There are several firms working in this market structure with non-
interdependent pricing as well as quantity decision making (Maghfuriyah, Azam and
Shukri, 2019). Moreover, monopolistic market structure have many buyers and firms
have freedom to enter and exit. Products selling by companies are different but close
substitute in relation of consumers so their demand curves remain elastic.
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 Oligopoly – There are few firms in oligopoly who have interdependent pricing as well as
quantity decision. In this market buyers are not specified and it is not easy to enter in
market. Offerings of companies can e either differentiated or non-differentiated.
The Market structure of UK's Grocery industry
UK's Grocery industry market structure in Oligopoly in which there are small number of
business firm as well as none of them have major influence on each other (Adel Mahrous and
Hammad, 2020). In addition to this, concentration ration results in measuring market share of
largest business firms. Although, in simple term it can be said that, monopoly is one firm,
duoploy is 2 and oligopoly is 2 or more than that. Moreover, in oligopoly there is no precise
upper limit on number of business firm but number should have to be low enough which action
taken by one company result in influencing others (COLLIN‐DUFRESNE, Junge and Trolle,
2016). In simple term it can be said that, grocery market of United Kingdom based on oligopoly
market structure which means that there are small number of firms as well as these firms each
other have no major influence on working of each others. There are several characteristics of
oligopoly market structure which provide assistance in understanding that why UK market
structure is oligopoly explanation are as follows :-
 Small number of large firms – In oligopoly market structure there are few business firm
whose working don't have major influence on each other.
 Identical or differentiate products – Few oligopolistic industries results in producing
products such as perfect competition while other offerings are differentiated products
more like monopolistic competition (Zachar and Daoutidis, 2016). Thus, identical
products oligopoly means process of raw material for producing such products which can
be use by other industries as inputs. On the other hand, differentiation products are those
which no other firm is manufacturing.
 Barriers to entry – Firms which are working within oligopolistic industry have attain and
retain market control by barriers to entry (Bertoletti and Etro, 2016). In the same manner
it is not easy to enter in retail market because there are several number of competitors.
Thus, from above characteristics it has been determined that Grocery industry of United
Kingdom market structure is Oligopoly.
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