Price Wars In the Past Decades

RUNNING HEAD: ECONOMICS 0
Macroeconomics: Price wars
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ECONOMICS 1
Part A Microeconomic
Q.1
Coles and Woolworth operate in oligopoly market structure where these two companies
control the market share of vegetables and fruits in Australia (Rodney & Varcoe, 2016). The
majority of the market share of the vegetables and other eatable products lie in the hands of
these giants. In the past decades there had been various wars between the two supermarket
chains on the basis of prices and quality of the products offered. Sometimes the sales of
Woolworth surpass the Coles sales while in other time Coles sales surpasses the Woolworth.
Many times, Woolworth is the one that dominates the market when compared with Coles.
These supermarket chains have solidified their position in the market thus leaving no space
for other companies to come and build their position in the best possible manner. in past,
many firms have tried to enter but they were not able to enter in the market place due to the
set barriers. But recently, Aldi had tried entering in the market area of the two companies thus
giving competition to the companies. According to Rodney, Oligopoly market structure is
about the ever continuation of the war between the companies (Rodney & Varcoe, 2016) . In
the case study, the price discount wars between the companies have made Coles to capture
the market share by reducing the prices of its products (Teravainen, 2018).

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(Teravainen, 2018)
Q.2.
As according to the case study, there is serious war going between the supermarket chains
that are Woolworths and Coles based on the market shares of the company. The changes in
the prices of the product will result in the consumers shifting form one supermarket giant to
another supermarket giant. Moreover, the profitability and revenue growth of the companies
will be affected hugely as they would be investing a lot to decrease its prices by aggressive
marketing campaigns which will require high expenditure to control it. It will result in high
level of disturbances between the market supply of the companies to the target consumers.
It is not in the interest of Woolworths and Coles to have price discount wars as it will going
to affect the huge industry badly. Due to the price discount wars the interests of farmers and
other people will be ignored negatively. The farmers and other members will be paid low
with the motive to decrease the cost of production thus affecting the chain of the food chain
negatively. It is important for the supermarket chain to play safe so that the interest of every
party is taken into account.
Q.3

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The market structure for the market of the vegetables provided by the farmers is perfectly
competitive. The reason for the vegetables market to be perfectly competitive is that they
supply homogeneous products to the market segment of the society resulting in high degree
of understanding between the sellers and the buyers. In the perfectly competitive market, the
price of the products decided are by the industry and every seller charges the same price as
the buyers are well informed about the industry decisions (Banfield & Kay, 2012).
The vegetable market is also characterized by the free entry and exit of the sellers in the
market place thus resulting in the effective competitive environment. According to the case
study, it is essential for the supermarket giants Woolworths and Coles to analyze the market
place in the best possible manner so that they charge effective price for the products from the
consumers (Banfield & Kay, 2012). The effective pricing of the products offered by the
supermarket giants will save the interests of all the members of the industry thus leading to
less exploitation to farmers and milkman leading to high level of understanding between all
the members of the industry.
Q4.
The falling prices will be going to affect the individual’s farmers badly as the company’s
motives is to capture the large market share by reducing the prices or by directing the
consumers of the other companies to one’s company. The goal of high profitability of the
supermarket giants can only be accomplished by reducing the cost of production of the
products which will be affecting the producers or farmers of the products in the long run. the
individual vegetable farmers will be affected badly.
Small farmers would be forced to leave the market as they would have no profit and they
would be made to bear high level of losses to control the things. According to the case study,
the high degree of price wars will result in the grave depression especially for farmers where
they have to make the things work in the best possible manner in the low prices (Earle, 2018).
Part B: Macro-economic (Spain)
Q.1
Spain has been into contraction business cycle as there was higher unemployment rate that
was around 26.94 percentage while there was also decrease in the consumer spending which
was only 89.9 percentage thus leading to the stage of contraction. Even the change in the

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GDP of the Spain was in negative that was -o.8 percentage. It could be concluded that 2013
phase was the period of contraction for Spain.
(Banfield & Kay, 2012)
Q.2.
In 2014, Spain has entered into the phase of business expansions where there was the
decrease in the unemployment rate that was from 26.94 percentage to 26.06 percentage thus it
could be concluded that Spain entered in the phase of expansion. Moreover, the sudden
increase in the consumer spending of Spanish people that was from 89.9 percentage to 91.55
percentage is indicative of high growth of Spanish economy.
(Rodney & Varcoe, 2016)
Q.3

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According to the case study, the current employment rate of Spain is 24.42 percentage and
currently 17353000 employees are employed so the unemployed youths would be 5,621,977
people.
Part B: Macroeconomics (India)
Q.1
In 2016, India experienced the expansion face after 2015 as there was the growth of
3.2perecnatge as compared to 3.2 percentage that was in 2015. When compared with the
other parts of the world, Indian economy has fared really well in various aspects. It could be
said that the Indian market revived really well in the best terms thus resulting high level of
relations with other parts of the people.
(Earle, 2018)
Q.2
The falling energy cost affects the Indian economy in revenue and growth of its operations.
The lower cost of energy products will affect the revenue of the Indian company. Th lower
cost will make easier for the consumers to obtain the petroleum products thus raising the
chances for the further inflation risk.

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(Teravainen, 2018)
Q.3
The macroeconomic indicator that is to be monitored closely is of inflation as it would help in
controlling the prices of the products. The reserve bank of India must follow various policies
that include Monetary and controlling the supply of money. It can use the monetary supply
in the tactical manner by increasing the interest rate of loans to lower the demand of the
consumers. These steps by RBI would help it to secure the stability in the economy.

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Bibliography
Banfield, P. & Kay, R., 2012. Introduction to Human Resource Management. 2nd Edition ed.
s.l.:Oxford University Press.
Earle, T., 2018. . Bronze Age Economics: the first political economie. New York: Routledge..
Rodney, P. & Varcoe, C., 2016. Towards Ethical Inquiry in the Economic Evaluation of
Nursing Practice. Canadian Journal of Nursing Research Archive, 33(1).
Teravainen, V., 2018. Organizational culture: Case of the Finnish construction industry.
Construction Economics and Building,, p. 48.