Economics for Managers Grocery Supermarket

Running head: ECONOMICS FOR MANAGERS
Economics for Managers
Name of the Student
Name of the University
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1ECONOMICS FOR MANAGERS
Table of Contents
Introduction......................................................................................................................................2
Income elasticity of demand............................................................................................................2
Oligopoly.........................................................................................................................................3
Price competition and kinked demand curve...................................................................................4
Customer led strategy......................................................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................8

2ECONOMICS FOR MANAGERS
Introduction
The grocery supermarket structure in Australia is oligopolistic in nature. The market is
concentrated among few large retailers. Woolworths and Coles are two big retailers in the
market. Intense competition prevails between Woolworths and Coles to for retaining market
share. Recently rising big player in the supermarket is Aldi. However, with increasing
competition from Woolworths and new competitor Aldi, Coles has accounted a decline in its
profit margin. Wesfamer, the parent company has recorded an increase in earning. In the present
report, an economic analysis is made on a news report stating the recent status of Coles in
Australian supermarket. Relevant economic theories and concept are used to understand the
scenario.
Income elasticity of demand
Income elasticity expresses the change in demand quantity with a change in income. Both
the changes in income and demand are represented in percentage term. Goods, for which demand
changes in the same direction of income is known as normal goods. Income elasticity is positive
for these goods. Within normal goods, for luxury items demand changes at a higher proportion
than income. Reverse is the case for necessary goods. The relation between income and demand
for different types of good is expressed by the Engel curve (Higgs and Worthington 2014).