Business Economics: Changes in Economy and UK Tobacco Market

This essay examines the effects of economic changes on businesses, particularly focusing on the UK tobacco market. It discusses how shifts in economic policies and market dynamics impact the industry, using the establishment of OFSMOKE as an example of government intervention. The essay highlights the negative impacts of monopolies and lack of competition, emphasizing the need for healthy market competition to foster product development and benefit consumers. It also considers the challenges posed by price capping and the importance of adapting to changes for business success, while also examining the broader effects of negative economic sentiments and the COVID-19 pandemic on business investment and consumer behavior. The essay concludes that the government can improve the market by encouraging competition and by ensuring consumer benefit.

Business Economics

Contents
INTRODUCTION.......................................................................................................................................3
CHANGES IN ECONOMY AND ITS IMPACT........................................................................................3
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................9

INTRODUCTION
This report is an essay written over the way in which changes occurring in the market are
impactful over the businesses and economy of the market. The essay, for comprehending results
and aftermaths of this scenario in the market, has taken stance of situation that has been
developed in Tobacco market of United Kingdom. Also, this essay throws light over possible
measures that were adopted by government in order to safeguard this market, together with
discussing the range of other possible measures that can be adopted.
CHANGES IN ECONOMY AND ITS IMPACT
Changes occurring in Economy are basically defined as the changes that make a shift in
the policies of economic nature at different levels like from government to business to
households or at any other level, together with bringing a change of perceptions and outlook in
which economy of a region or a country can be observed. These changes are products and results
of a range of developments that are seen developing at multiple levels, which can be either
internal or external, or if not the developments than influences for these developments can be
either external or internal (Caliendo and et.al., 2018). As one goes on seeing the nature of
internal level of developments and influences, than they are simply seen coming from
government side. This is simply because, in a country government is the one exercise control
over economic policies and frameworks, working as the total administrator. This administrator
makes a range of changes in economic policies and nature so that stability in the Nation’s
economy can be maintained. Also, other reason for making these changes in policies are
necessitated by the facts that administrator wants to makes some progress in the economy, and in
this manner takes some progressive steps so that growth is continued. In the other types of
changes, when government is required to take some progressive steps, the requirements comes
from the facts as general market or the market in its normal conditions gets failed to deliver
desirable level of opportunities for growth. The example of this situation, where requirements are
arose before administrator to take steps of making progress, can be simply observed from current
conditions of market. In the recent times, due to COVID-19 pandemic and its effects over socio-
economic situations, government around the world are required to take arioso measures of

economic boost and progresses in national economy level, because general sentiments of
business and market, along with expenditure and investments level are very negative. They are
totally bearish, if to be mentioned in language of business. People are not ready to take money
out of their pockets because they are very worried about future scenario of economic situation in
the economy, as they growth levels are consistently falling down. As a result, these negative
sentiments are hurting business sentiments in the economy and the businessmen are also not
willing to make progress and invest in their businesses towards expansion and increasing
production, as they are seeing that people are not making expenditure and there is no demand in
the economy (Ahmedov, 2020). This generally means to a businessmen that such times are not
really good time to make investments and they can be incurring losses at such moments, due to
non-recovery of cost. This way, all of them are seen retaining their investments. This is causing
conjecture in flow of money in economy and money is not getting passed away. Neither extra
investments are getting injected in economy, and as a result no incomes and income opportunity
are getting generated, resulting in more declining demand. Similar, is the case with tobacco
market of United Kingdom where, cartel of few business players, that are exercising major
control over market holdings in the country, sentiments of other business players are getting
pushed down and they are not willing to invest, because there any investments will be pushed out
of this market by the cartel by the regressive and non-favorable policies. At such times, favorable
interventions by the government are required, and this was exactly done by government of
United Kingdom by creating a regulatory agency, OFSMOKE, Office for Smoked Tobacco
Regulation.
However, in a broader sense this Regulatory body was set up by Government of UK for
keeping a check over price capping in the market. Price capping in the market is that regressive
phenomenon in market that does not allow business entities adopt suitable pricing policies that is
in accordance with their business operations and conditions. And, price levels of market in the
market get set up in a specific price range, and every business player is supposed to keep prices
of their products in that specific price range, actually they are bound to keep their prices in that
specific range (Guillemette and Turner, 2018). Price capping is phenomenon or can be regarded
as the policy of government as well, that can be of regressive nature bit it is very helpful in
attacking the hike of prices abnormally in the market. This kind of situation was actually getting
seen in the Tobacco Market of United Kingdom, where the cartel of few big companies, that

were actually holding more than 25% of market share and controlling not just holdings of the
market but also they were manipulating sentiments of consumers in the market. This can be
explained because, as the cartel that consolidating larger share in the market is the one that is
manipulating the supplies and so does the prices, also their marketing strategies are so much
convincing that consumers are being made to believe that suppliers in the market are the only
suppliers that are offering them best products at best prices, therefore, consumers are being
manipulated as well. Therefore, all such circumstances in the market, that are influential in
manipulating consumers in the market and also they are bullying other business players in this
market, were requiring some serious interventions from government. By setting up a regulatory
body like OFSMOKE, government of UK has been effective in fighting against rising of prices
abnormally in the market, but for the other evils of the market, there has to be some other
interventions in various other regards, that must not be only limited to setting up some regulatory
body in administration or something like that. Besides, the changes and the developments has to
come ground levels and the encouragement has to be from the same way. Also, discussed in this
constructive essay are few changes that are required to be fought by government, because they
are bringing many undesirable scenario and instability in the Tobacco market of United
Kingdom(Petrosky-Nadeau and Valletta, 2020).
The biggest threat is bought by this instability in the Tobacco market of the United
Kingdom is the emergence of Unhealthy competition in the market. For the good survival and
continuous progress in any business market there is requirement of healthy competition to
prevail in the market. In the absence of competition among different tobacco business entities, it
was seen that monopoly of a particular cartel and few big firms has been established in the
market, and rest of the other business players were facing difficulties managing their sales and
work and improve their market share. This had totally evaded the condition of ease of doing
business in the market, because no matter whatever steps these firms takes in order to make
progress in business all such steps, efforts and investments shall be bringing no result for them.
Therefore, competition had been completely vanished. Besides, it is a well known fact that
competition in any market is necessary, as this is the competition only through which
developments in products can be made (Olimovich, 2020). Such products will be developed by
businesses, to establish themselves more in the market, that adds value to quality of life of
consumers. Also, many suitable and new policies are bought in business environment that

renders growth of market for future. Such business policies and frameworks are the leaders of
future growth of businesses. And, they all are possible only n presence of competition in market.
Without competition businesses cannot be seen using each other and the market of tobacco
products will get situated at one level, without any further value in itself. Therefore, government
must also work in the order through which consumers are not only benefitted but market is also
channelized and mobilized in proper manner.
The other concern, in which the market scenario of Tobacco products had impacted the
worst, is consumers. As, major market holdings of tobacco products were being shared by one
single cartel and few big players in the market, then in this manner, they were gaining some extra
advantage not just in the respect of other business players but also in the respect of consumers as
well. This advantage that they had was in terms of number of consumers itself, as 25% of market
holding of such a large market is not a small number, therefore these firms in the cartel were
already earning sufficient amount of profits. This was making these companies to feel sufficient
and saturated, and thus they were not willing to attract more consumers through adding values in
their product, but rather they were willing to increase their hold on the market, obviously in the
respect of establishing monopoly. Also, the consumers were being made to believe that the only
brands of cigarettes they are available with, are such brands only. All such situations has together
created a large haywire in the market, and that is not good at all, because progress is key and
values has to have been added. Therefore, government must believe that for benefit of consumers
in the market, prices are not just the key, but quality in their life has to be increased.
Changes are the only consistent in life, and there scope is not just limited to life but in the
market as well, changes are utmost required for progress. These changes are those developments
and improvement, which are necessary for business in general. Like, new techniques and
practices in management of business, and new practices of marketing and many other such
developments that are required to build business environment of future. In this level of
advancements are required in business environment, and the advancements should be of the
nature that build business of future, a highly competitive and highly advanced business
environment. And, such development in business can be facilitated by competition in the market
only, where all the firms compete with each other and they adopt new methods to beat each other
in volume of sales and profit, through intelligence and wisdom. This can only be done through

competition, because in absence of this only set practices can be followed on the market, that are
run by the companies that try to control it. Even if any new business tries to enter in market, it
will also be forced to adopt those practices (Širá and et.al., 2020).

CONCLUSION
From the above discussion it can be concluded that, any such wrong practices and
wrongful deeds that hampers genuine and positive sentiments of market are good for none. It was
seen that, due to such practices, most directly impacted entities are business entities themselves
in the market. However, they are not only those entities that are standing on the opposite ideas of
misshapenness, or they are the only which are victimized y wrongful deeds in market. But, also
those entities which does so activities, because due to such activities they can only earn a
specific and limited amount and profits, but they cannot make significant growth. The growth in
this concern only lies in the heart of progressive approach and competition.

REFERENCES
Caliendo, L. and et.al., 2018. The impact of regional and sectoral productivity changes on the US
economy. The Review of economic studies. 85(4). pp.2042-2096.
Ahmedov, I., 2020. The Impact Of Digital Economy On International Trade. European Journal
of Business and Management Research. 5(4).
Guillemette, Y. and Turner, D., 2018. The long view: Scenarios for the world economy to 2060.
Petrosky-Nadeau, N. and Valletta, R. G., 2020. Unemployment paths in a pandemic economy.
Olimovich, D. I., 2020. The impact of innovative technologies for improving economy of
hotels. Asian Journal of Multidimensional Research (AJMR). 9(5). pp.194-201.
Širá, E. and et.al., 2020. Knowledge economy indicators and their impact on the sustainable
competitiveness of the EU countries. Sustainability. 12(10). p.4172.