Management Economics 2: Market Analysis and Operations of Tate & Lyle

This article discusses the market analysis and operations of Tate & Lyle, a food processing company, in different market structures. It covers the history, products, and services of the company, along with the determinants of market structure. The article also explains the impact of different market structures on the company's operations and the role of government intervention in the food processing industry.

Management Economics 2

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Organisational description...........................................................................................................1
Market analysis............................................................................................................................3
Market structure...........................................................................................................................5
Operations of company in different market structure..................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Management economics looks towards making rational decisions to solve business problems
with application of principles, models and theories of macroeconomics together with
microeconomics. Purpose of management economics is to analyse economic problems of
company along with suggestions of solutions to managers for making decisions about it. It
integrates economic theory with practices of business (Patel and Et. Al., 2020). Tate & Lyle is
selected venture which is specialised in supplying ingredients related to food and beverage to
industrial markets at global level. Its headquarters are located at London, UK since 1921.
The project comprises overview of organisations, its products and services along with
history. It further analyse market wherein the company is operating since inception. It discusses
characteristics of different market in which the company operate in history and optimality of
operations of entity in different market structure along with suggestion for more or lesser
interventions from government.
MAIN BODY
Organisational description
Overview of company
Tate & Lyle is a company which operates in food processing industry since 1921 with the
purpose to assist people across the globe make tastier and healthier choices for food and drinks
while supports communities together with care for planet, not for present but also for future. It is
internal provider of ingredients as well as solutions for food, beverage together with industrial
markets. It works with customers so to use low or no calorie sweeteners, add gut friendly fibres
and create tasty treats with nutritive sweeteners at affordable prices.
Products and services
Tate & Lyle produces innovative ingredient solutions for diverse industries which assist
partners to respond changing consumer needs addition to retain competitive edge at local and
global level. Its key products are Pure Cane Caster Sugar, Fairtrade Dark Muscovado, Jam
Sugar, Fairtrade Golden Granulated, Fairtrade Unrefined Demerara, Fairtrade Light Brown Soft
and hence forth (Products of Tate & Lyle, 2021).
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Figure 1: Share price of Tate & Lyle. 2021
(Source: Share price of Tate & Lyle. 2021)
From the statistical image, it can be said that shares of Tate & Lyle break up large
businesses, especially with conglomerate structure and sale that encourages the venture to
emphasis of food and beverage solutions having positive momentum which is increasingly
proposed to deliver healthier food and beverages with less sugar. From the year 2017 to 2021,
share prices of the company are fluctuating between 750 to 730 approximate GBp (Share price
of Tate & Lyle. 2021).
History
Tate & Lyle was established by two competitor sugar refiners that are Henry Tate & Sons
along with Abraham Lyle & Sons in 1921 at London, UK. In the year 1949, the business
launched its brand that is Mr Cube as part of marketing campaign for assisting it to fight a
proposed nationalisation by Labour government. In 1976, the organisation acquired 33% stake in
a European starch related manufacturing entity that is Amylum. In 2004, Tate & Lyle established
joint venture with DuPoint so to manufacture renewable 1,3- Propanediol for making Sorona. In
2006, Golden Syrup of the company was awarded Guinness World record. In 2012, true stories
of women that worked at the company was published. The venture has developed a method for
commercially manufacturing natural sweetener allulose.
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Market analysis
The concept of market structure refers to feature of a market either competitive or
organisational which elaborates nature of competition addition to pricing policy that is followed
in it (Tirole, 2017). There are ample number of determinants of market structure for specific
product. Key determinants are nature of product, number and nature of buyers, economies of
scale, number and nature of sellers, etc. In context to Tate & Lyle, analysing market structure is
crucial because market structure affects outcome of business by impacting of opportunities,
decisions and motivations to participate as well as compete in the market. Various categories of
market structure are as described:
Perfect Competition: This type of market refers to one where number of sellers as well
as buyers are very large and all engage in homogeneous commodities without any sort of
artificial restrictions together with possess perfect knowledge about practices within market at a
time. In case when Tate & Lyle operates in perfect competition market, they are known as price
takers and enjoys freedom of entrance and exit from the sector. There is complete absence of
competition among individual businesses and profit maximisation is key organisational goal.
Advantages of performing in perfect competition market to the venture are allocating resources
in efficient manner, maximum consumer surplus, competition encourages efficiency and
responsive towards preferences of target audience.
Monopoly: It is said to a market structure wherein one seller of a commodity exists with
restrictions to entry of other firms (Farboodi, Jarosch and Shimer, 2017). For example, operating
with monopoly market structure can assist Tate & Lyle to operate as individual seller of specific
product with no close substitute. The business has full control on product supply and influence
product prices as it works as price maker. Under the market, new organisations cannot enter
freely because of government licence as well as regulations, complex technology, huge
requirement of capital, economies of scale and hence forth. Benefits of working within
monopoly market comprises of operating individually, control on whole industry, raising prices,
reducing services without any consequence and massive profits.
Oligopoly: A market situation including few business setting selling differentiated or
homogeneous commodities is said to oligopoly market. For instance, when Tate & Lyle operates
in oligopoly market, it has to share market with few common entities. Moreover, companies in
oligopoly market has control on prices which makes it complex for other ventures to enter in
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market. It prevents emergence of new rivals which might hinder businesses. Benefits of working
in oligopoly market are better customer support, easier selection of products, higher possibilities
to make big profits, price stability, competitive prices and lower competition level (Procacci,
Phelan and Aste, 2020).
Monopolistic Competition: A situation of market including many firms selling
differentiated commodity for meeting needs of large number of buyers is monopolistic
competition. For instance, operations of Tate & Lyle in monopolistic competition requires to sell
differentiated products at reasonable or competitive price to buyers. In the market, no business
has any sort of perceptible influence on output-price policies of others and restrict influence from
actions of other organisations. Working in monopolistic competition market benefits an
establishment in offering higher product quality, active business environment, few entry barriers
and information about the market (Chunikhin, Kuzmin and Pushkareva, 2019).
Since inspection, Tate & Lyle operates in perfect competition market because the market
structure has large number of buyers as well as sellers. Some of sellers working against the
company includes Ingredion, ED&F Man and Performance Food Group, Corbion, Archer
Daniels Midland, etc. None of these businesses are in position to influence output and prices
related to food processing commodities.
Figure 2: Revenue shares of Tate & Lyle in food processing industry. 2021
(Source: Revenue shares of Tate & Lyle in food processing industry. 2021)
As per presented graph, it can be said that the company has global growth potential
addition to an attractive 3.8% yield (Revenue shares of Tate & Lyle in food processing industry,
2021). Continuing to assume widely flat to low single digit earning per share growth, Tate &
Lyle operational progress was consistent that implies organic growth to nearby 5%. Within the
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market, the entity was aligned with trends that provided its provisions of plant related ingredients
addition to solutions to customers that enables the firm to profit from boom in demand for
products.
Market structure
In the history, Tate & Lyle have operated in perfect competition market, however, with
passage of time, managers of the company have transformed their decisions to operate in
oligopoly market. With few firms selling homogenous products, actions of one company is likely
to impact others (Forgione and Migliardo, 2020). Characteristics of oligopoly market structure in
association to Tate & Lyle are underneath:
Interdependence: One of feature of oligopoly market structure is interdependence among
sellers. Each oligopolistic business has knowledge about changes in prices, attributes of
offerings, promotion and many more that results in countering moves by competitors. For
example, Tate & Lyle working in the market reduce or increase prices for whole market through
selling more quantity along with affect profit making competence of other sellers. With this, it is
implied that each seller or company is aware about price moves of others and their impact on
own profit making on eth basis of price moves on actions of competitors (Kley, Klüppelberg and
Reinert, 2018). There is complete interdependence between Tate & Lyle and other sellers for
price-output policies. In this essence, each seller of market has direct along with ascertainable
influences on every other seller in the sector.
Advertisement: In the market, key reason for mutual interdependence for making
decision is fortunes of one product dependent on policies of other manufacturers or buyers. For
this, businesses spend huge amount in advertisement addition to customer services. In context to
Tate & Lyle, spending on advertisement is feature to operate in oligopoly market so to promote
products for attracting and retaining customers for longer durations. It is determined that when
one oligopolist advertise or promotes their offerings, other businesses follow them for the
purpose of keeping up sales volume.
Competition: Oligopoly market structure is characterised as presence of competition
(Barnhill, 2021). Within the market, few sellers exist that causes action undertaken by one seller
affecting rivals immediately. For example, when Tate & Lyle makes some changes in its price
structure than it affects pricing policies of other businesses in no time. It is crucial for each seller
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to always remain alert as well as keep close watch on actions or moves by competitors for
attaining counter move which is true rivalry.
Barriers to firm entry: Because of keen or intense competition in oligopoly market
structure, no barriers to exit and enter arises (Illanes and Moshary, 2018). For Tate & Lyle,
control on market and specialised inputs including price, production, resources, etc makes it
complex for survival of a new venture. Besides, However, various types of entry barriers are
there that leads to restraining new business to enter in food processing industry in long run. In
the market, there are economies of scale that are enjoyed by large organisations, high capital
requirement, control on specialised inputs and existence of unused potentials which makes food
processing industry less attractive. When entrance is blocked by barriers than it enhances
chances for the industry to earn super normal profits.
Demand curve: In oligopoly market structure, it is difficult to trace demand curve for a
commodity or service (Dal Zotto, Sacco and Schenker, 2017). Exact behavioural pattern of
manufacturer cannot be discovered with certainty due to which demand curve is not possible to
be drawn accurately addition to definiteness. For Tate & Lyle, it cannot ignore reaction of
competitors. Any type of changes in prices by an entity leads to change in prices by other
business that shifts demand curve in indefinite manner. It impacts on sales of venture as their
sales are more dependent on existing prices and that of competitors.
Operations of company in different market structure
For Tate & Lyle, operating in different market structure is optimal for the venture as the
venture determines market wherein it access resources at low costs and increase customer
preferences towards offerings. As distinct type of market structure causes variant set of choices
that are faced by decision makers of establishments, operations in various market structure
benefits in looking towards issues comprising pricing of firm’s products, potential for enhancing
profitability and many more (Storey, 2019). Within highly competitive market, operations in
different market situations helps in financial analyst so to determine short together with long
term prospects of business. Managers of Tate & Lyle are able to frame decisions so to minimise
impacts of decision making of other sellers while working in different market situation. It helps
in improving sales volume, customer base and profitability. For example, when Tate & Lyle was
operating in perfect competition market, it aids in perfect knowledge about what other companies
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are performing, no entry barriers and share information among firms that resulted in making
normal profits in order to cover opportunity costs.
While, operating in oligopoly market is optimal for the firm to adopt competitive
strategy, bringing price stability, earning additional profits and more refinement in products to
occur (Song, Chang and Song, 2019). The company is able to focus towards accessibility of
market shares through operating in distinct kinds of market structure. When the business is
organised for taking advantages of various market structure, it is optimal to eliminate wasted
efforts addition to improve profitability. Within such markets, it is easy for Tate & Lyle to
identify segments that are more likely to purchase its offerings. It also helps in emphasising on
marketing efforts for avoiding wasting resources and achieving desired business volume.
Different market structures impact substantially on the company as it improves its ability to set
higher prices as well as operate profitably within the situations with few firms and barriers to
entry. It also ensures that operations of firm matches to intentions of government for market
structure that could improve chances of avoiding losses.
Government intervention could be described to declaration of government as a rule maker
or regulator of market who interfere deeply in transaction conflicts among market players and
mobilisation of resources with the hope of resolving transaction of disputes in phases of market
governance (Tan and Wang, 2017). Within market structures, decision making are done by
individual buyers as well as sellers. It is analysed that when there is greater government
intervention in practices of Tate & Lyle, it can result in implementation of decisions that benefits
society rather than the organisation. Government has powers to create subsidies, tariffs, taxing
public, adding taxes to international commodities and make domestic offerings more appealing.
In essence, greater regulations can stymie whole business or entire society. In contrary, lesser
government intervention leads to businesses exploiting resources and powers for paying lower
wages to employees and charging prices to consumer.
It is suggested that there must be greater government intervention in society and working of
company that is Tate & Lyle. It is because economy is changing in nature and economic
fluctuations are inevitable as well as unpredictable. Intervention of government could assist in
keeping business practices on track as well as preventing societies from experiencing extreme
recessions (Quint and Dahlke, 2019). Within society, greater government is suggested because
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government have capability to make decision for improving market infrastructure without any
investment by company.
CONCLUSION
As per the project, it is concluded management economics solves business issues as well as
guides in decision making with certain theories of economics. Market structure are classified as
oligopoly, monopolistic competition, perfect competition and monopoly. In oligopoly market
situation, there is no precise limit of firms but actions of one company influence others. The
market structure is characterised as no barriers on entry and exit, interdependence of firms, lack
of uniformity, price rigidity existence and competition. Greater government intervention in
society benefits in improve market structure, preventing economic swings, eliminate market
failure and equitable distribution of wealth.
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REFERENCES
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Dal Zotto, C., Sacco, V. and Schenker, Y., 2017. Market Structure and Innovation Policies in
Switzerland. In Innovation Policies in the European News Media Industry (pp. 205-
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Farboodi, M., Jarosch, G. and Shimer, R., 2017. The emergence of market structure (No.
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Forgione, A. F. and Migliardo, C., 2020. CSR engagement and market structure: Evidence from
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Illanes, G. and Moshary, S., 2018. Market structure and competition: Evidence from a natural
experiment in liquor licensure. Available at SSRN 3103998.
Kley, O., Klüppelberg, C. and Reinert, G., 2018. Conditional risk measures in a bipartite market
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Patel, P. and Et. Al., 2020. Biophysical economics and management of biodiesel, a harbinger of
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Procacci, P. F., Phelan, C. E. and Aste, T., 2020. Market structure dynamics during COVID-19
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Quint, D. and Dahlke, S., 2019. The impact of wind generation on wholesale electricity market
prices in the midcontinent independent system operator energy market: An empirical
investigation. Energy, 169, pp.456-466.
Song, J. Y., Chang, W. and Song, J. W., 2019. Cluster analysis on the structure of the
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Storey, G., 2019. International agricultural trade: advanced readings in price formation, market
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Tan, X. and Wang, X., 2017. The market performance of carbon trading in China: A theoretical
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Online:
Products of Tate & Lyle. 2021. [Online]. Available through:
https://www.wearetateandlylesugars.com/products
Revenue shares of Tate & Lyle in food processing industry. 2021. [Online]. Available through:
<https://www.sharesmagazine.co.uk/article/why-we-still-like-tate-lyle>
Share price of Tate & Lyle. 2021. [Online]. Available through:
<https://www.ft.com/content/8a521658-11a5-11e8-8cb6-b9ccc4c4dbbb>
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