Management Environment - Doc

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Running head: MANAGEMENT ENVIRONMENTManagement EnvironmentName of the StudentName of the UniversityAuthor Note
1MANAGEMENT ENVIRONMENTTable of ContentsAnswer 1:.........................................................................................................................................2Introduction..................................................................................................................................2Supermarket Industry: Price War................................................................................................2Price War among Supermarkets: Game Theoretic Perspective...................................................4Answer 2:.........................................................................................................................................5Answer 3..........................................................................................................................................3Introduction..................................................................................................................................3British Virgin Islands: Overview.................................................................................................4Hurricane Irma.............................................................................................................................5Impacts of the Hurricane Irma on BVI........................................................................................6Economic Impacts of Hurricane Irma: GDP Dynamics..............................................................7GDP as welfare indicator.............................................................................................................8Conclusion.................................................................................................................................10References......................................................................................................................................11
2MANAGEMENT ENVIRONMENTAnswer 1:IntroductionIn terms of economics, market is defined as the place of interaction of the buyers andsellers, where they reach to a mutual agreement regarding the price and quantity of productionand consumption of a commodity. There exists different types of market structure in aneconomy, which are mainly competitive, monopolistic, oligopolistic or monopolisticallycompetitive. The structure of a market depends on factors like the number of buyers and sellers,the nature of the commodity or service concerned the entry and exit barriers, the demandelasticity and others (Rader 2014).The supermarket industry of UK mainly operates in an oligopolistic market structure,with a few players in the supply side and a huge number of buyers. This gives each of the sellersa considerable share of the market and noticeable market power (Schiraldi, Smith and Takahashi2012). However, in the contemporary period, with the entry of several budget supermarkets, theold players are facing stiff competitions and are engaging in price war. The assignment, takingthis issue in consideration and tries to explain the same using the game theoretic framework ineconomics (Okuguchi and Szidarovszky 2012).Supermarket Industry: Price WarThe supermarket industry in the country had been long dominated by four primary supplyside players namely Morrisons, Asda, Sainsbury and Tesco, with these big players capturingnearly 75% of the total market share in the recent past. Operating in an oligopolistic structure,these supermarkets enjoyed huge demand, market share as well as price decisive power(ESQUIVIAS et al. 2013). The presence of other smaller firms did not have any negative
3MANAGEMENT ENVIRONMENTimplications as such on the profitability of the same and the presence of these four giants in theindustry created huge entry barriers for other players in the country, thereby asserting thepresence of oligopolistic market structure even more (Sushko 2013).However, in the recent period, these supermarkets have been facing immense competitionin the economy due to the entry of two discount supermarkets in the industry, namely the Aldiand the Lidl. Both of these having their origin in Germany, have been in the industry only for afew years but have already captured significant market share of the UK supermarket industry andthus pose as tough competitors to the big four supermarkets already present in the industry of theconcerned industry (Yildirim and Aydin 2012).Figure 1: Rise in the sales of the supermarkets since 2015(Source: Managementtoday.co.uk, 2017)As can be seen from the above figure, in the recent years, in spite of a continuousincrease in the clientele and demand for household and grocery commodities, the sales of the big
4MANAGEMENT ENVIRONMENTfour supermarkets have grown unimpressively while the growth in the sales of the discountsupermarkets like Aldi and Lidl have grown visibly. This can be mainly attributed to the overalllow prices of commodities, which these supermarkets offer (Myerson 2013). This in turn has ledto the creation of a price war situation among the players in the oligopolistic supermarketindustry of the country, with the primary competition being between the four big giants on onehand and the discount supermarkets Aldi and Lidl on the other hand. This competitive situationcan be explained with the help of game theoretical framework (Peters 2015).Price War among Supermarkets: Game Theoretic PerspectivePrice war is one of the competitive tactics taken by the gif firms in the markets,especially in oligopolistic framework, in order to stay ahead of their competitors and capturegreater share of market in the economy. This involves the dilemma of the firms of whether tooffer discount pricing to the customers or not (McMillan 2013). The problem can be discussedwith the help of the following hypothetical pay off matrix:No DiscountDiscountNo Discount(Medium Pay-off, MediumPay-off)(High Pay-off, Low Pay-off)Discount(Low Pay-off, High Pay-off)(Low Pay-off, Low Pay-off)OtherthreeTesco
5MANAGEMENT ENVIRONMENTAs can be seen from the above pay-off matrix, if any of the opponents offers discountwhile the other does not, then the former gains long term profitability by capturing bigger shareof clientele while the other loses its prospects. On the other hand, if both refrains from providingdiscounts then their payoffs remain moderate and usual but if both plays discounting strategiesthen they ultimately lose as the overall price level lowers down and the customers do not shift(Barron 2013).In this context, it can be asserted that due to the presence of such dilemma in the of pricecompetitions among the big four markets, before the entry of the budget supermarkets like Aldiand Lidl, these four markets usually avoided price wars among them. This was done by them inorder to keep their profit intact and not lose out by ending up in a non-optimal position, as hasbeen shown in the matrix(Parsons, Gymtrasiewicz and Wooldridge 2012).However, in therecent times, due to the entry of the budget supermarkets, price war has become inevitableamong them in order to sustain in the highly competitive market in this scenario.Answer 2:In the contemporary corporate world, with the scenarios becoming more integrated,inclusive and competitive, especially post Globalization, it becomes immensely crucial for thecommercial organizations, in any sector to emphasize on their business and operational activities.For increasing their prospects in the global business environment as well as to gain an edge overtheir competitors, it is crucial on part of the business enterprises to build up a robust strategicmanagement framework (Kiel 2014). For this purpose, one of the most efficient tools is theBusiness Model Canvas which is a visual representation of the overall structure of the company
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