Penny Market: Contemporary Business Environment

Penny Market. Contemporary
Business Environment

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
DISCUSSION AND ANALYSIS..............................................................................................3
Explaining various market structure......................................................................................3
Explain the market structure of UK’s grocery sector along with reason...............................4
Assessing economic Factors that affects Penny Market of UK.............................................4
Identifying the impact of Brexit on the Penny Market’s Business in the UK........................7
Presenting the impact of Covid19 on Penny Market Should it Invest in UK........................8
CONCLUSION..........................................................................................................................9
RECOMMENDATION...........................................................................................................10
REFERENCES.........................................................................................................................11

INTRODUCTION
Business environment mainly includes internal and external factors that have
significant impact on company’s operations as well as performance level. In business unit,
manager is assigned with an accountability to take appropriate decision by doing evaluation
of all the aspects that related to the firm’s activities. Moreover, there are several factors such
as Brexit, current economic condition etc which have direct impact on firm’s performance in
terms of both financially and non-financially. The present report is based on Penny market
which owns and operates 3550 stores over the globe. It is one the discounted supermarket
chain which offers wide range of products or services to the customers. In this, the present
report will provide deeper insight about market structure in which Penny market operating.
Further, report also entails economic factors that affect operations of concerned business unit.
It will also shed light on the extent to which Brexit and COVID-19 will influence the
activities of Penny market.
DISCUSSION AND ANALYSIS
Explaining various market structure
Market structure implies for the level of competition exist in particular industry but it
influence from numerous factors such as nature of goods, economies of scale, number of
buyers and sellers etc. There are mainly four types of market structure in which companies
operate:
Perfect: In this, large number of buyers and sellers are available due to the
homogenous nature of products. Under perfect market, the main motive of the firm is to
maximize both productivity and sales but it lacks concept of consumer preference.
Monopoly: This structure is characterized with the availability of one seller who
controls whole market (Bogoviz, Lobova and Bugai, 2017). As per this, seller has
opportunity to set any price due to the unavailability of other option.
Oligopoly: Through evaluation, it has assessed that in oligopoly market, 3-5 firms’
secure dominant position in the industry. In other words, availability of buyers is higher in
comparison to the seller (The Firm and Market Structures, 2020). In order to get desired level

of profit margin concerned firms collaboratively sets prices for the products or services
offered by them.
Monopolistic: Unlike others, this market structure is usually found in the real business
environment. Moreover, with the motive to get competitive edge companies place emphasis
on offering innovative or differentiated products rather than homogenous. Further, in this,
buyers have option in relation to choose other retailer due to the availability of wide number
of sellers.
Explain the market structure of UK’s grocery sector along with reason
Research reports present that UK grocery market mainly includes four sectors such as
convenience stores, hypermarket or supermarket and online channels. In UK, oligopoly
market structure has identified because in this few numbers of retailers gained high market
share. In other words, it can be said that there are mainly four firms such as Tesco, Sainsbury,
ASDA and Morrison’s who controlled 70% of grocery market. Due to this, market activities
are determined by such 4 players who competing with each other in terms of price. All these
firms tend to focus on offering heavy discounts to the customers for gaining high market
share. Hence, activities of such leading giants act as barrier in front of new entrants. In
addition to this, there is non-collusion within these firms but healthy competition level exists.
Referring all these aspects, it can be mentioned that Penny Market operates in oligopoly
structure because it is also competing on the basis of price by developing attractive
discounting strategies.
Penny Market is also recognized as one of the most significant player who
encouraging customers by cutting price of existing products. In UK, customers decision
making in relation to the purchasing of retail products are highly affected from oligopolistic
supermarkets (Oligopoly - Market Shares and Competition in the UK Food Grocery Industry,
2020). Moreover, supermarket tends to focus on offering excellent services at affordable. In
this market structure, Penny market is required to set appropriate prices in line with
competitors. This in turn helps Penny Market in influencing UK customers and thereby
contributes in the attainment of objectives. Moreover, in the case high prices customers will
start to purchase products from other retailer. Thus, by focusing on all such aspects Penny
market can operate in oligopolistic structure prominently.