Economics Assignment | Market Structure

Added on - 19 Sep 2019

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TED BAKEREssayEconomicsStudent[Pick the date]
The purpose of this essay is to undertake a research on one of the FTSE 250 companies whichare listed on the London Stock market and discuss the market structure of the company’sindustry, determine the factors affecting the supply and demand in the industry, the employmentof the long-term finance in the company, study the impact of macro-environmental factors in theindustry on the performance of the company and analyze the reason behind all this. The FTSE250 Index is the capitalization weighted index that comprises of 101stto 350thlargest companieswhich are listed on the London Stock exchange. The companies keep on promoting anddemoting on this index on quarterly basis. The FTSE 250 Company that will be discussed in thisessay is “Ted Baker”. It is a luxury clothing retail company and one of the fastest growing andleading brands of lifestyle in UK. It operates in the personal goods industry of UK. The productsof the company include menswear and womenswear collections, accessories, fragrances,footwear, watches, eyewear etc. (Baker, 2014). Apart from the stores in UK, the company hasestablished its international stores as well.There are different market structures in which the companies operates like the monopolistic,perfect competition, monopoly, oligopoly duopoly etc. There are several peers of ted baker in themarket like Paul Smith, Reiss, L.K. Bennett, French Connection, Jack Spade, Hackett, Swiggyetc. (Keller, 2014). The industry of the personal goods in London does not restrict the entry andexit of the companies but the products of the companies are differentiated. Each of the brandssells different designs, prices are also different, the collection is varied and all the material isexclusive on these shops. Thus, the market structure that operates in the personal goods industrywhere Ted Baker exists is monopolistic competition. The companies are found to earn a normalprofit in the long run which is again an indication that the market structure is monopolistic. Thepeers of ted baker in the market are big in size and the people who buy the products from them1
are also large in number. Though all of them sell the personal products but the products differimmensely in shape, trademark, durability, usage, quality and style. For example, the menswearcollection which ted baker has is very different from the menswear collection which Reiss has.Each of them has different market to cater and they have their own target customers based on theneed of the consumers and their affordability levels. Just like in monopolistic completion, theproducts are substitutes but then also they differ from each other. For example, if only the term“clothes” is used, then Ted Baker as well as its peers sells the clothes but they are highlydifferentiated. Another feature of the monopolistic market which is observed in the industry ofted baker is, that the factor of production and the goods and services here are not perfectlymobile (Feenstra, 2016). Thus, the monopolistic market structure operates in the personal goodsindustry of Ted Baker.There are several factors that determine the supply and demand of the products within thepersonal goods industry and they have a direct impact on the sales revenue of the company. Thefactors that affect the demand are: change in the income of the consumers, when it rises, theystarted demanding more and when the income falls, their demand also falls for the goods of Tedbaker. Then, the consumers also look for the quality that the companies in this industry areselling. If they get to see better quality at some other store, then they change their demand for theproducts of Ted Baker negatively (Finger, 2015). There are some expectations that theconsumers have from the goods of ted baker but if those are not fulfilled, then they tend tochange their demand. Also, advertising has a major role to play in this industry. If theadvertising positively influences the people, then they increase the demand for the products ofthat company. The factors that affect the supply are: fall in the cost of production or operationstend to increase the supply because the company gets to earn more. When the entry of new2
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