The UK sugar tax Case Study

Added on - 21 Feb 2021

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The UK sugar tax Case Study.
TABLE OF CONTENTS1. Detailed summary of case study..............................................................................................12.Logical interpretation of how UK government Sugar Tax economic policies can shapebusiness strategy and management decisions..............................................................................1REFERENCES................................................................................................................................4
1. Detailed summary of case study.UK sugar tax was introduced in March 2016, on soft drinks in order to decrease theobesity rate among the children by reducing the sugar content in soft drinks. This case studytypically focuses on the market imperfections and market failures which are associated with theconsumption of sugar. There are various market failure associated with the sugar consumptionlike lack of information which has resulted in the over consumption of sugar in soft drinks and isone of the major factor of rise of obesity among the children. There are various reasons of overconsumption of soft drinks as per the view points from the society which has lead to the loss inwelfare and have also resulted in the market failure of the business. Due to imperfect informationabout the sugar consumption could result in the over consumption of soft drinks which have astrong negative impact on the consumers (Briggs and et.al., 2017). The government of UK hastargeted the primary source of sugar for teenagers such as soft drinks, UK government hasimposed this tax on soft drinks because they found that content of sugar is too high in soft drinks.UK government decided to impose tax on the soft drink manufactures which will be based on thevolume of high sugar drinks which are produced or imported. Sugary drinks cause market failurethe main reason behind it is imperfect information and negative externalities, which has forcedthe UK government to introduce sugar tax in order to reduce obesity among the children. Alsothere are various limitations of introducing sugar tax like it may not work if the demand for theproduct is inelastic or there may be increase in the consumption of secondary markets. The taximposed would also lead the negative impact on the low income companies and for pubs. Thereare also major consequence of levying sugar tax on sugary companies like it has a strong impacton their profitability and performance of their business in long run (Backholer, Blake andVandevijvere, 2017). This has has brought huge challenges for the soft drink businesses and ithas also resulted in the change in strategies and management decisions of the companies. Butover all it has resulted in the positive impact on the society and has resulted in decrease in levelof obesity among the children in UK.Market imperfections and failure will affect entrepreneurship activity as if company isnot considering negative factor that will affect its operations will lead to cause of overconsumption of soft drinks that will affect company's image in the market. As people areconsuming more soft drinks that will have an impact on health of consumers. Thisoverconsumption will lead to loss in market failure (Trendowski and Rustambekov,1
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