Business Economics Report: UK Economy, Waitrose, and Market Analysis

This report provides a comprehensive analysis of business economics, focusing on the application of economic principles to the operations of Waitrose within the context of the UK economy. The report begins by exploring fundamental concepts such as scarcity, demand allocation, and market equilibrium, emphasizing the importance of understanding these principles for effective decision-making. It then delves into market systems, opportunity cost, and elasticity, illustrating how these factors influence business interactions and strategic choices. The analysis extends to pricing strategies, market structures, and the impact of regulations on market power. Furthermore, the report examines the changing structure of the UK economy, macroeconomic policies, and the economic performance within the global market, as well as international trade. The report concludes by evaluating the theory of comparative advantage and the implications of emerging economies on developed economies, offering a thorough understanding of the economic environment in which Waitrose operates.

Business Economics

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Economic problem of scarcity and demand allocation ....................................................1
1.2 Identification of process of equilibrium at market place attain........................................2
1.3 Importance of differing market system and role of opportunity cost in taking appropriate
decision...................................................................................................................................4
1.4 Importance of elasticity in market interaction..................................................................5
TASK 2............................................................................................................................................6
2.1 Implications of pricing and objectives on business firm operations................................6
2.2 Comparison of setting prices in different market structure..............................................7
2.3 Impact of market structure and operation on different firm behaviour............................8
2.4 Evaluation of impact of regulation on market power.......................................................8
TASK 3............................................................................................................................................9
3.1 Analysis about the structure of UK economy which get changed in 21st century and its
impact on BE..........................................................................................................................9
3.2 Analysis of tools available to meet macroeconomics policy challenges........................10
3.3 Identification of success of government policies in accomplishing macroeconomics
objectives..............................................................................................................................10
3.4 Economic performance of an economy in global market ..............................................11
TASK 4..........................................................................................................................................11
4.1 Theory of comparative advantage .................................................................................11
4.2 Advantages and disadvantages of free trade for development ......................................11
4.3 Analyse the impact of emerging economies on developed economies..........................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Every economy consists various number of resources which are scare in nature and have
to optimally utilise by personalities so that they effective and appropriate outcome would be
gain. Every business person requires several resources which enable them in manufacturing and
production of variety of goods and services to deal with various wants and desires of human. It
enables in distributing the wealth among different number of individual whom are helpful in
ascertaining targets with long term context (Acosta, Coronado and Flores, 2011). This project is
based on business economics on Waitrose, whom are going to identify UK economic system and
its impact on business organisation. This project includes a better and effective understanding of
microeconomics theory in context of market place. Along with this, it will also evaluate about
impact of market power on economy. Moreover, government play an appropriate role in
macroeconomics context by applying theory of economy on globalisation trade of business.
TASK 1
1.1 Economic problem of scarcity and demand allocation
Resources are the input which facilitate an opportunity to manufacture different variety of
goods and services so that an individual get satisfied properly. According to economics, it is
clearly determining that all resources are scare in nature but human wants are unlimited which do
not get extinct to a particular course of fact. Thus, a basic fundamental economic problem is
scarcity of resources and unlimited needs and desires of human beings. Scarcity is a basic
economic problem in which resources are limited in nature or consider as limited availability of a
commodity which demanded in the market. The notion of scarcity refer as that human wants are
unlimited in nature which never get satisfy even at using advanced human technology. Factors of
production are consider as resources which get finish one day like land, labour and capital. Thus,
it is essential for an organisation to understand this fact properly and take suitable decision
related with this major economical issue.
This thing is considering as major economic issue which made a vast impact on many
business associations through which chances of differentiation are high in nature. Every factors
of production will get extinct one day but needs and demands get maximise day after day.
Although, every factor has alternative which enable in making production process appropriate
and aid in dealing with this major issue (Cader and Leatherman, 2011). Thus, in UK economy, it
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is clearly get analysed that Waitrose have limited number of resources which restrict them in
generating more and more profit for business expansion. Hence, managers have to better
understand about all essentials properly and then produce quality based products which will
further serve to ultimate consumer. Waitrose do not have unlimited resources which directly
leads to satisfy their various number of customers. As their capital is limited in nature along with
that they have limited land for production as well but human wants are getting maximise days
per days. Hence, management have to utilise and understand scarcity of resources approach
properly in order to frame appropriate strategies and use suitable actions.
1.2 Identification of process of equilibrium at market place attain
Demand: It is considering as economic process under which an individual willingness to pay a
specific amount for a particular product is identify. Increase in price for a particular product will
lead to decrease its demand in market which is not beneficial and made a vast impact on a
business and its existence.
Supply: It is a fundamental economy process which underpin about the availability of products
and service to target market. Increase in demand will lead to enhance supply as well which
indicate a positive relationship between demand and supply or vice versa.
Equilibrium: Whenever supply and demand curve intersect each other then it is considering as a
process of equilibrium where no profit and no loss situation get arise. Thus, business have to
analyse this consent properly and then take further decision in this.
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(Sources: Principles of Economics, 2016)
Waitrose have to facilitate their supply according to demand which indicate that they
have to fulfil demand for particular goods (Ekman and et. al., 2011). Hence, managers have to
identify the supply and demand relation with each other and analyse equilibrium process
properly. This section indicated that whenever such situation gets arise, business have to stop
their production or selling process otherwise Waitrose profitability get decline.
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Illustration 1: Principles of Economics, 2016

1.3 Importance of differing market system and role of opportunity cost in taking appropriate
decision
A market system is the network of buyers, sellers and other market actors who come up
together to trade for a given product or services. A market system can be specific to a product
(coffee, mangoes, dairy) or a cross-cutting sector (finance, labour, business development
services). A market system’s strength depends on how well the participants obtain financing,
launch businesses and adopt new technologies and best practices. The major participants which
are included in the market system are stated as follow for the Waitrose:
 Market players: These are all such people whom are related with all kind of activities of
market or drive the economic activity of a country. Suppliers, buyers, producers all such
are consider as direct market player in an economic whom take active participation into
it.
 Suppliers of supporting goods and services such as finance, business consultancy and
equipments. Waitrose require several products like finance in order to execute operations
of business along with this they also need some equipments for producing their goods.
 Moreover, there are several parties are also include in market system which enable in
operating such dynamic environment and bound evert association to not to perform any
unregulated activity. Government made some legislations which have to follow by
Waitrose properly along with infrastructure provider support in establish such
infrastructure which enable business operations to get done properly.
Every business found out best alternatives with to produce quality based products.
Opportunity cost refer to as process under which an individual or an organisation will lead to
work properly in order to grab another alternative and lose current one. Business management
have to identify different number of alternatives and scale them according to nature, preference
and value of them (Geithner, 2014). Once this section gets done, management have to choose
best one whom gain highest rank and thus a beneficial judgement will be carried down. Waitrose
have to determine all best suited alternatives which enable them in making the product
development process appropriate by analysing a gap between best alternative and previously
used one. Business have to analyse about previous consent and identify the gap between current
and past alternative base. Thus, whenever, Waitrose will be going to introduce any new product
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at market they have to identify best alternatives and choose appropriate one to establish good at
market system.
Thus, it gets identify the opportunity cost is best suited technique which facilitate a
section so that best economic decision will be carried down on the basis of various individual
value and preferences. Along with this, their demand gets satisfied as well by complying with
needs and desires properly. Scarcity always enforce in order to make choice between the two and
adopt best one to get thing done. Thus, a major scenario get frame which prepared according to
customer perspective with opportunity cost aspect properly which is:
 Waitrose have infinite number of products and services which are quality based in nature.
But due to wide range of competitors, customers usually have an opportunity to easily
shift to other. Thus, customers of a company have high opportunity cost in order to which
they can easily choose alternative for purchasing products and services.
 Waitrose are dealing in all types of products but apart from this, management can shift to
render appropriate services as well like consultancy firms etc. Thus, opportunity cost for
a business is choosing alternative services instead of dealing in large stores because at
small level investment is also low in nature.
1.4 Importance of elasticity in market interaction
Demand and price have negative relation with each other and thus the degree to which
demand and price of a goods and services varies from each other. Elasticity of demand is
described as a process under which price and other factors made a vast impact on quantity
consume by an individual. It gets analysed through percentage change in demand quantity get
divided or in respect of another economic determinant. Certain number of factors which affect
demand and availability of goods are:
1. Availability of substitute goods
2. Income of a consumer
3. Durability of goods and services
4. Necessity
5. Brand loyalty
Waitrose managers determine that there are many companies are already taking place in
environment which stated that substitute of their products and services are more in number.
Along with this, another factor which impacted demand of user is their income level. Waitrose
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have to deliver each kind of products and services which further lead to satisfy and target every
group of customer properly so that better and appropriate demand for their goods and services
could be arise. Moreover, in stores, all products and services are belong to necessity which
facilitate an option to make their customers satisfy in nature.
All these factors have to take in consideration when dealing with price elasticity concept.
It is helpful for Waitrose when they are going to deal with UK market consumers due to
analysing the concept properly and make their price and supply related decision properly:
 Determining output level through analysing elasticity of demand. Change in price
will directly made a vast impact on its demand (Mason and Brown, 2013). Hence,
Waitrose have to identify the demand and price concept properly and apply into their
business process as well.
 Measure production factors properly and paid them accordingly. If factors are
expensive in nature, then price for a certain commodity is high.
 Analyse the demand for future context. This factor indicates that while change in
income level of an individual, management have to produce goods by keeping such
fact in mind.
All these factors indicate the importance of price elasticity of demand for the managers of
Waitrose whom are going to available their products at each and every store with required
demand. Hence, whenever a new market interaction will take place, it is essential to determine
the nature of market and then appropriate decision on the basis of that so it will enhance chances
of success in long term context. Moreover, business become able to sustain at market for long
term perspective as well.
TASK 2
2.1 Implications of pricing and objectives on business firm operations
Pricing is considering as an essential topic which clearly signifies about the value which
incur on a goods manufacturing and production. A major objective behind setting an appropriate
price is to cover all output aspects and generate profit as well through which chances of
executing the operations become possible. Waitrose is one of the finest retail outlet store in
United Kingdom whose major objective is to render quality and luxury based goods and services
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to user (Naudé, 2013). Thus, their prices are generally high for certain number of products and it
made a negative as well as positive impact on business but in diverse manner.
Waitrose managers have to evaluate various pricing strategies properly so that they
become able to take effective decision related with cost. Thus, manager evaluate various pricing
approaches which are stated as follow: Penetration pricing: This type of strategy adopted by business for attracting maximum
number of customers for products and services. For lure away competition from business,
many association make their prices low during introducing a new offering into keen
competitive world. Thus, Waitrose can apply this section at such point of course when
they lead to introduce any new product or services into market.
 Premium pricing: This section signifies about a product or services whom prices are
always high in nature so that customers become motivated in nature in order to gain
market share. Many customers have a mind set that if a product have high prices then it
must be luxury in nature and start consuming. Waitrose can apply this technique on
business as well through which they become able to make their products image differ
from their competitors for gaining competitive advantage.
Apart from all these things, there are several corporate objectives always prepare by a company
properly so that they would lead to get sustain into market world for an appropriate frame.
Hence, corporate objectives for Waitrose are define as follow which have to take in account by
managers properly: Mission and vision: “We believe in championing British produce, treading lightly on the
environment, supporting responsible sourcing and treating people fairly. We believe
everything we do goes into everything you taste.”
 Objectives:
◦ To implement CSR activity properly
◦ To take care about each and every customer effectively
◦ To produce such quality foods and products which do not consist any harmful
pesticides
2.2 Comparison of setting prices in different market structure
There is different market system are identifying under which every business operation is
executed. many firms are operating in perfect competition market, oligopoly market and
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monopolistic environment (Newbold, Carlson and Thorne, 2012). Thus, in different market
context, there prices also used to get vary. Hence, business owners have to analyse market
system properly and then take appropriate actions in order to set a price:
 Monopoly market: In monopoly market, prices are made according to business
owner wish. There is lack of competition and chances of shift are less in number
due to nil substitutes. But marketer do not take much high prices because it will
lead to made a vast impact on business as well because buyer will not lead to
purchase such quantity in near future context or find the best alternative. Generally,
government made a hold on these products and services as fear of exploitation is
more.
 Monopolistic market: According to this market system, monopolistic market is one
where large number of buyers and sellers come together for exchange process.
Thus, buyers do not have any right to take more price for their products which they
render. Hence, in this structure prices are generally low and appropriate action plan
get follow up to attract more number of users.
 Perfect competition: According to this market system which simplifies that there
are infinite number of buyers and sellers are taking place whom are selling goods
and services at equal price. It is not easy for a single buyer to alter the prevailing
price level of market otherwise business easily take advantage of this consent.
 Oligopoly: This market system includes small number of sellers but have wide
range of sellers. This concept is quite similar with monopoly where buyers are
dominating the market.
 Monopsony: There is only one buyer for every particular goods and services which
indicates that buyer have a power to take any decision which is related with pricing
segment.
2.3 Impact of market structure and operation on different firm behaviour
Market structure of an association describe its operations and nature properly. Different
sectors belong to differ market structure under which their execution of operation is taking place.
For improving the operations of business it is essential to improve quality and reduce wastage
from products and services:
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i. Market accessibility and segmentation: It is essential for an organisation to
determine the target market on which business will going to sale out their products
and services. Thus, business have to determine that which market will easily get
access and maximum number of users get attain (Summers, 2014).
ii. Competitive structure: Another major thing which have to take in account by
association is to analyse competitive structure which state about different number
of rivalries in such industry. In oligopoly business structure chances of rivalry is
less and dominant nature would be gain.
iii. Regulatory and policy influence: Ensure that all government and policy legislation
are meeting with objectives. This factor is helpful in enhancing business operations
through which chances of maximising sales get increase and business operations
get done effectively.
2.4 Evaluation of impact of regulation on market power
Market power is consider as gaining benefits of market by individual selling and work as
a leader. There are various number of regulations are identifying in UK market which are related
with economy perspective and management have to take better decision on them as well.
Competition Policy act 1998 is formulate with a purpose of analysing that monopoly work as a
major benefit for an organisation so that most number of targets get ascertain in an effective
manner. Waitrose have to determine all sort of activities which restrict by the Competition Act
1998 whom are described as below:
 Competition Act restrict that business do not have an opportunity to deal with
according to same manner. It is not possible for big firms to abuse market and affect
their operations as well. Thus, this regulatory act made a vast impact on firm
operations and their business as well (Uhlaner and et. al., 2012).
 On the basis of enterprise act 2002, it gets analysed that business operations would
have to take place properly and government will be going to punish such entities
whom abuse market. Along with this, consumer have a right to file a complaint
against such enterprises.
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TASK 3
3.1 Analysis about the structure of UK economy which get changed in 21st century and its impact
on BE
Structure change in economy refer to as the process where industries get modify with
each other. From ancient time, it gets analysed that business are taking place at small level and
their functions and operations also get vary to each other. Thus, management have to identify all
such modification with a course of time and take appropriate decision on them as well. This
change made a positive impact on business and its operating environment under which chances
of attaining success get enhance as well. Waitrose is a best example of this structure change in
economy of 21st century because business environment is dynamic in nature which implied that
management have to function and operates all things in an appropriate manner:
 This change can be from political view which lead to modify all government
related policies and regulations. This political transformation plays an effective role
in make positive impact on business and more and more profit get ascertain.
 Another major change in structure in market took place due to alteration in
technology which enable business to make effective and appropriate products with
high quality standard.
 United Kingdom economy is a free trade or consider as open economy under which
many sellers become able to start business over there (Varian, 2014). This hinder
many sellers in order to sale their products in economy properly due to wide range
of competition.
All these points indicate that Waitrose have to suffer heavy competition in their economy
which is not beneficial in ascertaining maximum profit. This indicates that economy is related
with Monopolistic context in which more buyers are identifying and dominance is in their hands.
3.2 Analysis of tools available to meet macroeconomics policy challenges
There are different number of policies are identifying which are available to meet
macroeconomics policy challenges whom have to consider by Waitrose are described as follow: Fiscal policy: Government made fiscal policy through which they are going to make a
balance of payment. Along with this, all taxation policy is also levied under this segment
and thus appropriate action have to be carried down. Through this procedure government
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