Global Tech: Market Structure, Forces & International Trade Impact

This case study examines the influence of different market structures on pricing and output decisions, focusing on perfect, monopoly, and oligopoly markets. It analyzes how market forces like supply, demand, elasticity, and economies of scale affect organizational responses, particularly for 'Global Tech.' The study also explores the impact of business and cultural environments on organizations like McDonald's, highlighting the significance of cultural differences and business practices. Furthermore, it discusses the importance of international trade for UK organizations such as British Airways and Tesco, detailing how global factors (political, economic, social, and technological) and European Union policies influence their operations. The case study concludes by referencing various academic sources to support its analysis of market dynamics and international business environments.

TASK 3 and 4
Business Environment

3.1 Pricing and output decisions under different
market structure
Market structure refers to the number of organizations
who produce identical types of goods in the market.
Pricing and output decisions under different market
structure have been described here as under:

Types of market structure
Perfect market: Large number of buyers and sellers,
homogeneous products and high consumer
awareness are the characteristics of this market.
Moreover, competition level is very high henceforth,
prices are decided through considering competitor’s
product prices. On contrary, output decisions are
taken by analysing current sales and consumer
demand. It helps to determine the quantity which
firm needs to be produced to meet customer demand
for the future period. Any firm can enter and exit
from the market at any time.

Monopoly market: In this market, only a single producer
delivers products and services to large number of consumers.
Thus, firms own decide their product’s prices with the
objective of maximizing its earning and profitability. However,
current market demand is the basis for output decisions.
Oligopoly market: Only a few firms operate in this market
structure; henceforth price decisions are very much affected by
competitor’s product prices. In case, when rival firms change
their prices then the other organization will also need to change
prices accordingly. For instance, when a competitor falls their
prices and other firm does not change their prices then their
sales will be declined.
Contd.

3.2 Impact of market forces on organizational
responses
Market forces includes followings elements:
Supply and demand.
Elasticity of supply and demand.
Interest rates.
Governmental.
Political.
Technological.
Legal.
Environmental.

Contd.
Impact of changing demand and supply on the
product’s prices is described below:
Supply and demand: Quantity of goods which
consumer wants to purchase at a specified time and at a
fixed price is called demand. However, quantity of
available goods in the market is called supply. In
context to Global tech, increase in consumer’s demand
and fall in supply will result in increasing its product
prices. On contrary, reduction in demand and high
market supply will result in price reduction.

Contd.
Elasticity of demand: It measures the changes in demand
resulted due to price changes. High elasticity of demand creates
major changes in consumer demand by a little increase or
decrease in prices. For instance, demand for food is elastic
hence, a minor change in price will impact demand to a major
extent. However, inelastic demand creates no impact to the
demand while varying the charged prices. For instance,
demand for smoking goods such as cigarette is relatively
inelastic.

Contd.
Elasticity of supply: It measures the changes in
supply due to change in prices. High elasticity of
supply causes a major change in supply while prices
are changed by a little percentage. On contrary,
inelastic product demand does not bring any changes in
supply at high or low prices.

Contd.
Economies of scale: It refers to the benefits that
firms can be taken through large scale of production. In
context to Global tech, high production scale of mobile
handset and tablet devices helps to reduce per unit
product cost. Further, its recent diversification in fast
food outlets also brings large benefits for the company.
This in turn, it will be able to accelerate large revenues
and profit margin from its operations.

Contd.
Economical: Under the economical factors, purchasing
power, investment rates, trade rates and verying
interest rates affect Global Tech's organization in a
great extent.
Government: Unemployment rate, rate of inflation and
deflation also impact product prices. For instance, high
inflation rate will contribute to increase Global tech's
product prices and vice versa.

Contd.
Political: Tax rates, new political regulations, fiscal
policy and trade tariffs are the political factors which
affect gloabl tech in both the directions.
Technological: GT provide technological products to
the customer, thus, technological factors affect the
organization to a great extent. In the present
technological age, GT has to provide innovative
products to the customers which help to improve their
position.

Contd.
Legal: Government laws, regulations, policies and
standards impact Global Tech's operations in great
manner. This is because GT has to comply all the
legislations and standards.
Environmental: Recycilling of waste, reduce scrap,
provide safe and pollution free environment are the
environmental responsibility of gloabl tech.