Business Economics: Oligopoly, Competition, and Market Analysis

This business economics report delves into the concept of oligopoly, defining it as a market structure dominated by a few sellers, and contrasting it with collusive oligopoly, monopoly, and perfect competition. The report examines the impact of supermarket giants on privately owned local grocery stores, highlighting the challenges faced by small businesses due to the rise of large retail chains. A comparison table presents the prices of various food items across different stores, with an analysis of total shopping costs and competitiveness within the food market. The analysis includes an examination of market segmentation strategies and the competitive landscape of major supermarket chains like Tesco, Asda, and Waitrose, providing insights into their market share, sales, and expenditures.

Business Economics

Contents
Contents...........................................................................................................................................2
1.0 INTRODUCTION...................................................................................................................1
2.0 Define and explain oligopoly and discuss how it differs from other
forms of competitive models in economics................................................................1
3.0 Oligopoly Compared with Collusive Oligopoly....................................................2
4.0 Oligopoly and Monopoly.............................................................................................3
5. Oligopoly and perfect competition............................................................................4
7.0 Comparison table of the prices of food in different stores............................6
8.0 Comparison of total shopping cost:........................................................................7
9.0 Competitiveness and segmentation on the food market................8
10.0 CONCLUSION..................................................................................................................10

1.0 INTRODUCTION
Business economics could be defined as the field of economics which is
studies for the purpose of analysing different types of issues such as
financial environmental, marketing, organisational etc. which are faced by
businesses. It is highly focused with some of the specific components such as
factors, consumption, scarcity, distribution etc. Main aim of this report is to
analyse the impacts of supermarket giants on the privately owned local
grocery stores. In this report, the market structure oligopoly will be analysed
in detail and it will also be compared with other structures. Apart from this,
different products that will be bought from various markets will also be
analysed on the basis of cost in this assignment.
2.0 Define and explain oligopoly and discuss how it differs from other forms
of competitive models in economics
Definition and discussion of oligopoly: It could be defined as the
market position in which the competition for the market players will be
limited as the whole marketplace is ruled by small number of sellers. It may
result in very low level of market competition which leads to higher prices for
the customers. The following graph shows the changes in price and demand
in oligopoly market:
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Figure 1: Oligopoly market, 2020
(Source: Oligopoly market, 2020)
From the above chart it has been analysed that in oligopoly structure
when price will be increased then it will leave negative impact upon the
demand or quantity supplied to the customers.
3.0 Oligopoly Compared with Collusive Oligopoly
Oligopoly market in which there are few firms that are having their own
prices and output policies to compete with the rivals (Collusive Oligopoly and
oligopoly, 2020). On the other hand, the collusive oligopoly is the market in
which few firms form mutual agreement with each other to ignore the
competition within the industry. The following graph demonstrates the
difference between these structures:
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Figure 2: Oligopoly Compared with Collusive Oligopoly, 2020
(Source: Oligopoly Compared with Collusive Oligopoly, 2020)
On the basis of above graph it could be analysed that in oligopoly
market the changes in price results in decreased demand but in the collusive
oligopoly price change does not result in reduced demand as the competitors
sign mutual agreement to deal with competition. This difference could be
analysed with the help of above diagram and it demonstrates that price in
the market changes on the basis of available competition within the industry.
If the price of products will be increased in the market, then it will affect the
demand because it results in reduced demand of audiences for that product.
4.0 Oligopoly and Monopoly.
These types of market structures are related to imperfect competition within
the industry. When an entity rules the market then it is known as monopoly
market (Oligopoly and Monopoly, 2020). In this market structure there will be
only one producer or seller of a good who will be leading the market. The
price of all the products in this market is set by government. Apart from this,
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when small number of large companies produce similar but little different
items that it will be known as oligopoly market. The graph attached below
shows differences in both the market structures:
Figure 3: Oligopoly and Monopoly, 2020
(Source: Oligopoly and Monopoly, 2020)
From the above chart it has been analysed that the kinked curve that
shows oligopoly market structure will provide normal profit to the sellers. On
the other hand, the curve that slops downward and showing monopoly
market will facilitate the sellers to generate higher profits as there will be
only one firm which will be leading the market.
5. Oligopoly and perfect competition.
Oligopoly market structure is the market in which there are few sellers who
are dominating the whole market. All companies are price makers in a
fiercely competitive world and this means that they do not control the sale
price of a product (Difference in Oligopoly and perfect competition, 2020).
Both firms do have a relatively poor market share and one product is not
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favoured to another by the consumer. The formula is fairly straightforward
for a great rivalry market:
Price = Marginal revenue = Marginal cost = Average cost
P = MR = MC = AC
An oligopolistic is a circumstance in which a limited manufacturer or retailer
dominates the market. If corporations have shared trust and cooperation in
an oligopoly environment, they may raise the gross profit by setting a
monopolistically competitive firm. If oligopolists conspire successfully, rates
and performance may be fixed for the whole sector, so that nominal sales
are marginal (MR) costs.
6.0 Impact supermarket giants have on privately owned local
grocery stores.
Small-scale businesses are adversely affected by stores and grocery
stores. As elevated centers and shopping centers become popular during the
modern day days, in local resellers and small-scale distributors' interest in
citizens 'focus is becoming less. Anything moves to higher centers and
shopping areas in a new world, which has a detrimental effect on small
stores and suppliers' income.
Supermarkets undermine local choice while smaller; shops struggle to stay
open, while ten independent specialist stores in Britain have already shut
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down. The separate share currently amounts to just 90 percent in the
grocery store (Impact of supermarket giants has on privately owned local
grocery stores, 2020). The market Authority's study found that the shortage
of local stores, particularly for individuals with lower earning or who don't
use a car has a major impact on food adequacy. Supermarket chains are
pushing money away from small cities and the founders and distant
businesses. Traffic and chaos was increased in stores. The distribution
networks used by dealers and the location of out-of-town shops generate
large amounts of traffic.
Supermarkets target local employees. Food store claims that modern
retailers work in jobs are not considered to take the wider image of small
retailer sector failures into account. A 1998 study by the National Retailer
Planning Forum analysing the work effect of 93% (NRPF).
7.0 Comparison table of the prices of food in different stores
Product Stores
Tesco Asda Morr
1 x Uncle Beans Sweet& Sour Sauce (450gr) £
1.85
£
1.76 1.90
4 x Tins Tuna Chunks in brine £
2.83
£
2.69 5.00
1L Still Strawberry Sugar Free Fruit Flavored Spring
Water
£
0.79
£
1.05 1.00
2 x Balsam Man-size Compact Tissues £
4.00
£
4.00 4.00
1 x White Tissue Rolls 12 pk ** £
4.95
£
4.15 4.00
1 x Ready Baked Jacket potatoes (4pk) £
2.50
£
2.50 2.00
1 x 25ogr Beef mince meat £ £
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2.50 2.19 2.35
1 x Baked Beans 6pk £
3.50
£
3.50 3.70
1 x Muller Light Strawberry Yogurt £
0.60
£
0.60 0.68
1 x Whole-meal Loaf £
0.85
£
1.10 0.90
1L Almond Milk - Without Sugar £
1.70
£
1.70 1.80
1 Bag of Salmon Fillets £
4.00
£
3.30 4.00
6 Pack Medium Oranges £
1.50
£
1.80 0.99
Total cost of the shopping list £
31.57
£
30.34 32.3
8.0 Comparison of total shopping cost:
Supermarket chains are of varying sorts and contain various types of pricing
for each commodity. Below is a graph showing the cost underneath the
various supermarkets for each product. Price differential must therefore be
achieved based on manufacturers claiming that buyers must be told
somewhat to pay according to those groups or that customers value the
goods or services at issue in those countries. If the benefits of separating
markets are greater than the gains produced by maintaining economies
intact, market manipulation is more essential. The currency value
permeability in the post depends on the role of price differential and the time
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over which several groups will pay higher costs for the same good. In a more
elastoplastic post, buyers pay a higher premium, whereas in a more elastic
post they are given a lower price. The meaning of universality has been
transition. In Britain's retail market there were times of competitive
dominance over global economic systems. The economic implications have
been transforming since 2008, since the recession (Price discrimination in UK
supermarkets, 2020). Following the current trade conditions and global
collapse, costs now have to be redefined in the same way. There are the
same economic issues, but the climate is different. The key issue is how
much products or services are delivered or how the consumer can generate
demand. Then, goals and reasons are presented before braking on a single
price. Updating or price-plus incentives, demands or value-based costs or the
estimated return or archive price of rivals.
According to the aforementioned table, Waitrose plc prices its goods more
expensively, which amounts to 33,14 £. Aldi, that prices goods at a cost of
£20.42, is the retailer that displays the products at lower prices. The reason
is that prices are handled in multiple shops. The cost of food goods in the
nearest Nisa supermarket is £31.45. This increase in food costs is attributed
to changes in market structure policies. Like Aldi, costs of grocery goods are
cheaper as they see it as possible to contribute to an improved number of
consumers over a certain amount of time by setting cheaper prices. Waitrose
plc keeps price for its food goods higher on the other hand because they
claim that rising prices will lead to greater buyer attraction to shoppers, who
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are conscious of customer satisfaction. As well as the other reason why
prices are different for similar foodstuffs is only due to supplier costs. Like
stores where food costs are higher than this, manufacturers can assumes
that they can deliver goods more expensively.
9.0 Competitiveness and segmentation on the food market
The value of combining distinction between retail goods and competition
research as a highly efficient way of understanding supermarket
requirements and analysing business decisions in large supermarkets. The
advertising research begins by narrowing the distance between the
academically focused exposure and the realistic application of the awareness
presence. In an extensive review the methodology recommended is applied
and methodological findings and competitive impacts are discussed for retail
multinationals. This shows how a creative and complicated approach needs
to be graded. Orange also provides data resources under an integrated CRM
system (Customer Relationship Management) to track parts on a regular
basis to adjust the service schedule carefully. It adapts its marketing and
support programmes, for example, to the value of the customer. Premium
customers in Tesco are registered automatically and favoured by call centres
in the service phase. Compared to other shops, where the customers do not
get anything this acute attention on some of the most desirable goods will
pass by ticketing machines rather than consumers with packed Aldi and
Waitrose shopping trolleys.
The main point here should be noted: productivity and future profitability
results, not revenue, market share, or more subjective indicators like
appearance or reputation. In 2005, Tesco reported profit of approximately
37.1 billion. Revenues and sales have gradually improved over the last five
years. Revenues from 2004-5 grew by 20.5% on sales increase of 12.4%.
360,000 people worldwide are working, but there are 2.000 stores. 111 new
stores are expected to be constructed in 2006. Sainsbury was the pioneer in
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the industry, but in 1996 Tesco took the leading position, but now its market
share has risen to 30 related UK market data. Sainsbury is now ranked third
behind Asda, which Morrison bought in 1999 (Competitiveness and
segmentation on the food market, 2020). The following paragraphs briefly
summarise the sales and expenditures of each firm, its focus on business
orientation and the extent to which each company tends to add texture
characteristics.
As when the statistics in Aldi accounts are hidden away, Asda Wal-Mart
cannot have access to separate accounting reports. The UK market outlook
still isn't as transparent as the business concerns Tesco, Sainsbury, Waitrose
and Morrison are. Asda is now liable for misleading ads, the use of
manufacturers accused of possessing improper employment practises, the
evasion of substantive regulations and green washing, infringement of
zoning laws and damages to the greenbelt's land. Asda is pushing for an
aggressive agenda of privatisation for small urban regions that drives
independent competition, but local jobs directly copied from Waitrose. The
false comments by the company concerning 'value' and 'accessibility' were
also challenged and all possibilities for driving buying impulses were abused.
No conclusive evidence are found, but negative content is all over us on the
media, including the above regarding Morrison and it is likely that this will
make it more difficult for Asda to position itself in such a manner that it
reaches the more educated, attentive customers. About 25 percent of
Sainsbury's clients fall into the AB category, as per figures in Morrison’s 2005
income report; whereas in Tesco it is just 20 percent whereas with Asda it is
just 17 percent. Asda, but at the other side, is very much in step with market
affordability. Tesco is lower and Sainsbury is a store traditionally associated
with high prices, with Waitrose too.
10.0 CONCLUSION
Based on the aforementioned project report, it is possible to infer that a
number of markets exist in the market such as oligopoly, perfectly
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competitive, monopolies etc. This period pricing is dependent on the number
of players on the market under each category of market and the market
demand for its goods. The project study analyses these particular types of
markets with the aid of different diagrams. Some stores and their food price
list are clarified and compared in further phase of the project study. The only
explanation for price increases is that a store offers grocery products at
reduced prices, regardless of different forms of tactics like Aldi. Waitrose
would be on the other hand a store where, due to new price strategies and
increased supplier costs, costs are increasing than all other stores. In
addition, it can be inferred, because of different factors, such amount of
products, opening times and several more, that stores have a big effect on
local store.
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11.0 REFERENCES
Online
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%20leader>
Oligopoly and Monopoly [viewed 2020]. Available from: <
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Price discrimination in UK supermarkets [viewed 2020]. Available from: <
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Competitiveness and segmentation on the food market [viewed 2020].
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Difference in Oligopoly and perfect competition [viewed 2020]. Available
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