Business Economics Report: UK Market Analysis and Besco Limited

This report delves into business economics, using Besco Limited as a case study. It begins by exploring the economic problem of scarcity, resource allocation, and the roles of supply and demand within an economy. The report then analyzes various market systems, the significance of demand elasticity, and the implications of pricing strategies and corporate objectives. Furthermore, it examines how prices are set in different market structures and how UK regulations influence market power. The report also assesses changes in the UK economy, macroeconomic policy tools, and the UK's performance in the global market. Finally, it demonstrates the theory of competitive advantage and analyzes the impact of emerging economies, such as the BRICS nations, on developed economies. The report offers a comprehensive overview of business economics principles and their practical application.

Business Economics
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TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
1.1 Economic problem of scarcity and demand resource allocation in management of an
economy.......................................................................................................................................3
1.2 Role of supply and demand in an economy...........................................................................4
1.3 Importance of varied market systems....................................................................................4
1.4 Elasticity of demand and assessment of importance of elasticity in market interactions......5
TASK 2............................................................................................................................................6
2.1 Implications of its pricing and corporate objectives on its operations...................................6
2.2 Manner in which prices can be set in varied market structures.............................................7
2.3 Manner in which UK regulations influence market power....................................................8
TASK 3............................................................................................................................................8
3.1 Manner in which structure of UK economy has altered in 21st century...............................8
3.2 Tools available for meeting macroeconomic policy .............................................................9
3.3 Evaluation of performance of UK economy within global market......................................10
TASK 4..........................................................................................................................................10
4.1 Demonstrating theory of competitive advantage.................................................................10
4.2 Analysis of impact of emerging economies such as BRICS on developed economies.......11
CONCLUSION ............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
The concept of business economics deals with the issues that are attached with firm,
management, expansion as well as strategy etc. In other words it is is referred to as the study of
financial issues and challenges that are being experienced by the business that are performing in
specific market place (Summers, 2014). The term economics is regarded as the study of
components and functions of specific market place that includes demand and supply and its
impact on the scarcity concept. In the present study concept of business economics has been
discussed with respect to Besco Limited. The present report includes discussion on the problems
related to scarcity and demand resource allocation for managing economy. Further it includes
performance of UK economy within the global market.
TASK 1
1.1 Economic problem of scarcity and demand resource allocation in management of an
economy
Economic scarcity as well as allocation
Scarcity can be referred to as absence of something. In respect to economics, the concept
is related with lack of adequate quantity of the economic resources that is comprised of labor,
natural material as well as land etc. As a reason of presence of limited resources there is greater
importance for Besco to make allocation of the resources in several operations in best way. In
relation to UK the problem related with the economy emerges as a reason of low presence
workers who are skilled. In the present competitive business environment the role of employees
is inevitable in the success of the business as they offer services to the customers for the sake of
satisfying their demand (Naudé, 2010). Therefore the company is experiencing problems
regarding non availability of the skilled and efficient labor that leads to increase in cost of labor.
In addition to this machinery exists in minimal use that influence the production in adverse
manner. Therefore Besco Limited makes use of varied sources such as land, material, labor,
money for the sake of ensuring optimum use of such. The allocation of the resource is the
procedure that lay emphasis on production of the goods in needed quantity so as to meet the
needs and wants of the customers consistently.
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1.2 Role of supply and demand in an economy
Equilibrium is considered as the point at which both the demand in market and producers
supply is equal to one another. Besco Limited can make determination of the equilibrium point
through demand of the customers at particular time at specific price as well as make comparison
of such with the supply (Vasant, 2012). In other sense the company can make comparison of the
demand and supply forces and make assessment of the equilibrium point at which both are equal.
This is for the reason that such assist Besco in fulfilling the demand through supply of goods in
adequate quantity. This act as an aid in attainment of greater satisfaction level among the
customers.
D S
(Price) P E
S D
Q
(Production)
1.3 Importance of varied market systems
There is greater significance of the several market system. This has been enumerated in
the manner stated as under:
Free market economy: It is considered as the market system in which there is no role of the
regulatory authority in terms of allocation of the resources is referred to as free market system.
Under this system the determination of the prices is done at the intersection of the point of
supply as well as demand curve (Winter, Sizmann and Vant-Hull, 2012). In relation with UK,
such is prevailing within the free market economy. Thus manager of Besco Limited possess
freedom to make allocation of the resources in several activities in accordance with their desire
and without government intervention.
Command market economy: Government has fuller control on such market system as it wholly
determine the production and decision regarding marketing in order to control the supply
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(Hyclak, Johnes and Thornton, 2012). Such can be done through implementation of the
government legislations, rules and regulations.
Mixed market economy: The system of market wherein both the firm and government participate
in the effective resource allocation within varied operating functions is referred to as mixed
economic system.
Role of opportunity cost
It is regarded as the cost or the value of the alternative that has been sacrificed for the
sake of performing some action that is chosen already. Besco would make selection of the
alternative that offers higher return (Devlin, 2012). For example, in case Besco choose at making
investment of the amount for expansion of the operations then bank interest that is lost over the
deposits is considered as opportunity cost.
1.4 Elasticity of demand and assessment of importance of elasticity in market interactions
Elasticity of demand
It is referred to as degree to which the quantity demanded by the customers difference in
accordance with the fluctuations in the prices. It provides explanation regarding the relationship
level among the demand as well as price. In context of Besco consumers possess sensitive nature
and this demonstrates that demand is highly elastic. It reflects little enhancement in the price that
would lead to decrease in the demand in the market to a significant level. Thus company is
maintaining price of the product in order keep consistency among the demand and profitability.
The importance of the elasticity of demand is enumerated in the manner stated as below: Rivalry among the producers and customers: Within the market the management of
Besco desires at charging some higher prices in order to increase the revenue as well as
profitability to a significant level (Schön and Konrad, 2012). Therefore demand elasticity
reflects the association among the factors that company can utilize for determination of
their prices of product. Dispute among the consumers: Absence of supply would result in promoting the rivalry
among the consumers as a reason that every person intends at satisfying the desires that
are being possessed by them. Rivalry among producer: There is greater competition among the producers with one
another in order to comply with larger proportion of the demand of the world through
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sales of own services as well as product. Thus huge number of customers can be attracted
and provided services in an effective manner (De Jong, 2013).
 Role of regulatory authority: The regulatory authority is engaged in imposing tax rates
and other legislations for regulating the decisions regarding pricing of the business.
TASK 2
2.1 Implications of its pricing and corporate objectives on its operations
The corporate aim and objectives of the firm are as under:
 Suitable quality of service at reasonable prices
 Increasing base of customers
 Expansion of the operations
 Appropriate management of property
The strategy of Besco: The company make use of several strategy for the purpose of
attaining aims and objectives. It has been determined that main emphasis of the firm is on paying
attention towards the customer on continuous basis (Lin and Prince, 2013). This is for the
purpose of keeping track on the changing requirement of the customers and making efforts
towards meeting it in an effective manner through offering quality services at economical prices.
Methods of pricing: There is existence of several methods of pricing for Besco Limited
for deciding the prices of their products. Such are presented in the manner as under:
Competitive prices: Considering the prices of the competitors assist in setting the prices for the
own products and services is regarded as competitive prices.
Penetration pricing: Decision on the lesser prices in the introduction phase for the new products
and services assist in attracting greater number of customers and development of the product.
This is considered as penetration pricing.
Cost plus pricing: Addition of the sufficient or desired percentage return within the cost of
product for setting the sales price is referred to as cost plus method of pricing (Mas-Colell,
2014).
Premium pricing: The product for which there is no price sensitivity by the customers and also
they have willingness towards making payment of more. Thus company can ask for higher prices
as well. This is considered as skim pricing.
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In this relation to Besco limited it makes utilization of medium to low strategy of pricing
in order to set the prices of the product. The reason beside such strategy is that the there is price
sensitiveness among the user. Thus there is greater impact of price on the buying decisions of the
consumers. Such strategy enhanced the volume of sales and transaction number to a significant
level (Duan and Huang, 2014). Thus it can be stated that through decision on moderate pricing it
is able to attract greater number of customers and maintain profitability to a greater extent.
Further Besco has borne greater expenses in marketing for the product in order to enhance the
awareness about the product in the market. Thus leads to enhancement in the sales.
2.2 Manner in which prices can be set in varied market structures Perfect competition: It is considered as the market structure wherein industry determines
the equilibrium point of the demand and supply on which the company needs to sell the
product. Within UK there is presence of greater number of firm similar to Besco who are
offering services to the market. Thus firm is perfect. Because of such organization is
involved in offering services at economical prices that has adverse influence on the
operational performance. However the tool of marketing and promotion assist the
company in enhancing its volume of sales and transactions. Monopoly: In case the product is offered by single producer then such possess total
control over the supply (Dumas, 2013). Thus such producer are able to charge greater
prices. This is due to the reason that there is no availability of the substitutes for the
customers. Thus there are required to purchase product at high prices. Oligopoly: Under this kind of market structure high concentrated prices are determined as
there is presence few producers who have dominant position. Under this Besco can
determine the price of the product through evaluation of prices of competitor. The
technique of differentiation in product is employed by firm for the sake of increasing the
profitability and revenue. Monopolistic: This type of market structure is one wherein the producer provide
differentiated product. Thus they possess little power of pricing (Gillespie, 2013). In this
relation manufacturer would be able to charge higher prices in comparison to one that
competitors charge for the kind of goods that possess higher demand and loyalty of the
customers.
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Impact of operational decisions of Besco Limited Product: The company is offering quality products that is increasing its sales and
profitability to a significant level. Price: Medium to low strategy of pricing assist Besco is increasing the volume of sales as
a reason of moderate prices. In case the price increase then sales and profitability are
influenced in adverse manner (Hyclak, Johnes and Thornton, 2012). Place: The company is offering services to the target market by means of store or online
presence. With this customer can make purchase at any point of time as well as at each
place.
 Promotion: The company is making utilization of the several tools of marketing such as
advertisement, personal selling as well as social media for increasing the revenue by
means of enhancing awareness among the customers.
2.3 Manner in which UK regulations influence market power
The government of UK has imposed greater legislations and regulation that needs to be
followed by the firm for operating within the market. Competition as well as Market Authority
has significant role within such as such body has accountability for regulating the practices of
firm in order to make sure fair competition level (Summers, 2014). The competition is
formulated specifically in order to make prevention of the anti-competitive practices that would
enhance unnecessary competition in the firms. Besco is required to follow regulation of such act
through operating the firm in legal and faithful manner. Further Enterprise act 2002 includes
legislatory provisions in relation with assessment of merger, market research etc. In case any
director of firm commits prohibited actions stated within the act then termination of the person
can be done. Along with this in accordance with Office of Fair trading Besco has the obligation
to carry out the operations in faithful manner for ensuring fair practices related with trade. The
company would be obliged in relation with restrictive action such as fixation of minimum price
at higher level.
Apart from this Advertisement act 2012 develops obligation over Besco to make
disclosure of the authentic information within the advertisement for promoting the site.
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TASK 3
3.1 Manner in which structure of UK economy has altered in 21st century
Economic structure: This is regarded as the changes in the conditions of the market, trade,
income, savings, investment of various sectors such as primary, tertiary as well as secondary.
Within UK changes in economic structure has been stated in the manner as under: Maturity of the industry: As the time pass preferences of the customers, shopping habits,
product range, income level alters to a significant level. Moreover the significance of
emerging technology, promotional tool and research is raising. Such is because it is
important for company to make evaluation of demand of customer and then offer
services. Labour and manufacturing productivity: Through emerging and free policies of trade
Besco is able to make recruitment of talented employees at lower wages in comparison
with developed nations (Naudé, 2010). Further utilization of new technologies assist in
offering greater advantages.
 Wages competition: Minimum wages within the nations that are developing is lesser in
comparison with the developed ones. Within perfect competition higher minimum wages
in comparison to clearing wage would lead to higher employment. In accordance with the
minimum wage the company is accountable towards making payment of the standard
wages to employees.
3.2 Tools available for meeting macroeconomic policy
The policy of macroeconomic is comprised of both fiscal as well as monetary policy so
as to increase the GDP of nation and employment through control on supply of money.
Fiscal policy
The government of UK alters the rate of taxes and their spending in order to bring
enhancement in economic performance (Newbold, Carlson and Thorne, 2012). For instance, in
case the regulatory authority decrease the spending than greater money would be present for the
customers thus demand for product and services of the company would enhance. This results in
decreasing the turnover and revenues.
Monetary policy
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By means of such policy central bank is able to keep track on the supply of money
through alteration in the cash reserves, statutory liquidity ratio as well as open market operations
in order to control the rate of interest.
3.3 Evaluation of performance of UK economy within global market
The measurement of the economic performance such as GDP, employment, inflation as
well as industrial production assist in making evaluation of own performance with respect to
other nations.
 Within the year 2015, GDP growth rate of UK has decreased from 2.9% to 2.2% (UK's
economic growth, 2015). On the other hand GDP of US has increased to 3.9% from the
previous year. Further in the initial quarter of 2016 the estimated rate of growth of GDP
is 0.5% while actual rate of growth exceed the estimated to 0.8%
 The industrial production of US has enhanced from 106.52 to 104.04 within the year
2015. On the other hand industrial production of UK has fall down by 1.1% in 2015.
 In August 2015 the inflation rate of UK has enhanced to 0.1% because of increasing
customer price index from 0% to 1%. In contrast to this the rate of inflation in US is
negative to 0.09%
In relation to Besco, decrease in the GDP rate of growth, higher rate of inflation, decrease
in industrial population influence the operations of company in negative manner. Decrease in
demand and lesser rate of production are the factors that are controlling the revenue and
profitability of business.
TASK 4
4.1 Demonstrating theory of competitive advantage
Comparative advantages
It is regarded as the ability to perform particular action in an effective manner in
comparison with other. In relation to firm the company can gain comparative advantage through
production of lesser opportunity cost in comparison with rivalry business.
Free trade policy
The free trade policy of UK assist Besco in expanding its operations in several countries
without any restrictions and constraints such as tariffs, duties and quotas. Because of such
company has the ability to increase productivity, operational efficiency and performance to
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significant level (Lin and Prince, 2013). Through such the company can expand its operations
and makes sales of good to greater customers.
Advantages
 Reduction in barriers to trade in expanding business
 Increase in production
 Greater opportunities for employment
 Cheap imports Maintenance of balance of payment
Disadvantage
 International monopoly
 Unemployment and lesser welfare
 Higher inflation rate
 Decreasing economic stability of home country
4.2 Analysis of impact of emerging economies such as BRICS on developed economies
After the globalization as well as free policies of trade, all the firms have began to trade
with one another. The emerging market economies includes 80% of the entire population of the
globe. BRICS (Brazil, Russia, India, China and South Africa) is regarded as appropriate example
of emerging economies. The benefits to Besco Limited as as such:
 Greater product and service choices
 Availability of products at economical price
 Increase in demand within market
 Increase in base of customers
The stated points reflects that firm can attain greater advantage by means of emerging
countries (Kurzban and et.al., 2013). With this company can serve greater demand of the
customers and can enhance its productivity as well.
In contrast to the benefits to emerging nations, there is existence of certain demerit
related with domestic and global economic shocks over the economy. Such are enumerated in
the manner stated as under:
 Unemployment
 Inflation
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 Higher prices of fuel in greater cost of production
CONCLUSION
It can be concluded from the present study that Besco is influenced by the changes in the
conditions of the market. It is also comprised of the economic factors such as level of income,
demand as well as saving etc. The policies of the government such as fiscal and monetary affects
the business in several manner. In addition to this market system affect pricing decisions which
affects the productivity.
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REFERENCES
Journals and Books
De Jong, E., 2013. Culture and economics: on values, economics and international business.
Routledge.
Devlin, K., 2012. The joy of sets: fundamentals of contemporary set theory. Springer Science &
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Duan, L. and Huang, L., 2014. Global dynamics of equilibrium point for delayed competitive
neural networks with different time scales and discontinuous activations. Neurocomputing.
123. pp.318-327.
Dumas, B. A. B., 2013. Financial Securities: market equilibrium and pricing methods. Springer.
Gillespie, A., 2013. Business economics. Oxford University Press.
Hyclak, T., Johnes, G. and Thornton, R., 2012. Fundamentals of labor economics. Nelson
Education.
Kurzban, R. and et.al., 2013. An opportunity cost model of subjective effort and task
performance. Behavioral and Brain Sciences. 36(06). pp.661-679.
Lin, C. Y. C. and Prince, L., 2013. Gasoline price volatility and the elasticity of demand for
gasoline. Energy Economics. 38. pp.111-117.
Mas-Colell, A., 2014. Noncooperative approaches to the theory of perfect competition.
Academic Press.
Naudé, W., 2010. Entrepreneurship, developing countries, and development economics: new
approaches and insights. Small business economics. 34(1). pp.1-12.
Newbold, P., Carlson, W. and Thorne, B., 2012. Statistics for business and economics. Pearson.
Schön, W. and Konrad, K.A. Eds., 2012. Fundamentals of international transfer pricing in law
and economics (Vol. 1). Springer Science & Business Media.
Summers, L.H., 2014. US economic prospects: Secular stagnation, hysteresis, and the zero lower
bound. Business Economics. 49(2). pp.65-73.
Vasant, P. M. ed., 2012. Meta-heuristics optimization algorithms in engineering, business,
economics, and finance. IGI Global.
Winter, C. J., Sizmann, R. L. and Vant-Hull, L. L. Eds., 2012. Solar power plants: fundamentals,
technology, systems, economics. Springer Science & Business Media.
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Online
UK's economic growth, 2015. [Online]. Available through: <http://www.bbc.com/news/business-
32126975>. [Accessed on 19th April 2017].
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