Business Economics Report: Economic Analysis of Mark & Spencer

This report provides a comprehensive analysis of business economics, focusing on key concepts such as scarcity, supply and demand, and elasticity of demand. It examines the role of these factors in managing the economy and making economic decisions, including the importance of different market systems and opportunity cost. The report further explores pricing strategies, corporate objectives, and their implications on business operations, setting the market structure, and how firm behavior affects market structure. It also delves into macroeconomic policies, market structure changes, and the impact of global economic factors. The report concludes with an evaluation of the theory of comparative advantage and the advantages and disadvantages of free trade, specifically for Mark & Spencer, while also assessing the impact of emerging and developed economies and global and domestic shocks. The report uses Mark & Spencer as a case study to illustrate these concepts and provide practical insights.

BUSINESS ECONOMICS

Table of Contents
INTRODUCTION...........................................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explain the economic problem of scarcity and demand of resource allocation for
managing the economy...............................................................................................................1
1.2 Role of supply and demand in an economy and how equilibrium can help to achieve the
market. ........................................................................................................................................2
1.3 Evaluate the importance of different market system and the role of opportunity cost. How
they help to make economic decisions. ......................................................................................2
1.4 Role of opportunity Cost.......................................................................................................3
1.5 Explain the meaning of elasticity of demand and assess the importance of elasticity in
market interaction........................................................................................................................3
TASK 2............................................................................................................................................4
2.1 Explain the implications of its pricing and corporate objectives on its operations. ............4
2.2 Setting to set the market structure in different market systems. ..........................................4
2.3 Firms behaviour affects market stricture and operations of the company. ..........................5
2.4 Impact of UK regulation on market power ..........................................................................5
TASK 3............................................................................................................................................6
3.1 Analyse the structure changes in market...............................................................................6
3.2 Tools to meet macroeconomic policy ..................................................................................6
3.3 Success of the government policies in achieving macroeconomics objectives. ..................7
3.4 Economic performance in the global market........................................................................7
TASK 4............................................................................................................................................7
4.1 Theory of comparative advantage.........................................................................................7
4.2 Advantage and disadvantages of tree trade for M&S ..........................................................8
4.3 impact of emerging economic over developed economic.....................................................8
4.4 Evaluation of global and domestic shocks within economy.................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business economics is the king of research of monetary problems and difficulties. This is
the most important factor to analyse the actual market position. It handles the business growth
techniques and management. Present report is based on business economics of Mark & Clerk.
Mark & Spencer is the leading retail organisation in UK. Furthermore, business economics
involves the understanding of the external factors. This report will cover the economic problem
of scarcity. Furthermore, it will discuss about the supply and demand. Business economics
mainly concern about the micro and macro factors. This decision mainly related to the
organisation strategies. This report helps M&S to make better planning in relation to economic
factors. These aspects help company to make better planning with respect to organisation
development.
TASK 1
1.1 Explain the economic problem of scarcity and demand of resource allocation for managing
the economy.
Scarcity and demand both the factors are very important for the organisation. It impacts
on the product and services in the market. Scarcity means the shortage of resources as compared
to customer wants(Barney, 2014). Human needs are never going to be satisfied as they always
want new and different; nobody can reduce their needs and wants. UK economy has large
number of desire but the resources are limited. In order to manage the scarcity of resources,
company needs to decide planning for allocation of resources. The wants of customer are
unlimited in spite of resources. Consumer needs to select only that commodity which gives
higher level of satisfaction. For example, government of UK make extra efforts to improvise
educational standards because National Health Service provides maximum benefits to the
society. This economic problem affects the business of Mark and Spencer. To overcome from
this effect, company needs to adopt rational consumer theory through which they can give
maximum benefits to the consumer. According to the research, consumer always prefer those
products and services which give them the best experience and satisfaction. Consumers are
rational as they always determine the prices and quality of the products and then make their
purchasing decision. For example, consumer has low income level in that Mark and Spencer
needs to make cost effective product and services to maintain its sales and profit revenue. And
try to make cost effective services(Bergs and et.al, 2014).

1.2 Role of supply and demand in an economy and how equilibrium can help to achieve the
market.
Demand and supply are the most important factors in the economy. It helps in making
effective market and profit revenue for the company. From the effects of these forces, economy
get their maximum utilisation of resources.
Law of Demand and Supply
As per the law, demand will decrease when the price of the product goes high; on the
other side, demand will go high when the price of product will go down. Furthermore, supply
will do up on the other side prices are also become go up. The relationship between supply and
price is positive as compared to demand(Biondi and Zambon, eds., 2013). The main purpose of
demand and supply is to provide correct information regarding commodity prices to the
customers.
Equilibrium.
At the time when demand and supply is on same position, that level of point is called
equilibrium. At this point, quantity of demand and quality of supply is the same. Organisation set
their product and service prices on the basis of equilibrium when both the elements are on the
same position. Demand and supply are the two main factors which affect the growth of product
and services. They both influence each other to determine the prices of commodities.
Furthermore, M&S needs to analyse the external demands of customers on the basis of which
they determine the prices of product and services. Apart from that, market factors also affect the
business activities(Buckley, 2016). All these factors help company to set the prices and get
maximum profit revenue.
1.3 Evaluate the importance of different market system and the role of opportunity cost. How
they help to make economic decisions.
Market is the main area where number of companies and customers deal and exchange
their commodities in terms of money. Furthermore, market is the place where company
determine its potential customers after analysing their needs and wants of the customers.
Perfect Market
It is the positive market where number of sellers as well as number of buyers are present
to deal with each other. This perfect market has involved only those products and services which

has quality of services at the same price. In this market situation, prices are never being
manipulated. It involves higher number of buyers and sellers(Gillespie, 2013).
Monopoly Market
In this market situation, there is only one seller and number of buyers. In this particular
situation, seller earn maximum profit and take advantage of being monopolistic in the market.
There are no chances of any substitution due to which company charge high prices from the
buyers.
Oligopoly Market
In this market system, there are small number of companies available in the market.
Accordingly, organisation beat with other rival firms on the basis of quality rather than prices of
the product and services.
Monopolistic Market
In this imperfect market, company produces huge number of products and services. In
this market situation, firms have to focus on its quality of services to earn profit revenue.
Customer are very much concerned about the quality of services through which they decide their
favourite brands so as to earn customer attraction. M&S needs to adopt quality of product and
services to make them happy(Hunter, Herr and Heyland, 2015).
1.4 Role of opportunity Cost
Opportunity cost is the economic concept that individual needs to give up from
something to achieve better than that. This opportunity cost helps consumer to take better
decision in terms of purchasing goods and services. It gives choices to select the best one for
them. Human wants are unlimited and they are never satisfied with anyone because of high
choices. To get satisfied itself, individual needs to select the product which give him/ her
maximum satisfaction. With the help of opportunity costs, M&S make their strategies
accordingly. It also helps to make better product and services for the customers. Like, M&S may
produce product and services at low prices to attract number of customers and expand the
business activities and revenue. This is the advantage of opportunity cost.
1.5 Explain the meaning of elasticity of demand and assess the importance of elasticity in market
interaction.
Elasticity of demand is also known as price elasticity of demand. This may be affected by
the change in prices and change in quantity of demand of product and services. With the help of

this factor, M&S can determine the effective factors of demand of the company. To measure the
elasticity of demand, firms needs to determine the current tax rates, inflation and exchange rates.
Furthermore, it also helps company to interact with the market trends and set the prices on the
basis of customer, competitor’s price and customer demands(Laszlo and Zhexembayeva, 2017).
With the help of elasticity of demand, company will understand the market more effectively and
gain more information regarding current trends and the latest technologies in the market. For
example, government of UK many increases the rates of taxes I that particular situation prices
will go up which affects the demand of the products. To keep its position, company needs to
minimise its cost to maintain its stability in the market.
On the other side, elasticity of demand also gives benefits to firms for getting optimum
price of products so that they can get better profit revenue. This elasticity of demand also helps
company make better marketing and company strategies to take the best decision.
TASK 2
2.1 Explain the implications of its pricing and corporate objectives on its operations.
The main objective of the firm is to get maximum profit revenue by providing quality of
goods and services to the customers. To enhance their sales of the product, M&S needs to adopt
the best strategies to make product prices(Laubach and Williams, 2016). Like Marginal costs,
Average Costs and Cost-plus price. Both approaches have their own pros and cons.
Marginal Costs of pricing
In this pricing, strategies are used by the company when they face poor level of sales in
the company. It is the method in which company produce another unit of output to changes in
volume changes. The prices are changed on the basis of one additional unit of output changes.
Costs Plus Pricing
It is another method to set the prices of product and services. In this process, company
adds all expenses and additional costing in order to set pricing of the products. With the help of
this pricing tool, M&S achieve their overall target of operational activities and earn sales revenue
for the company expansion and brand image.
2.2 Setting to set the market structure in different market systems.
Different market structures have their own method of pricing of the product and services.
Every organisation set their own prices on the basis of different factors. Various prices in
different market situations as given below.

Perfect Market
In this particular market prices are based on market forces because all the buyers are sold
same products and services in the market. In this market condition competition is very and
competitive because of high number of buyers and sellers(Li and Liu, 2014).
Monopoly Market
In this market position company decide their prices of product and services on the basis
of its own choice rather than market forces. In this market position seller is the king and buyers
has to adopt those implications. Furthermore, there is no other substitution available for the
buyers. In this king ODF situation seller earn maximum profit revenue.
Monopolistic market
This is the imperfect market situation in which product price are depends on the time
period of short term and long term. Prices are based on the profit level of the company. In this
market position company set their price on which they get maximum profit level.
Oligopoly Market
In this Market position firms create competition on the basis quality of services. In this
market position customer pay high prices for getting high quality of commodities. It has less
number of sellers and limited substitutes available in the market.
2.3 Firms behaviour affects market stricture and operations of the company.
Firms structure is affected on the basis of new changes in operation activities. M&S is the
company which comes under perfect market system in which huge number of competitor are
involved(Saeidi and et.al, 2015). Like key competitors of M&S is TESCO and Asda they are the
retail organisation in UK. On the basis of market situation in this perfect market position
company needs to follow the customer needs and wants. Market involves many changes factors
which affects company growth in positive as well as negative ways.
2.4 Impact of UK regulation on market power
UK government many regulations and laws on the business entities. This regulations
impact on the structure of the company. Furthermore, to carry its business smoothly and
effectively company needs to follow all regulations and laws of the government. There are some
regulations and laws imposed by the UK government.
Minimum wage Act, 1998

This law is belongs to employees and workers. According to this act, company has to
adopt fair minimum wages act for its workers. This is the act which is followed by very
organisation in the country. As per the law company is liable to pay £7.20 per hour wages to
workers(Schilke, 2014). It is the minimum wages pay which is mandatory to give to the
employees. If organisation fails to follow this act they will face many risks and challenges
running the business.
Working Time Directive Act, 1998
This act is all about the flexibility during the working hours to the employees. Like every
organisation provide some rest break to the employees so that they cannot feel and stress and
work load As per the UK Law it is mandatory that every employee may not work more than 48
hours. So that company has to scheduling their work time accordingly. This is mandatory for the
M&S to follow this law according to the UK government.
TASK 3
3.1 Analyse the structure changes in market.
In market and new changes has come with new ideas. As like 21st century this generation
has lots of innovation in social, cultural, political and legal. Apart from this new generation has
change new development opportunities and threats. Moreover, this century also provides more
employment and standard of living. Apart from that many organisations has come with their best
products(Stiglitz, 2017). Also new technologies are developed new opportunities. M&S is in
perfect market where they involve huge number of buyers and sellers are available. With the help
of new technologies company may provide better quality of services to the customers.
3.2 Tools to meet macroeconomic policy
Macroeconomic policies are plays very important role in the company operations. They
have too sets of tool, fiscal and monetary policy. These factors helps to boost the economy
conditions and helps to enhance the level of GDP. It is directly related to the Government of UK.
It is controlled by two tools as given below.
 Fiscal Policy : Fiscal policies are directly connected with the government bodies. These
factors help to determine the growth and effects on national economy. This tool helps
country to maintain the stability and growth of the nation.
 Monetary Policy : this is the another tool of the economy which help to measure the
economic growth. This policy is set by the central bands of very nation. This tool tries to

control the heavy interest rates which is directly connected with the money supply in the
nation. It helps to give higher economic growth to the nation in monetary terms. It gives
desirable economic state to the country(Summers, 2014).
3.3 Success of the government policies in achieving macroeconomics objectives.
Government policies are the most effective factors to increased the country position and
growth. It helps to achieve the macroeconomic factors in UK. Success of the government
objectives are as follows;
Ensure growth of economy
Government provides many benefits and helps in growth of economy. Company also get
many benefits from the economic growth of the country. Low interest rates and foreign
exchange may give many growth opportunities to the company in terms of higher customer
attraction towards the company. Through this positive effects company also get benefits to
manage their operation activities in more effective way.
Decrease unemployment in the country
Positive economy also helps to give many jog opportunities to the unemployed person.
These policies help M&S to get more new customers and talented employees. Both the side
company take advantage for getting profit(Taylor and Wieland, 2016).
3.4 Economic performance in the global market.
As per the position UK get number 5th position in the world in terms of higher GDP
growth. They have good number of employment opportunity through which consumer has
increased their purchasing power. It helps company to get higher sales revenue and earn good
amount of annual profit. It helps to increase the standard of living of the people living in UK.
Apart from that, it gives new technologies and innovative ideas through which country make
higher position in the world. Furthermore, UK also enhance the tourism and fashion industry.
Company also provides many product and services to the customers and make them happy and
satisfied. Economy also increased international trading and business contracts with other
companies to expand their market share(Varian, 2014).
TASK 4
4.1 Theory of comparative advantage.
This is the very basic theory of economic. The main focus of this theory is to make
operation activities more perfectly. Through this theory company make quality of services and

products for its customers. It also helps M&S to make cost effective products and earn high
profit. Like take an example of UK and India. UK is specialised with technologies and India
engaging with agriculture products. U provides technologies products on the other side India
exporting agriculture products to UK as well. It also helps to enhance productivity of goods and
services.
4.2 Advantage and disadvantages of tree trade for M&S
The effective impacts of this development is company get opportunity to export its
product and services to another country as well. It is known as free trade. There are some
advantage and disadvantage of free trade(Wagner III, and Hollenbeck, 2014).
Advantages
 Customer has different varieties of goods and services at low prices. This is the first
benefit of free trade.
 Country become rich through having free trade.
Disadvantages
 Local Business facing the problem of unfavourable outcomes because of Trade policies.
 Job opportunities of average employees will take away.
4.3 impact of emerging economic over developed economic
Few countries are well known in developed economy like Brazil, Russia, China and
India. These countries are growing in positive economy and in advanced economy. Results of
this situation is countries have good opportunity and development opportunities in terms of
growth. Few countries are well known example of developed economy like Canada, US, UK and
France. This emerging economy helps country in all matters.
4.4 Evaluation of global and domestic shocks within economy.
This economic growth of country has been come through from 2007. Many global shocks
during the time in terms of trade channels etc. the supply of credit is also very strict and rigid at
that time(West, Ford and Ibrahim, 2015). Due to some global shocks country faced many
problems and issues. Due to which At that time UK economy rate reduced by 6%. this may give
many negative environment to the organisation.
CONCLUSION
From the above discussion it was concluded that business economics is the most
important factor to maintain the position in the global market. Furthermore, this was concluded

various theories of economies. Apart from that it discussed the M&S Company growth in terms
of country economic. It also covered the importance points of economic growth in the future. It
covered that there are many essential decision making which is very important to run the
business.

REFERENCES
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