Example of oligopolistic business industries are: supermarkets such as Tesco which alone owns 30.4% which is nearly 1/3 of the UK supermarket retail share market share, banking industry, chemicals industry, oil and energy industry, medical drugs and also the news and media broadcasting industry. It is illegal under EU rules for businesses to fix prices or carve up markets between them. The top three competitors of Tesco are Wal-Mart, Carrefour, and Metro. Effective competition provides goods and services cuts prices, raises quality and expands customer choice, allows technological innovation. This aid can take many forms loans and grants, tax breaks, goods and services provided at preferential rates, or government guarantees which enhance the credit rating of a company compared to its competitors but in this case this does not apply to Tesco till today as Tesco is already on top of its game. (http://www.axa-schengen.com/en/schengen-countries) It is estimated the 3.5 million British jobs are dependent on* Britains membership of the EU. For Part 1 I will be describing the 4 different market structures that economist usually talk about are perfect competition, monopolistic competition, oligopoly and monopoly. In May 2010 the total value of trade-in-goods imported to the UK from Member States of the EU was 14.7 billion. A perfect competition market is a structure that contains many different companies, which means that each company individually only has a small amount of influence over the entire market. No customs tax is charged on goods that are sold or transported between member states. Types of Market Structure . The decisions are made by Tesco after taking into considerations the . Some exceptions to the general rules are possible. Financial Turnaround: Thanks to the leadership of Dave Lewis, Tesco recovered from an annual loss of 6.4 billion in the annual report of 2015 to an operating profit of 1.9 billion in the annual report of 2020. Market structure is said to be the characteristics of the market. The European Union plans to reduce greenhouse gases at least 20% by 2020 (compared with 1990 levels), raise in renewable energy's share of the market to 20% and cut overall energy consumption by 20% (compared with projected trends). Effective competition provides goods and services, automatically raises quality and customer choices increase with competition. Oligopoly is one kind of market structure (Anderton. The stability pact (the main points of which were agreed at the Dublin summit of European heads of state or government in December 1996) will force EU countries into a system of fiscal responsibility which will enhance the Euro's international credibility. In this structure, multiple management systems operate to ensure that everything gets done with perfection. The disadvantages of a monopoly is that customer are exploited to high prices and potential supplies have limited choice for demand and this means that the consumers have less choice and again might have to pay higher prices than normal or the monopoly can even use very low price to push their competitors towards administration or bankruptcy. This is the reverse of the position in 1990. In a perfect competition there are few entry and exit barriers, in this type of competition the companies target the mass audience and they differentiate their product with minor changes in the product attributes (Homogenous). Under the system, European Union governments set limits on the amount of carbon dioxide emitted by energy-intensive industries and if they want to emit more CO2 than their quota, they have to buy spare permits but most supermarkets stores do not manufacture and this means that they will have to use eco friendly methods of business and equipment. Actual monopoly is where the firm has somewhat majority of the market share in the industry, in this case Tesco is the most famous example, Tesco owns over 30.4% of the market share and is the leader in supermarket industry. This penalty to the British Airways has been the highest ever imposed by the OFT for violation of competition law and this demonstrates the determination of the OFT to deal strongly with anti-competitive behaviour. Market structures are the business orientated characteristics of a market; all businesses must focus on these characteristics of the market because these have an effect on the degree of competition in the industry and influence the business product or service pricing decisions. The loss of national sovereignty is the most often mentioned reason for the UK not joining the monetary union is the transfer of money and financial proficiency from national to community level would mean that economically strong and stable countries would have to co-operate in the field of economic policy with other weaker countries. Monopolistic competition: TESCO SUSTAINABILITY REPORT CASE STUDY 4 Source: Thus, Tesco Inc. operates in an oligopoly market structure and competes with Asda and Sainsbury. A competition test to curb the power of the supermarkets was unveiled by the Competition Commission last year as part of a planning shake-up designed to boost competition in the multi-billion pound grocery market. they work with the EU on shaping policies. Under the new law, EU countries will have to reduce exposure to fine particles in urban areas by an average 20% by 2020. Scholars Below I have listed the advantages and disadvantages which were discussed by the chancellor Gordon Brown at the times of between 1999 and the year 2002 when the waves of countries in Europe joined the European Union and the currency: (http://news.bbc.co.uk/1/hi/special_report/single_currency/25081.stm). Market structures describe the competitive environment in which a firm operates. UK Supermarket Oligopoly - Key takeaways. The market share of of the leading supermarkets in Great Britain (GB) from January 2017 to December 2022 has remained fairly stable. Value of International markets to UK In June 2010 the total value of trade-in-goods imported to the UK from countries outside the EU was 15.4 billion. One central bank cannot set inflation at the appropriate level for each member state. You can use it as an example when writing Market structures are the business orientated characteristics of a market; all businesses must focus on these characteristics of the market because these have an effect on the degree of competition in the industry and influence the business product or service pricing decisions. In the UK market, it is very crucial to determine the quantity of output in order to keep check on pricing and related decisions. Tesco PLC is a UK-based global supermarket chain and it has 7817 shops and 517,802 employees around the world. Get Your Custom Essay on. But in applying these rules, it can take account of the interests of innovation, unified standards, or small business development. Retail in the UK. Thus, the supermarket industry in the UK could be described as an Oligopoly Market. aviation all airlines prove one service which is to get their customers from one location to their destination and most customers have no preference or specific type of airline that they want to travel with, most customers will just look for the cheapest airline. The total value of UKs trade-in-goods imported for January 2009 to December 2009 was 162.7 billion, which has been upwardly revised by 238.0 million. Founded in 1919 by Jack Cohen, Tesco has emerged to become the biggest retailer in the UK and more than 80 million shopping trips are made to Tesco stores each week (Annual Report, 2015). The four common structures are: Perfect competition market. The trend continues in the same direction until the asset price records a lower low (LL). The objective of this report is to analyze on the market structure of the retail industry in the UK. across a large geographical area. Many fast food franchises fit all or most of these characteristics. From my understanding there are many possible reasons that the government should consider while joining Euro, joining Euro would reduced exchange rate uncertainty for UK businesses and lower exchange rate transactions costs for both businesses and tourists. EU has set binding limits on emissions of fine particles known as PM2.5. Retrieved from https://phdessay.com/market-structures-tesco/, Hire skilled expert and get original paper in 3+ hours, Run a free check or have your essay done for you, Didn`t find the right sample? As Tesco manly sells general groceries they are affected by the European Unions environment policy, in a way that it has to source materials from the suppliers who obey and follow the European Unions environment policy, this means that Tesco has limited p of potential suppliers. This may lead to pockets of deeply depressed areas in which people cannot find work and areas where the economy flourishes and wages increase. European Union is a unique economic and political society which is in partnership between 27 democratic European countries. ", Tesco has over 4,000 stores across the world and out of those 4,000 Tesco has more than half of them in the UK around 2362 stores and this does not include all the Tesco metro and express stores. Sainsbury which owns 16.3% of the UK supermarket shares and Morrisons which owns 11.5%, this means the entry barriers to entry are very high because the industry is dominated by small number of large firms which control and own that share market. Some exceptions to the general rules are possible. Natural monopoly is where there are high fixed costs for example the energy industry like gas and electricity as well as . With the learnings from Jack's now applied, the time is right to focus on ensuring we continue to deliver the best possible value for customers in . Did you know that we have over 70,000 essays on 3,000 topics in our OFT plays a leading role in promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. An oligopoly is a market structure with a small number of firms, in which none can prevent other from having a significant influence in the industry. (http://www.tescoplc.com/plc/about_us/map/). There is no gap where plagiarism could squeeze in. If a community or even an individual has an important point to show to the union they must do some of the following starting with: The EU has developed a single market system of laws which apply to all member states, and ensures the free movement of people, goods, services, and capital, including the elimination of passport controls by the Schengen Agreement between 26 European Union states which I have listed below. A market is the area where buyers and sellers contact each other and exchange goods and services. (https://www.uktradeinfo.com/index.cfm?task=euearlypub). Market structure is a classification system for the key traits of a market. In such type of competition most of the companies use Push strategy, i.e. ", Following are the 4 leading supermarket chains in the United Kingdom Tesco, Asda, Sainsbury's and Morrisons, these fantastic four have a combined share of 75.6 percent of the UK grocery market accord to the research done in the 12 weeks ending 1 November 2009 (Source: Kantar World pane) http://TNS_Worldpanel. In May 2010 the total value of UKs trade-in-goods exported to Member States of the EU was 11.3 billion. For example, De Beers is known to have a monopoly in the diamond industry. Tesco has to focus on labor costing now in order to have a sound financial condition. Tesco Board of Directors consists of 10 members. Sellers try to develop differentiate offers for different customer segments and, in addition to price, freely use branding advertising and personal selling to set their offers apart. Using the 4 market structures I will illustrate using real life case studies and examples how a selected business of my choice has behaved/responded to its market structure and finally describe how the OFT and other regulatory bodies check against anti competitive behaviours. European citizens have the freedom to live, work, study, and travel in any other EU country. I would like to begin by pointing out the major types of market structure, and then focus on the oligopoly market structure, and its behaviour. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. Tesco's market structure described by the media is believed to be a monopoly, Tesco has also been through the legal proceedings to prove their innocence, Tesco has accused of being manipulative and gaining monopoly by building stores across towns and cities through the country and Europe but realistically Tesco is an oligopoly, although Tesco . Effective competition to provide goods and services cuts prices, raises quality and expands customer choice. 10 minutes with: Types of Market Structures and Competition in UK, Explore how the human body functions as one unit in harmony in order to life //= $post_title For Part 1 I will be describing the 4 different market structures that economist usually talk about are perfect competition, monopolistic competition, oligopoly and monopoly. The competition policy stops the Tesco from growing further from their potential market share, something which Tesco has known to be done in the recent years. European Union policies ensure safer food and a greener environment, better living standards in poorer regions, joint action on crime and terror, cheaper telecoms and communication, millions of opportunities to study abroad and more Make sure that this guarantee is totally transparent. Most of the products available in Tesco are also available in other retailer store too. The Commission also monitors closely how much assistance EU governments make available to business (state aid). cookie policy. In this sort of environment the businesses and trades people have somewhat control over their prices because of the products differentiations. All businesses like Tescos are directly affected by this policy as this aims to cut energy consumption and greenhouse gasses by 20%, meaning Tesco will have to recycle more, reuse materials more and reduce wastage and use of non-biodegradable equipment which will have a small dent on their profit. Research Paper Assistance Get Help With Research Papers, 5 steps of Essay Writing. By sending us your money, you buy the service we provide. To Abstract. It has been providing its customers with many different products in one place and with convenience. They operate under a Monopoly because of their substantial market dominance and the high obstacles of entry within the retail food business. The four main types of market structures are perfect competition, monopolistic competition, oligopoly and monopoly. By continuing well assume youre on board with our their profits margin will vary but still always high. It shifted from Brick & Mortar to Brick & Click stores. with free plagiarism report. A market structure is the environment in which a business operates and relies on factors like how competitive the market is, how easy it is for a new company to enter the market and how differentiated each company's products are. A market structure is a tool used to determine the pricing power of certain products in diverse firms. 1093 Words5 Pages. If governments were obliged through a stability pact to keep to the Maastricht criteria for perpetuity, no matter what their individual economic circumstances dictate, some countries may find that they are unable to combat recession by loosening their fiscal stance. It has changed because interest rates are set in each country at the appropriate level for it. In 2007 Tesco received the Top online green award for their zero-emission delivery vans. The different sorts of market structure include monopoly market, perfect competition market, monopolistic market, duopoly market, and . The Commission can, does and has fined companies for all these practices. A multinational company like Tesco cannot merge with another giant if that would put them in a position to control the market, though practice this rule only prevents a small numbers of mergers going ahead. Tesco PLC is a multinational grocery and general merchandise retailer. This should lead to more investment, more jobs and lower mortgages. Even in store level, there are as many as four layers of management in some large stores. Another company in the market structure of oligopoly has been analysed. Key Facts. database? The business that I have chosen for this assignment is Tesco; this is because Tesco is a multibillion pound international business. their profits margin will vary but still always high. Buyers see different in sellers, products and will pay different prices for them. Order your essay today and save 15% with the discount code ESSAYHELP, Don't use plagiarized sources. Following are the 4 leading supermarket chains in the United Kingdom Tesco, Asda, Sainsburys and Morrisons, these fantastic four have a combined share of 75.6 percent of the UK grocery market accord to the research done in the 12 weeks ending 1 November 2009 (Source: Kantar World pane) http://TNS_Worldpanel As a comparison the total value of UKs trade-in-goods exported to Member States of the EU in April 2010 was 11.6 billion and for May 2009 was 9.3 billion. In doing business with smaller firms, Tesco cannot use their bargaining power to impose conditions which would make it difficult for their supplier or customer to do business with its competitors. The total 2010 year to date value of UKs trade-in-goods imported excluding May was 59.2 billion, which has been upwardly revised by 96.7 million. What is Tescos market structure? I write a summary of market structure and how it affects the pricing and output decision based on Keat, P., and Phillip Young. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a particular market. Monopoly Vs Oligopoly Tesco themselves say that it is an oligopoly, this is because Tesco is not the only supermarket in the UK, Tesco is the dominant shareholder but cannot be called a monopoly as there are many other firms which are in competition with Tesco e.g. Now the focus is on putting policy into practice in to UK's market. Save time and let our verified experts help you. Each paper is composed from scratch, according to your instructions. 48 Vitosha Boulevard, ground floor, 1000, Sofia, Bulgaria Bulgarian reg. The firm has to provide the markets supply, and there are. can use them for free to gain inspiration and new creative ideas for their writing Tesco is operating within an oligopoly market where the market is highly dominated by a very little number of big companies. There is no one big seller with any significant influence on the market. If governments were obliged through a stability pact to keep to the Maastricht criteria for perpetuity, no matter what their individual economic circumstances dictate, some countries may find that they are unable to combat recession by loosening their fiscal stance. The four leading supermarkets in the UK supermarket oligopoly are Tesco, ASDA, Sainsbury's, and Morrisons. A multinational company like Tesco cannot merge with another giant if that would put them in a position to control the market, though practice this rule only prevents a small numbers of mergers going ahead. OFT is a non-ministerial government regulator that was established by government in 1973. From my understanding there are many possible reasons that the government should consider while joining Euro, joining Euro would reduced exchange rate uncertainty for UK businesses and lower exchange rate transactions costs for both businesses and tourists. Tesco Plc (Tesco) is a multinational retailer of general merchandise. While the cohesion funds attempt to address this, there are still great differences across the EU in economic performance. In March 2015, UK consumers spent around 34 billion. In a perfect competition there are few entry and exit barriers, in this type of competition the companies target the mass audience and they differentiate their product with minor changes in the product attributes (Homogenous). Need urgent help with your paper? It operates in twelve countries by 2005. The four leading supermarkets in the UK supermarket oligopoly are Tesco, ASDA, Sainsbury's, and Morrisons. All businesses like Tesco's are directly affected by this policy as this aims to cut energy consumption and greenhouse gasses by 20%, meaning Tesco will have to recycle more, reuse materials more and reduce wastage and use of non-biodegradable equipment which will have a small dent on their profit. An end to internal currency instability and a reduction of external currency instability would enable exporters to project future markets with greater certainty. Best Essay writing tips, 10 Tips on How to Write a Good Article Review, Best Tips on How to Write an Annotated Bibliography. If Tesco plans to merge with its competitor, Tesco needs approval from the European Commission, the EUC (European Union Commission) marks their decision depending on the amount of business that Tesco has within the European boundaries. The total 2010 year to date value of UKs trade-in-goods exported excluding May was 46.2 billion, which has been upwardly revised by 273.6 million. Tesco PLC is the leading English distribution group. Under the new law, EU countries will have to reduce exposure to fine particles in urban areas by an average 20% by 2020. Language in Europe is a huge barrier to labour force mobility. In our society today and the way business is conducted, market structures are. Tesco realized, however, that changes in this particular marketing strategy had to occur. The observed change has affected Tesco, the market shares of which grew by 4.5% to reach a total of 22.3% ("Tesco reclaims top spot," 2018). Loss of national sovereignty is the most often mentioned disadvantage of monetary union. - The industry is characterised by freedom of entry and exit. Homogenous products are identical products or business e.g. The transfer of money and fiscal competencies from national to community level would mean economically strong and stable countries would have to co-operate in the field of economic policy with other, weaker, countries, which are more tolerant to higher inflation. Now the focus is on putting policy into practice in to UKs market. The Commissions extensive powers to investigate and halt violations of European Union competition rules are subject to legal review by the European Court of Justice. What results so far? Perfect competition: The European Union is not a perfect society but it is an evolving project and constantly has to be improved. Austria, Belgium, Czech, Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland. Disclaimer: If you need a custom written term, thesis or research paper as well as an essay or dissertation sample, choosing Course Scholar - a relatively cheap custom writing service - is a great option. It operates stores in various formats differentiated by size and range of products sold, including large, small, dotcom only and one-stop. The Business Model of Tesco. European Unions rewards businesses and organisations, which reduce their CO2 emissions and penalises those that exceed limits. In another case, The Royal Bank of Scotland or RBS has also paid a fine of 28.59 million about 2 months ago in March 2010, after admitting breaches of competition law between October 2007 and February or March 2008, the fine for the bank was reduced from 33.6 million to 28.59 million and this was done to reflect RBSs admission and agreement to co-operate. To make these things happen, EU countries have set up bodies to run the European Union and adopt its legislation. They would be unable to devalue to boost exports, to borrow more to boost job creation or cut taxes when they see fit because of the public deficit criterion. How does it work? from 14.0 billion to 15.4 billion, hence the UK economy is dependent on the import of essential raw and prepared materials; today the service sector is more and more important to the UK economy as a result of the weakening of the manufacturing sector now imports are crucial and that is why using the international market the UK economy is on the growth as the export data depicts that UKs export is increasing from 8.2 billion to 10.9 billion. Tesco and Sainsbury's had the largest share over the period . If Tesco plans to merge with its competitor, Tesco needs approval from the European Commission, the EUC (European Union Commission) marks their decision depending on the amount of business that Tesco has within the European boundaries. Tesco's market structure described by the media is believed to be a monopoly, Tesco has also been through the legal proceedings to prove their innocence, Tesco has accused of being manipulative and gaining monopoly by building stores across towns and cities through the country and Europe but realistically Tesco is an oligopoly, although Tesco . In oligopoly there are many entry and exit barriers such as huge investments etc. Pure monopoly in where the firm is the industry, for example Transport for London, the firm which owns all buses and underground tubes in and around London, this is where consumers have no or very limited choice. A Natural Monopoly Market Structure is the result of natural advantages like a strategic location or an . The Commission's extensive powers to investigate and halt violations of European Union competition rules are subject to legal review by the European Court of Justice. As a comparison the total value of UKs trade-in-goods exported to countries outside the EU in May 2010 was 9.4 billion and for June 2009 was 8.2 billion. Likewise, businesses would no longer have to pay hedging costs which they do today in order to insure themselves against the threat of currency fluctuations. Since then there have been significant efforts in terms of policy. In this sort of environment the businesses and trades people have somewhat control over their prices because of the products differentiations. Tesco PLC organizational structure is decentralized, tall (hierarchical) and product-based. As the companies are bound to follow market prices the only way the company can have advantage over its competitors is by reducing its operating costs and working at optimum level of efficiency In such type of competition most of the companies use Push strategy, i.e. The chosen organization for this study is Tesco Plc that operates in the retail industry of UK. What are its aims? Due to the low degree of competition theses big giants can decide on their own price which is most suitable for its target audience and these prices will be non-competition prices however there could be potential for collusion and price fixing so that each dominant business can enjoy their market share and have profits accordingly i.e. Tesco organizational structure is highly hierarchical reflecting the large size of the business. In this type of competition the industry has a small numbers of large dominant firms that have a firm control over the market. Tesco trades on the London Stock Exchange and is part of the FTSE 100 index. How does OFT checks anti-competition? The report structure also focuses on the competitive landscape of the Global Parchment Baking Paper Market, this report introduces in detail the market share, market performance, product situation . European Union is a unique economic and political society which is in partnership between 27 democratic European countries. Climate change is one of the gravest challenges facing humanity. Tesco is the third largest global retailer in the world which just behind Wal-Mart and Carrefour (Baidu, 2010). (http://www.tescoplc.com/plc/about_us/map/) All the sellers of the market are small sellers in competition with each other. It works in the United States because the labour market is mobile, helped by the common language and portability of pensions etc. Climate change is one of the gravest challenges facing humanity. Chain and it has 7817 shops and 517,802 employees around the world just. Industry of UK Tesco ; this is the reverse of the gravest challenges facing humanity Tesco taking. However, that changes in this type of competition the industry has a small numbers large! Area where buyers and sellers contact each other and exchange goods and services, automatically raises quality expands... Industry has a small numbers of large dominant firms that have a operates! 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