Under the European Union the members can travel and trade freely without any constraints as long as the members are trading in euro (the single European currency). The four main types of market structures are perfect competition, monopolistic competition, oligopoly and monopoly. Tesco Plc (Tesco) is a multinational retailer of general merchandise. The trend continues in the same direction until the asset price records a lower low (LL). Thus, the current strategic purposes for business that Tesco should consider include expansion and . 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. Advantages: A single currency should end currency instability in the participating countries (by irrevocably fixing exchange rates) and reduce it outside them. United Kingdom supermarket share It works in the United States because the labour market is mobile, helped by the common language and portability of pensions etc. How can the members have their say? European Union is a unique economic and political society which is in partnership between 27 democratic European countries. Sometimes it is hard to do all the work on your own. It is then checked by our plagiarism-detection software. May 2010 showed a 4.2 per cent decrease in imports compared to April 2010 and a 20.8 per cent increase in imports compared to May 2009. You have to be 100% sure of the quality of your product to give a money-back guarantee. 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. Tesco and InterContinental plc are two UK businesses which get affected by market structures to adjust their output and pricing decisions. ", 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. Market structure is a classification system for the key traits of a market. In this type of industry firms usually follows pull strategy and make huge efforts in marketing and advertising to attract its target customers, the products in the industry could be highly differentiated or even be similar but hard of getting a hold and this is why businesses use branding or homogenous. This means there is a few dominant firms in the market. Tesco is operating within an oligopoly market where the market is highly dominated by a very little number of big companies. Types of Market Structure . 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. (Octotutor, 2014). 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 energys share of the market to 20% and cut overall energy consumption by 20% (compared with projected trends). - The industry is characterised by freedom of entry and exit. 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. 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). The top three competitors of Tesco are Wal-Mart, Carrefour, and Metro. 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. Since 1995 alone, about 100,000 young Britons have spent time studying in another European country. //= $post_title Market structure influences the behavior of firms to a great extent. they work with the EU on shaping policies. By 2014, that number had declined by about 10 percent. This should lead to more investment, more jobs and lower mortgages. As the OFT only supervises what happens in the United Kingdom, there is the European Union which is active in a wide range of policy areas, from human rights to transport and trade, the European Union monitors all of the 27 countries that are part of the union, using similar techniques as the OFT but on a much larger scale, the policy to monitor and control competition is said as "A fair deal for all" and this policy is described as: "Effective competition to provide goods and services cuts prices, raises quality and expands customer choice. This work is done using the powers granted to the OFT under consumer and competition legislation. Tesco organizational structure is highly hierarchical reflecting the large size of the business. Make sure that this guarantee is totally transparent. database? Some of the basic aims of the European Union are peace, prosperity and freedom for its 498 million citizens in a fairer, safer world. Tesco PLC is the leading English distribution group. The major market forms are: Perfect Competition; Monopolistic Competition . Buyers see different in sellers, products and will pay different prices for them. The oligopoly market structure is perhaps the most prevalent type anywhere in the world and hence deserves a careful study. 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). Non EU Exports. 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. Market structures are basically the number of firms in the market that produce identical goods and services. But the tribunal agreed with Tesco that the commission did not fully take account of the fact that the test, relating to planning decisions for larger stores, might have "adverse effects for consumers", among other matters. More Jobs: It was founded by Jack Cohen in the East End of London in 1919. OFT plays a leading role in promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. It can allow smaller companies to cooperate if this strengthens their ability to compete with larger ones such as Sainsburys and Tesco. their profits margin will vary but still always high. your own essay or use it as a source, but you need 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 this type of competition the companies are forced to follow the competitive pricing strategy in order to survive in the industry, i.e. Therefore, the general trend toward expansion and search for innovations allows the industry to grow. 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. In this type of competition the industry has a small numbers of large dominant firms that have a firm control over the market. 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. 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. My description will include an evaluation of the pros and cons of UK joining the Euro along with that I will describe the impact of 2 EU policies on UK businesses. Understanding Market Structures. Even in store level, there are as many as four layers of management in some large stores. There are three different types of monopolies listed as below: This task for Business environment is split in two parts. In a Monopoly Market Structure, there is only one firm prevailing in a particular industry. Since then there have been significant efforts in terms of policy. Tesco is an oligopoly as it is one of the few dominant firms in the supermarket market. How does it work? The company is now one of the world's largest retailers, with more than 6,800 locations across Europe and Asia. Abstract. In this type of competition the industry has a small numbers of large dominant firms that have a firm control over the market. MARKET STRUCTURES. The market share of of the leading supermarkets in Great Britain (GB) from January 2017 to December 2022 has remained fairly stable. The chosen organization for this study is Tesco Plc that operates in the retail industry of UK. The total 2010 year to date value of UKs trade-in-goods imported excluding June 2010 was 67.5 billion. Scholars 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. They may have differentiated products. Language in Europe is a huge barrier to labour force mobility. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. Businesses, involved in commercial transactions in different member states, would no longer have to face administrative costs of accounting for the changes of currencies, plus the time involved. Tesco has already proven that they are committed towards being eco-friendly, Tesco Plc, the worlds No.4 retailer, plans to spend over 100 million pounds with British green technology companies over the coming year as it steps up its drive to halve carbon emissions by 2020.. 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 Effective competition to provide goods and services cuts prices, raises quality and expands customer choice. 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. 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. Tesco is the third largest global retailer in the world which just behind Wal-Mart and Carrefour (Baidu, 2010). Tesco PLC is a UK-based global supermarket chain and it has 7817 shops and 517,802 employees around the world. Though the number of sellers in . assignments. The retail sector. Since the war the UK economy has tended to have an economic cycle closer to the US than the EU. We use cookies to give you the best experience possible. Waitrose is another . Oligopolies lie between the definitions of perfect competition and pure monopoly. Market Structure Pricing and Output Decision. Firstly, there are several sellers but only a few big companies who have a large market share in the industry. Tesco's mission statement is "to be the champion for customers - to help everyone who shops . In the UK, the five big supermarkets totally have 3/4th of the market . et al, 2008:298). Tesco and Sainsbury's had the largest share over the period . The main ones are: The European Union is not a perfect society but it is an evolving project and constantly has to be improved. The decisions are made by Tesco after taking into considerations the . The price of goods and services in a firm depend on the levels of demand, cost conditions and competition . Businesses regularly have to make appeals against Commission decisions if it seems like a unfair deal. Natural monopoly is where there are high fixed costs for example the energy industry like gas and electricity as well as water, telecommunications and the transportation industry like underground and rail. Tesco is not the only supermarket in the United Kingdom, Tesco is the dominant shareholder, but it should not be considered a monopoly since there are several other companies competing with Tesco . There may be a large number of firms, but most are small and relatively unimportant, while a small number of large firms produce most of the outputs of the . Tesco was born and the first shop was opened in 1929 in north London. 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