In my work, I will be talking about how

In my work, I will be talking about how
a market structure affects the supply and demand on my chosen business which is
a profitable organisation.

There are many types of structures in
the market here below are some examples which are explained:

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Different
Types of markets:

•          Monopolistic Market

•          Oligopoly Market

•          Perfect competition

•          Imperfect competition

 

Monopolistic
Market

 A monopolistic market has the independent
decision on its price based on the product and the cost of its production.
There is freedom in entering and leaving the market meaning there is no strict
policy on what times you would be eligible to leave or not and also the firms
have different variety of products.

Oligopoly
Market

Oligopoly Market is a market structure
which is usually a minority of the firms which have the majority of the market
share (The percentage of an industry’s market total sales which is earned by a
specific company in a certain period) This market type is very similar to
monopolistic however there isn’t a limit on the amount of firms in the
oligopoly market structure. The number of firms must be low enough so that the
actions of one firm can affect and influence others.

Perfect
Market

Perfect competition is when each business
sell the exact same product for the same price to everyone.  There are no restrictions of entry into or
out of the market. The power is dispersed throughout all firms.

Imperfect
Market

Imperfect Competition exists whenever a
market violates the rules and regulations of perfect competition.

Information
about Tesco

Tesco is an online retailer and
delivery business based in England. The popular retailer was founded in 1919
and has grown to be one of the largest retailers in the world. The retailer offers
a range of items including groceries, wines, home electronics, and DVD rentals.
They are known for providing groceries to local customers. Tesco is known
nationally for its food and other goods such as entertainment, kitchen
appliances, etc. They have many competition wherever they place their
supermarkets meaning they have oligopoly competition market structure. This is
because in the supermarket industry there is many competition. An example of
this competition would be when Tesco could raise the price of their crisps from
£1 to £1.50 however the shop across the road still have their crisps for £1.
This would cause for some customers to start shopping in Asda.

 

Tesco is a company which can be run
simultaneously in the short and long run. This is because the long run can
occupy a much shorter period in the short run. This is because the better long
run planning decisions the longer the short run would last.

Next, I will talk about the supply side
of Tesco.  Here is the usual supply curve
graph which usually applies to all companies.

Tesco have always gotten their supply
from a company who are called Tata Motors. They are the ones who produce the
majority of their food and their packaging, the problem of importing their
stuff becomes a financial problem however it causes problems. The main problem
this would cause is that if they do set up different factories in a variety of
countries, then the quality of the product might not be the same and this
doesn’t agree with one of their main aims and this is for the food to taste the
same globally. However Tesco do have backup suppliers in case of any problems.

 

 

 

Pricing
and output decisions

If
Tesco do decide to decrease their price and for example Asda doesn’t also cut
their price, the price cutter would begin to increase its sales. This would
result would be represented by the elastic demand curve.
M4

Introduction: In this piece of work I will be discussing the
different changes which have occurred within the Tesco business and how Tesco
have individually dealt with each change which occurred.

Tesco is one of the
largest food retail stores across the globe. Besides food, the store has also
expanded its line of business to toiletries, household goods, clothing and
electrical items. It has been successful over the years it has been in
operation. However, like any other business, it faces economic challenges which
affects the profit made.

Tesco have had many changes which
have occurred since they have opened which was in 1919. The changes they have
come across are changes such as price wars with other companies such as Asda
and Morrison’s, Customer demand, changes in the economy and suppliers
increasing prices.

 

 

Customer Demand
Customers are wishing to eat to healthier, Tesco has responded to this
by making sure the products are healthy and by putting labels on the product.
Customers want to shop more conveniently, Tesco has responded to by offering
convenient time including 24 hour shopping and six hours on Sunday. Many
customers do not want food that has been grown using chemicals, they want to
natural food. Tesco has responded to this change by introducing organic food
ranges.

 

 

Price wars

In 2015 Tesco was called ‘ The  under-pressure grocer’ as due to Christmas
sales figures, said the average savings of 25% on 380 items under brands
including Hovis, Coca-Cola, Marmite and Tetley. Due to price wars Tesco started
to lose out on customers making them cut prices to gain an advantage of
customers over their rivals. To stand their ground Asda even cut up to three
pence off their petrol which would interest customers to come to them to put
petrol in instead of another company with Tesco shortly following them to also
do the same. Due to Brexit and the pound sterling has decreased in value making
it nearly equivalent to the euro. This is bad for companies such as Tesco as
they already have to cut prices to compete with rivals and now the pound is
worth less means they are making less money. 
All these factors have affected Tesco as the annual trading profits slid
to £1.4bn from the £3.3bn achieved in 2013-14 making them loose out on £1.9bn.

Social
There have been many changes over last 40 years .Customer possess mobile and
car, Tesco has responded to this change by developing extra stores with larger
parks. Customers want one stop shopping. Tesco has responded to this by making
sure that their stock has nearly got everything a customer might need. Over
last 40 years travellers have been abroad to try and taste different foods.
Tesco has responded to this change by increasing the range of foreign food such
as Mexican, Chinese and Indian etc. Because of the large ethnic populations
that have moved to the United Kingdom, this has encouraged Tesco to increase
the range of foreign products. When microwaves were launched and people have
started buying them. Tesco has responded to this change by introducing frozen
foods that come from all around the world that people of other ethnicities can
buy. 

Political
Customers are wishing to eat to healthier, Tesco has responded to this by
making sure the products are healthy and by putting labels on the product.
Customers want to shop more conveniently, Tesco has responded to by offering
convenient time including 24 hour shopping and six hours on Sunday. Many
customers do not want food that has been grown using chemicals, they want to
natural food. Tesco has responded to this change by introducing organic food
ranges. Tesco is restricted by law from growing too big to overcome this they
have begun to offer more services. Recession has been biggest political factor
as a lot of countries suffer unemployment; Tesco has responded to this change
by offering more employment as this will reduce the amount of people who are
unemployed.

Economical
Customers want to shop in a pleasant and clean environment, Tesco has responded
to this change by making their shops light and attractive. The government wants
everyone to be environmentally aware, Tesco has responded by increasing the
amount of recyclable packing that they use for their products. Tesco is also
reducing the number of free plastic bags they give away. They have built small
local stores called Tesco express to respond to customers’ needs to shop more
conveniently. Tesco has responded to local needs by helping community projects.
They have also responded to the large amount of people who are unemployed
offering them employment this allows people to work around family commitment.
Tesco’s prices may reflect inflation rates, an increase in inflation will

 

Technology
Customers have been using the internet as a source of information, Tesco has
capitalised this by offering online shopping on Tesco’s website and increase in
prices and a decrease in inflation will mean prices reduce. Tesco is also
providing through the use of online delivery services. Customers are paying
with debit cards than with cash, Tesco has responded to this change by
introducing self-service check outs. This change is much quicker and easier for
the customers.

    

 

D3

In my work, I will be evaluating how the changes in the market for my chosen
business which is Tesco have impacted my chosen business which is Tesco.

Legal
Factors
Taxation policy affects the business costs for Tesco. This is because a rise in
corporation tax on business profits has the same effect as an increase in
costs. Businesses can pass some of this tax on to consumers in higher prices,
but it will also affect the bottom line. Other business taxes are environmental
taxes. For example, landfill tax; and VAT. VAT is actually passed down the line
to the final consumer but the administration of the VAT system is a cost for
business. The rise in taxes have impacted Tesco as they’ve had to pay more
money to the government due to the rise in corporation taxes.

 

 

Social
Factors
looking at social factors that affect Tesco’s. It has a lot to do with
demographics, population and society. There are several things that are
included in this. For example the way that society changes, talking about
habits or jobs and responsibilities are affecting Tesco from the social point
of view. People started spending more time in work. They work around 50 hours a
week which meant they had less time for cooling and taking care of health, this
leads them in eating a lot of unhealthy fast good. This becomes a problem for
Tesco and their sales department, because they do not get enough of their stock
sold. This has impacted Tesco as they had to produce more healthy meals which
fits all the customers’ satisfactions in hope that not a vast majority is
displeased.

Brexit
Brexit has impacted Tesco. This is because Tesco is running low on everyday
household items after Tesco refused to bow to demands from a major conglomerate
to raise prices in the wake of the Brexit vote. Tesco is locked in a standoff
with Unilever, which owns brands including PG Tips, Ben & Jerry’s ice cream
and Persil, after the company demanded price rises of 10 per cent, blaming the
falling value of the pound. Unilever, which earlier this year posted profits of
more than £2billion, is understood to have stopped deliveries to Tesco
branches, leading to shortages of products including mayonnaise, Marmite,
toothpaste and soap. Due to this, Tesco have had to remove certain products
from their online store due to Brexit coming in place.

Price
Wars
Price wars have impacted Tesco due to the significant drop in profit produced
by Tesco. They have fired the latest salvo in the supermarket price war by
cutting the cost of some of its best-known products. The price cuts are the
latest after Asda this week cut the prices of 2,500 “essentials” including
fruit and vegetables, cereal and nappies which are a necessity to a vast
majority of the families in the United Kingdom. They are pencilling in a
trading loss for the domestic business of £84m for the six-month period to
February due to price wars with other major supermarkets such as ‘Asda’ ,
‘Morrison’s’ etc.

Customer
Demand
Customer demand has impacted Tesco due to an increasing amount of customers
demanding certain products. Future  changes  will  have 
an  impact  on  Tesco  strategy,  because  most
organisation  in  the  UK  will  always 
try  to  see  themselves  in  the  future, 
Tesco  will  also  try  to  think  ahead 
of  other  company  and  picture  there  organisation 
in  the  next  10  years. Each of these factors 
will  a?ect  how  successful  or  how 
large  their  reputation/business will  be in the future. For
example, if the percentage of customers demanding a certain product drops, then
it’s highly likely that the certain product will get discontinued. However, if
the percentage of customers demanding a certain product increases, then it’s
highly likely that the certain product will be continued for customers to be
able to buy the product in store/online.

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