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. It can allow smaller companies to cooperate if this strengthens their ability to compete with larger ones such as Sainsburys and Tesco. How does it work? Another organisation that does similar commerce to what Office of Fair Trading do, Ofcom is an independent regulator and competition authority, for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services. In 2007 Tesco received the Top online green award for their zero-emission delivery vans. You have to be 100% sure of the quality of your product to give a money-back guarantee. There is a lack of competition. 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. Key Facts. The decisions are made by Tesco after taking into considerations the . It can be concluded that UK has less exports to the non EU zone compared to the European market, in June 2010 total value of goods exported to Europe was 11.3Billion compared to the total value of goods exported to the international market which was 10.9Billion. How does OFT checks anti-competition? It earned him the nickname "slasher Jack". It is important to note that the structure below . Tesco Entering the Us Market. Monopoly: European Union executes legislations in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development. United Kingdom supermarket share Businesses regularly have to make appeals against Commission decisions if it seems like a unfair deal. 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. But, in economics, market is used in a wide perspective. European Union executes legislations in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development. Best tips on how to write a literature Review? In the UK, the five big supermarkets totally have 3/4th of the market . OFT plays a leading role in promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive. We use cookies to give you the best experience possible. 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. (http://www.oft.gov.uk/ about/what/#named2) The European Union is currently active in a wide variety of policies from human rights to transport and trade; below is the list of some of the policy areas of the European Union. OFT gathers intelligence about markets and trader behaviour from a wide range of sources and then they respond to complaints about markets from nominated consumer bodies, where the OFT is able to see potential problems, the OFT undertakes market studies and recommends to take action respectively. It is common to differentiate these markets across the following seven . 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. 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. The Commission may agree to a company having a monopoly in special circumstances - for example where costly infrastructure is involved ('natural monopolies') or where it is important to guarantee a public service. Tesco makes biggest ever investment in hourly pay, taking the rate to over 11 an hour . 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). 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. Sustainable development has long been one of the overarching objectives of EU policy. et al, 2008:298). A range of prices occurs because sellers can differentiate their offers to buyers. 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. Impact of European Unions Competition policy on Tesco 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. Now the focus is on putting policy into practice in to UK's market. 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. Eliminating exchange rates between European countries eliminates the risks of unforeseen exchange rate revaluations or devaluation, further those businesses who involved in commercial transactions in different member states would no longer have to face administrative costs of accounting for the changes of currencies. OFT is a non-ministerial government regulator that was established by government in 1973. 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. You can use it as an example when writing Scholars Contacting their local MP - European Union policies are part of national politics. 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 is the dominant supermarket it has fairly large competitors who also partly control the market. across a large geographical area. To compete with other organizations, cost-plus pricing is the most . While the cohesion funds attempt to address this, there are still great differences across the EU in economic performance. June 2010 showed a 9.6 per cent increase in imports compared to May 2010 and a 28.4 per cent increase compared to June 2009. In this type of competition the industry has a small numbers of large dominant firms that have a firm control over the market. In this structure, multiple management systems operate to ensure that everything gets done with perfection. with free plagiarism report. This means there is a few dominant firms in the market. The changes will see Sharry Cramond take up a role as head of brand and . Order your essay today and save 15% with the discount code ESSAYHELP, Don't use plagiarized sources. Once in a lifetime a family might make one large purchase or transaction across a European border such as buying a holiday home or a piece of furniture. TESCO Leadership and Organisational structure. 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. Twenty seven separate countries with widely differing economic performances and different languages have never before attempted to form a monetary union. 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. The total 2010 year to date value of UKs trade-in-goods exported excluding June 2010 was 45.5 billion, which has been downwardly revised by 6.9 million. A market structure is a tool used to determine the pricing power of certain products in diverse firms. their profits margin will vary but still always high. 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. One legal structure of Tesco is the 'Corporate governance', the people in this sector deal with shareholders; they do this to make sure Tesco is achieving the strategies that the shareholders want them to achieve. In a Monopoly Market Structure, there is only one firm prevailing in a particular industry. In oligopoly there are many entry and exit barriers such as huge investments etc. European citizens have the freedom to live, work, study, and travel in any other EU country. Under monopolistic competition, the market consists of many buyers and sellers who trade over a range of prices rather than a single market price. 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. 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. The four common structures are: Perfect competition market. One of the few reasons that the United Kingdom did not want to join the single European currency with the first wave of countries on 1 January 1999 is that according to the chancellor of the Exchequer at that time in 1999 who was Gordon Brown our current prime minister said that, although the government supported the principle of the single currency Britain would not be ready to join at least until the second wave of countries which occurred in 2002 and during that time he told the European Union that the country should begin to prepare for monetary union but up till now there have been no indications of the United Kingdom joining the European Union currency, Euros. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. 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. This should lead to more investment, more jobs and lower mortgages. In this sort of environment the businesses and trades people have somewhat control over their prices because of the products differentiations. the buyers have the power to influence the price of the product or services. Some of the basic aims of the European Union are peace, prosperity and freedom for its 498 million citizens in a fairer, safer world. their profits margin will vary but still always high. 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 Euros international credibility. The oligopoly market structure is perhaps the most prevalent type anywhere in the world and hence deserves a careful study. A concentration ratio is a way . Tesco adding eCommerce to the mainstream business model. This essay was written by a fellow student. Under the new law, EU countries will have to reduce exposure to fine particles in urban areas by an average 20% by 2020. Get any needed writing assistance at a price that every average student can afford. International business traffic is an important feature of the UK economys survival; almost 50% of UKs export is in the Non European Union zone, there fore international market has a vital role to play in UKs economy. In such type of competition most of the companies use Push strategy, i.e. The Commission also monitors closely how much assistance EU governments make available to business (state aid). 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. The Council of the European Union (representing national governments) A range of prices occurs because sellers can differentiate their offers to buyers. (Source: UK Jobs Dependent). The two organisations I will be comparing and contrasting are Tesco and Sainsbury's which I believe belong to the Oligopoly market structure. 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. Value of International markets to UK Check out our terms and conditions if you prefer business talks to be laid out in official language. Noise, swimming water, rare species and emergency response -these are just some of the areas covered under the extensive body of environmental legislation that the EU has established over the decades. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. Sometimes it is hard to do all the work on your own. Therefore, one can say that market . The European Commission (representing the common EU interest). Views 1142. The Price elasticity of demand measures the responsiveness of the quantity of goods sold to the changes in the products price. In June 2010 the total value of trade-in-goods imported to the UK from countries outside the EU was 15.4 billion. Market structure 1. The European Parliament (representing the people of Europe), The Council of the European Union (representing national governments). 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. Now the focus is on putting policy into practice in to UKs market. The firm needs to establish its price and output levels to achieve its business objective of profit maximization. Examples of a perfect competition to its closest definition are in the financial market like stock exchange, currency exchange market and the bonds/certificates market. (Octotutor, 2014). It works in the United States because the labour market is mobile, helped by the common language and portability of pensions etc. Market Collapse: Tesco has stores in different countries but still it is completely depending on the UK market. Effective competition provides goods and services, automatically raises quality and customer choices increase with competition. Tesco Board of Directors consists of 10 members. Though there are many companies operating chain retail shop . Tesco's mission statement is "to be the champion for customers - to help everyone who shops . In the second part of the assignment I will describe the value of international and EU markets to UK firms. 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. 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. Kudler Fine Foods is an organization that offers gourmet foods and wines to the San Diego Metropolitan area. No customs tax is charged on goods that are sold or transported between member states. Some exceptions to the general rules are possible. The main ones are: The European Parliament (representing the people of Europe) It is estimated that the currency cost of exports to small companies is 10 times the cost to the multi-nationals, who offset sales against purchases and can command the best rates. But in applying these rules, it can take account of the interests of innovation, unified standards, or small business development. A single currency should result in lower interest rates as all European countries would be locking into German monetary credibility. In economics, market structure is a term that describes the state of a market, with respect to competition. Tesco management aims to reduce the cost of purchases and operational costs through and a set of other measures in order to pass the cost advantage to customer as the main brand value. cookie policy. EU Exports. Competition regulators are important in business and are required to ensure equality and a fair deal for all. 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. 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