(Source: UK Jobs Dependent). (http://www.oft.gov.uk/ about/what/#named2). The market structure where the Tesco is operating, for example in the UK, there are many other players in the market which are offering the same products as the UK, hence the price and output of the products offered by Tesco is being decided by the supply and demand mechanism. The company carries out business through multi-format stores and online. In a recent investigation by the OFT has reviled that British Airways has been found guilty over the price of long-haul passenger fuel surcharges and has paid a penalty of 121.5m to be imposed by the OFT, therefore enabling the OFT to close its civil investigation and resolve this case. A good and most current example of a monopoly is the Apple Company which has created the iPhone, because of the degree of the monopoly there is a high possibility of price discrimination where the customers and the consumers have their choices limited to what is available in the market. How can the members have their say? In oligopoly there are many entry and exit barriers such as huge investments etc. Though there are many companies operating chain retail shop . A market structure is a tool used to determine the pricing power of certain products in diverse firms. In May 2010 the total value of UKs trade-in-goods exported to Member States of the EU was 11.3 billion. Since then there have been significant efforts in terms of policy. PhDessay is an educational resource where over 1,000,000 free essays are This means there is a few dominant firms in the market. Tesco is a large U.K grocery firm and retailer whose main competitors are Sainsbury's, ASDA, and Morrison's, which are often called the Big Four in the United Kingdom. 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. 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. 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 . Tesco and InterContinental plc are two UK businesses which get affected by market structures to adjust their output and pricing decisions. The UK is growing reasonably well, Germany is having problems. cookie policy. In such type of competition most of the companies use Push strategy, i.e. Therefore, the general trend toward expansion and search for innovations allows the industry to grow. 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 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). 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 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. In addition, faced with the saturation of domestic market, high competition and self-development demand, Tesco expanded oversea markets in time and translated its store format to international market such as Turkey, China and Poland. The market structure is of dissimilar types in different nations so Tesco has to adopt strategical measures regarding making pricing and output decision while carrying out its business in the overseas nations. 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. 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. Contacting their MEP and cast vote at the European Parliament elections the European Parliament enacts EU laws: (www.europarl.europa.eu). 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. The retail sector. It operates in twelve countries by 2005. Most common examples of monopolistic competitions are: restaurants as in the right area and right type of food they can have their own small portion of monopoly, professional solicitors, building and project managing firms and finally plumbers as there are less of them and more required. Some exceptions to the general rules are possible. 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 . Today the main priorities are combating climate change, preserving biodiversity, and reducing health problems from pollution and marking sure that natural resources are being used more responsibly. In 2013, Tesco spent approximately 110 million on marketing efforts in traditional outlets. Type your requirements and I'll connect 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. ", 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. One central bank cannot set inflation at the appropriate level for each member state. The top three competitors of Tesco are Wal-Mart, Carrefour, and Metro. To 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's mission statement is "to be the champion for customers - to help everyone who shops . their profits margin will vary but still always high. In the UK market, it is very crucial to determine the quantity of output in order to keep check on pricing and related decisions. Contacting their local MP - European Union policies are part of national politics. Among these firms, Tesco Inc. leads in terms of sales and profits. In recent years, Tesco has had to change their business model as well as their services to stay a market leader and differ-entiate from the competition. In economics, market structure is a term that describes the state of a market, with respect to competition. The European Union is not a perfect society but it is an evolving project and constantly has to be improved. 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. Value of European markets to UK The changes will see Sharry Cramond take up a role as head of brand and . Employment Environment External trade Fight against fraud Human rights The Council of the European Union (representing national governments) However, Tesco ranks second, following after Wal-Mart, in terms of net profits. 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 European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. 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. Make sure that this guarantee is totally transparent. It is estimated the 3.5 million British jobs are dependent on* Britains membership of the EU. harmony in order to life, Types of Market Structures and Competition in UK. In the second part of the assignment I will describe the value of international and EU markets to UK firms. The four leading supermarkets in the UK supermarket oligopoly are Tesco, ASDA, Sainsbury's, and Morrisons. 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. 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: Market Collapse: Tesco has stores in different countries but still it is completely depending on the UK market. Tesco makes biggest ever investment in hourly pay, taking the rate to over 11 an hour . Oligopoly is one kind of market structure (Anderton. 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. 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. European Union executes legislations in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development. Get Your Custom Essay on. European Unions rewards businesses and organisations, which reduce their CO2 emissions and penalises those that exceed limits. 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. 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). Tesco's Promotional Strategy. Market structure decides the interaction of buyers with the producers. Either the physical products can be varied in quality, features, style or the accompanying services can be varied. The decisions are made by Tesco after taking into considerations the . 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. Understanding Market Structures. 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. Agriculture Media Competition Consumers Education EU Exports. Conclusion. 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 . 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. Tesco PLC organizational structure is decentralized, tall (hierarchical) and product-based. 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. This work is done using the powers granted to the OFT under consumer and competition legislation. 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. The European Commission (representing the common EU interest). OFT (Office of Fair Trading) collected. In March 2015, UK consumers spent around 34 billion. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a particular market. 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. In May 2010 the total value of trade-in-goods imported to the UK from Member States of the EU was 14.7 billion. Buyers see different in sellers, products and will pay different prices for them. European Union executes legislations in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development. Homogenous products are identical products or business e.g. 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. It follows a hierarchical structure, which truly matches the demand of the huge size of the company. 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. In the business model of Tesco, we have seen that it has organized its business model with the best strategies. To make these things happen, EU countries have set up bodies to run the European Union and adopt its legislation. 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. 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. How does it work? support@phdessay.com. 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. Meaning of Market: Ordinarily, the term "market" refers to a particular place where goods are purchased and sold. The European Commission has wide powers to make sure businesses and governments stick to EU rules on fair competition. Competition regulators are important in business and are required to ensure equality and a fair deal for all. A concentration ratio is a way . A single currency should end currency instability in the participating countries (by irrevocably fixing exchange rates) and reduce it outside them. Essay. Types of Market Structure . 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. The EU also tries to make each market as similar as possible to ensure fair competition across national borders. Tesco PLC is a multinational grocery and general merchandise retailer. . Coca Cola Market Structure Analysis. Copy. 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. (http://www.axa-schengen.com/en/schengen-countries). As a comparison the total value of UKs trade-in-goods imported to the UK from countries outside the EU in May 2010 was 14.0 billion and for June 2009 was 12.0 billion. European Union is a unique economic and political society which is in partnership between 27 democratic European countries. 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? This is because in the . Aid for research and innovation, regional development or small and medium-sized enterprises is often allowable because these serve overall EU goals. Agriculture Media Competition Consumers Education, Employment Environment External trade Fight against fraud Human rights, Taxation Transport Justice, freedom Internal market Customs, Impact of European Union's Competition policy on Tesco. Tesco PLC is a British grocery and general merchandise retailer that operates internationally with headquarters in Hertfordshire, England. Abstract. The UK's retail sector involves a lot of spending by consumers both in shop and online. Monopoly: Language in Europe is a huge barrier to labour force mobility. The main characteristic of the oligopoly market . 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 this type of competition the companies are forced to follow the competitive pricing strategy in order to survive in the industry, i.e. What results so far? 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. total sales and thus guarantee a profit out of low price. There are four basic types of market structure: perfect competition, imperfect competition, oligopoly, and monopoly. 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