SUPERMARKET INDUSTRY

Supermarket Industry: Tesco



Supermarket Industry: Tesco

Introduction

Super markets are described by distinguishing patterns of competition, sources of risk or opportunity and, certainly, different levels of profitability. The super markets have one of the most significant roles in market of United Kingdom. This report is based on the analysis of the super market industry in the United Kingdom. The report focuses on the analysis of the super market industry in the current scenario, with reflection from the conditions in the past. The report includes various aspects of the super market industry. Additionally, there are also details about the market structure and the way it relates to the existing scenario in the United Kingdom. The paper is based on the economic scenario of the super markets all over the United Kingdom. There are various aspects considered in the paper related to the super markets, specifically Tesco. Tesco is a major brand in the super market industry. The brand has also been highly affected by the economic issues all over the globe. The paper is aimed to give some insights related to these factors.

Structure of the super market sector in the United Kingdom

The marketplace of United Kingdom is the market with a few independent firms that compete with each other. The super market industry of the United Kingdom is dominated by no more than a few firms which are mutually dependent or can be said to be interdependent. There are obstacles to entry into the super market industry and similarly to the exit. The super market industry of the United Kingdom is an oligopoly structure (Anonymous, 2012, pp. 03). In the oligopolistic market structure the industry faces a downward sloping demand curve but in this situation the elasticity might depend on the consequence of competitors to changes in the cost and output. The assumption is that the super markets are going to protect a high intensity of profits. Competitors are not supposed to pursue a price boost by one firm, as a result the demand will be reasonably flexible and an increase in the price would direct to a fall in the total income of the organization. The competitors are more likely to equal a price drop by one organization to guide clear loss of market share (Anchor et. al, 2008, pp. 119). This mostly happens when demand will be more inelastic and a fall in price will guide to a fall in total revenue.

Since the last few decades the grocery shopping in the United Kingdom has been changed by the increase in the supermarkets. The top four super markets in the segment control more than 60% of the overall market. This domination would not be possible with no support of the customer. Super markets bring low prices and suitable one stop shops contributing the full variety of products. Though there are rising concerns that this uprising has moved out too far. The opposition Commission has referred super markets to the Office of Fair Trading (OFT) for examination of anti competitive ...