Supermarket Chains

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Supermarket Chains

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Supermarket Chains, supermarket, economies of scale

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Abstract

The consumers can have the benefit from the supermarket. In references to analysis, the four brands take more than seventy-five percent of the market share particularly Tesco since it has the biggest market share with regards to the UK market. Because of market supply done by several manufacturers is always in demand, the production scale tends to be large to have space to accommodate the economies of scale. When the issue of economies of scale come into question, the variable costs become low on the advanced technology and hence a chance to make full use of the investment. The consumers are able to get more products at lower prices and also abundant and advanced products. Such a market that has an oligopoly structure requires large manufacturer hence the financial and technical strength are engaged through product and technical innovation (Obitz, 2009, p. 59). Such an oligopoly market has more benefits to the people in the UK such as having product and low prices and larger quantities.

The most significant characteristic of an oligopoly market such as the one experienced by the supermarket chains in the United Kingdom is the aspect of interdependence. If a company makes a price or market strategy that has influence on the other companies, then interdependent is in control (Leahy & Neary, 2010, p. 25). This means that if one supermarket decreases or increases the price of its commodities, the other supermarkets will also make changes to their price failure to which the consumers may change their shopping stations. The supermarkets in most instances have to have a common agreement of how they make changes on the output and also the price.

Introduction
The market structure
Tesco
Supermarket Chains
Conclusion

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[...] On the other hand, if the supermarkets allow other firms to come into the industry, there will be unhealthy competition since the price will probably change. Since the quality of the commodities offered in the supermarkets is superb, the supermarket should ensure that they expand further in order to occupy all the markets. If it is possible, they should invest in the international market and increase their global market share. References Clarke, R. (2002). Buyer power and competition in European food retailing. Cheltenham, Edward Elgar Pub. Pp. 126-157. Growth of 'big four' supermarkets. (2010, December 22). [...]

[...] The multi-format strategy has made Tesco successful since they let their customers have access as convenient and easily as possible (Rigby, 2013). Through positioning and the low prices, it markets itself within the population in UK regardless of the consumers being middle income. ASDA takes the second place in the supermarket industry. It was founded in the early 1950's in Leeds. It has a large presence in the North of England and has expanded to the south thorough store development. Currently, they operate close to three hundred and fifty stores but lack convenience store formats like Tesco. [...]

[...] This results to a non-price competition in oligopoly market and price rigidity. The supermarkets in the UK avoid engaging in price wars hence competition is very low since price is an essential factor when it comes to competition. In the world of business, some firms will tend to lower their price than the others while the quality of their goods is not securitized. This makes the consumers buy the products at low prices and miss the chance to get high-quality goods. [...]

[...] Rigby, C. (2013, August 6). UK's four largest supermarkets among European retail elite: Kantar. Retrieved November from http://internetretailing.net/2013/08/uks-four-largest-supermarkets- among-european-retail-elite-kantar/ Seth, A., & Randall, G. (2011). The grocers: The rise and rise of the supermarket chains. London, Kogan Page. Pp. 11-67. [...]

[...] The supermarket industry in UK has put all measure to control any forms of competition. All the small firms or any companies that wish to invest into the market is blocked hence maintaining the oligopoly state of market structure. It is a benefit to the customers but, on the other hand, it blocks other people who have ability to bring change into the market. Competition is always healthy to the customers since they have a large number of choices on where to shop. [...]

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