Research Articles Base: Retail Grocery Market Industry

UK Retail Grocery Market Industry

Task 1 a)      Explain how a market system result in an efficient allocation of resources. b)      Explain why markets fail and identify the ways in which social and industrial policy can be used by governments to overcome the problems of market failure. Task 2 a)      Examine the extent to which the retail grocery market in the UK can be regarded as either perfect competition, imperfect competition, oligopoly or monopoly and comment on the reason why   a1) the office of fair trading and the competition commission were concerned about the take over bids for Safeway submitted by rival supermarket chains (Morrisons, Tesco, Sainsbury, Asda) [ need to explain every single market structure ; have a look at the retail grocery market; a1) research -> the guardian website] b)      Identify and evaluate the methods used by grocery retailers, large and small, to compete with one another. Task 3 a)      the UK has during the last 5 years (despite fears of a slow in the world economy) enjoyed a healthy economy, experiencing economic growth and low levels of unemployment simultaneously with very low rates of inflation.  To what extent has the Government’s use of Fiscal and Monetary policies contributed to the achievement of these macroeconomic objectives? b)      Comment on the impact the economic situation in the UK during the last 5 years has had on UK grocery retailers. [ look at market link, economic data for info] Task 4 a)      to what extent has the creation of the EU single market and the single European currency had an impact on organisations in the UK retail grocery industry b)      to what extent would the UK joining the single European currency benefit or disadvantage:                                                                i.      the UK economy as a whole                                                              ii.      organisations in the UK retail grocery market Task 5 a)      choose an organisation in the UK retail grocery industry eg Tesco and                                                                i.      state its mission statement and key objectives                                                              ii.      to what extent are the objectives of the organisation likely to conflict with the objectives of its shareholders, employees and customers                                                             iii.      how does the organisation attempt to meet its responsibilities to customers Credit:ivythesis.typepad.com

UK Retail Grocery Market Industry

Task 1 a) Explain how a market system result in an efficient allocation of resources. b) Explain why markets fail and id...

Sample Logistics Essay: What Role Do Logistics Play in Online Grocery Retailing in general

What role do logistics play in online grocery retailing in general?                 The advent of Internet technology in all its applications paved way to the modernization of traditional tasks before. In business, the traditional market operations such as retailing of grocery stores was transformed into point and click strategy. Today, the process is known as e-tailing – the sale of goods and services via the Internet or other means of electronic channels for personal consumption of consumers (Harris and Dennis, 2002). Meanwhile, on the case of online grocery retailers, e-grocer is the term that was coined to describe both the process and the people engaged to it (Hays et al.). Generally, logistics is among the most essential tool in procuring products and services where they are needed and when they are desired. It plays a general role in accomplishing tasks in marketing and manufacturing industries. The whole support process involves integration of information, transportation, inventory, warehousing, material handling, and packaging.             In online grocery retailing, logistics still play its traditional functions. However, the advancement that the Internet technology brought enhanced the efficiency, convenience, and access to the services/products being offered by the company. Mainly, logistics in online grocery retailing is a tool for increased efficiency and convenience (Dennis et al. 2004). Logistics developed the traditional market. It augmented the growth of retailer power to control their supply chains. The physical involvement or retailers is reduced but the supply chain management become more effective with the use of modernized equipment for operations (supplier and retailer linked) (Dennis et al. 2004). Placing grocery orders over the Internet that utilise highly automated centralized warehouses and computerized logistics structures is more efficient as to compare with groceries in the supermarket. The movement management for the retailer and prospective customer to establish contact and achieve an exchange of merchandise for payments has not always required a physical store (Dennis et al. 2004, pp. 205-206). Some retailers saved a significant amount of their resources in operations “by replacing electronic-data-interchange (EDI) tools with Internet-based ones that facilitate product comparisons, streamline logistics, and help business-to-business vendors” (Calkins et al. 2000, p. 140). At once, customers neglect the feasible benefits of online grocery retailing, but when they tried and are enchanted with the convenience of ordering groceries online, they will be hooked to it (Smaros et al., 2000). Logistics, effective in application, is a competitive weapon to survive online retailing industry (Dvorak & Van Paasschen 120). As an example, the superior effectiveness of the computer-controlled logistics schemes is seen in Tesco (Fernie, & McKinnon, 2003). Another example would be, Amazon, which is founded on efficient logistics systems and customer care and service (Dennis et al, 2004). Amazon uses its logistics proficiency “to carry out distribution services on contract for bricks retailers such as WHSmith (www.whsmith.co.uk) and Toys R Us (www.toysrus.co.uk)” in U.K. (Dennis et al. 2004, p. 9). But the convenience of online grocery retailing still holds predictable consequences relating to the usage of Internet in the process. The Internet has global reach and provides the opportunity to trade internationally. Dennis et al. (2004) claim that “this is not necessarily an advantage for a number of reasons, such as having to deal with multiple languages, currencies and even cultures, and managing far-flung logistics including returns, but, with foreign competition able to enjoy the potential of international trade online, businesses do need to consider their competitive position should they ignore e-retail” (p. 58). With its forgivable pitfalls, logistics in online grocery retailing supports the whole operation of the company by means of highly sophisticated technology and processes that provide instantaneous, effective, and 100% quality guaranteed product/service.   Credit:ivythesis.typepad.com

Sample Logistics Essay: What Role Do Logistics Play in Online Grocery Retailing in general

What role do logistics play in online grocery retailing in general? The advent of Internet technology in all its applic...

Merging and Acquisition is a very popular way of industry development and efficiency. A case study looking at steps involved in Morrison’s take over of Safeway Supermarket

Merging and Acquisition is a very popular way of industry development and efficiency. A case study looking at steps involved in Morrison’s take over of Safeway Supermarket   Introduction             In the rapidly changing and improving companies and businesses, the management of companies is being challenged in terms of demonstrating their capacity to think and act strategically. As the business wants to expand abroad, there are certain tasks that need to perform. Accordingly, most organisations develop in two different manners. The first one is through the natural or the organic ways or simply by merging with other organisation. It can be said that the route of the merger is suitable if and only if the development in conventional goods/services and the market environment is confined because of the size or share of the market. Merger is also appropriate when a more advanced degree of growth and development in terms of turnover is demanded, for whatever motive there is. However, acquiring, merging or starting up a industry on the external part of the diversification of the market environment and products can be considered as an outstanding approach to strengthen the competitiveness of an organisation (Kotler, 1983).  The process of merger and acquisitions in the retail and supermarket industry has been noted to be one of the foremost vehicles in line with the transformation of a key set of economic activities that stand at the center retail market system. Hence, it can be agreed upon that that the result or outcome of the merger and acquisition process in terms of the structure, conduct, and performance of the retail industry has a disproportionate impact on the economy as a whole.  This report will tackle the merging steps involved in Morrison’s takeover of Safeway Supermarket.   Morrison takeover of Safeway Morrisons Supermarket intends for sustainable growth as a broad supermarket leader in England and also for segment competitiveness. This is the simple objective of the acquisition of Safeway Supermarkets. In both cases, Morrisons Supermarket as well as their branches including Safeway will play critical roles. Morrisons Supermarket is able to generate its broad leadership usually by acquiring other strong supermarkets as well as their products, which are then combined into a new, larger industry. Offering training to its employees, improving the industry operations, and the introduction of new technologies then reinforces the positions of the various Morrisons Supermarkets. Such practically has directed to economies of scale that is able to generate a distribution network for both the local and international branches. If an area is already in the control of other supermarkets, Morrisons Supermarket has been able to devote their attention towards the development of a premium segment with its various branches.             The main goal of Morrisons Supermarket, on one hand, is to secure the growth of its business in a sustainable approach, while at the same time constantly enhancing the industry’s profitability. The strategy to attain the following steps with this involves four elements: <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Striving in order to reach a leading 	position in attractive markets </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Focusing on securing a competitive share of 	the supermarket segments. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Working in order to improve the industry’s 	efficiency and cut costs in operations. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 	Continuous growth through selective 	acquisitions for as long as they are able to create shareholder value. </li> B. Benefits of Safeway Takeover Among the competitive advantages enjoyed by Morrisons Supermarket upon taking over of Safeway included the following: ·         Economies of Scale and Scope in product research and development arising from its various and different branches situated in the United Kingdom. ·         Unique Quality Products owing to heavy emphasis on research Morrisons Supermarket’s ability to commit with research & development activities has always been one of its top approaches to remain competitive in the market.           ·         Differentiated Products With the context of the production and marketing of differentiated products originating from their research and development activities, Morrisons Supermarket is able to generate  own firm-specific advantages. The continuous pursuit of research and development processes enables the industry to produce a steady stream of originally differentiated products which makes it harder for competitors to find substitutes. Because of this differentiated approach, Morrisons Supermarket is able to market their products around England, which enables them in turn to maximize the returns on research and development expenditures. Reference Kotler, P. (1983), Principles of Marketing, 2nd edition, Prentice Hall, Englewood Cliffs, New Jersey.   Mirvis, P.H, and Marks, M.L. (1992). Managing the Merger: Making it Work. Beard Books.     Credit:ivythesis.typepad.com

Merging and Acquisition is a very popular way of industry development and efficiency. A case study looking at steps involved in Morrison’s take over of Safeway Supermarket

Merging and Acquisition is a very popular way of industry development and efficiency. A case study looking at steps involved in Morrison...

UK Retail Grocery Industry

The retail grocery industry in the United Kingdom could be regarded as a perfect competition based on the existing forty labels that provide the grocery needs of those living throughout the United Kingdom. The perfectly competitive theory was first developed by Finn (1995). It crucially differs from more traditional perfectly competitive models such as Rasche and Tatom (1981) and Rotemberg and Woodford’s (1996) perfectly competitive theory by viewing capital utilization as the avenue through which energy enters into the model economy–energy is essential for the utilization of capital. The reason why the said industry has a perfectly competitive milieu is because the disposition of its buyers, competition among each other, suppliers, substitute services and the industry’s new entrants. To illustrate, the industry’s buyers and primary customers are a characterized as a very powerful force in the industry. Powerful buyers drive down profitability because they bargain for lower prices, demand better product features for the same price, and play one competitor against another. Weak buyers are not likely to be as price-sensitive or to impose demands on companies in the industry. Similarly, the rivalry among competitors in the industry is considerably powerful. Competitors in the retail grocery industry could drive down industry profitability by cutting prices or offering more product features for the same price. When rivalry is most intense, competitors often compete head-to-head on price. When competition is disciplined and constrained by industry norms, rivalry is weak. On the other hand, the suppliers of the industry are a moderate force. Powerful suppliers drive down the profitability of companies in the industry because they can charge higher prices for the products and services they sell. Weak suppliers are not likely to bargain on price or impose demands on companies in the industry. The substitute services that serve as a threat to the players in the industry provides the same functionality but is not identical to potentially competitive services. Substitute products such as online grocery are a moderate force in the industry. Substitute products constrain industry profitability by limiting the selling price companies in the industry can charge. And lastly, the new entrants in this industry are potential competitors. New entrants are a powerful force in the industry considering they could easily get in and out of the industry. The easier it is for new companies to enter the industry the greater the competition in the industry. New entrants will often attempt to break into the industry with low prices, innovative products, or new features and benefits. When it is difficult to enter an industry, the threats of new entrants are low. Based on the description of the retail grocery industry of UK, the major players of the industry targets future growth in market segments composed of small and midsize buyers. They are less likely to bargain on price and will often pay more for less. They have less leverage and fewer options than the large customers everyone is trying to attract. Moreover, the grocery owners also seek new ways to differentiate their service that have value to the customer. Even if their product is a commodity, there are ways to differentiate it in terms of the services that surround it. Differentiation can occur from the very first time customers becomes aware of your product to the time when they must dispose of it. Likewise, they also started to offer additional services or support to customers in exchange for a larger share of their total purchases. Develop services that make it easier for them to work with the company as a single source supplier. The grocery owners as well combines a reduction in the buyers’ overall cost of doing business with you with the creation of switching costs while focusing on new growth initiatives on customer segments with the best profit margins. This way each competitor is less likely to beat one down on price. Moreover, these owners are also seeking the creation of a new distribution channel in order to figure out ways to disintermediate those in the distribution channel thus, getting closer to the end user. Furthermore, the players in the retail grocery industry started to work with regulatory bodies to establish industry policies and procedures. They are seeking legislations that would make it hard for new entrants to be certified. The more stringent the requirements, the lower the likelihood of new companies entering the industry; the cost will be too high. This is one time that the owners consider industry regulations as good business. In addition, the existing players are now quitting their wimpy disposition by aggressively going after newbies in the industry. They make sure they are adding more value than the new entrants. This way, new entrants fight for every customer. Complacency and the assumption that there is enough business for everyone are considered as a taboo among the main players of the retail grocery industry. In the preceding year, the manufacturing output of UK recorded a decline of 1% in the fourth quarter of last year. This left the average level of output for 2002 1.4% below the level for 1995. It was expected for manufacturing output to increase this year as world trade growth accelerates. Manufacturing output rose in both January and February this year. It is expected to grow of around ¼% in the first quarter of this year. The growth rate is forecast to improve throughout this year and next as the volume of UK exports increases, together with manufacturers’ increasing competitiveness in the domestic market in response to the depreciation of the effective exchange rate. Its expected growth per annum of around ½ and 2 ¼ % this year and next, rising to 2 ½% in 2005. Moreover, growth in the distributive services sector reached 4 % last year. It is expected to be more moderate growth of 2.6 % per annum this year as household expenditure slows. Growth in the distribution sector in the last years has been sustained by strong growth in the wholesale and retail sector. By the fourth quarter of 2002 the volume of output in the wholesale and retail sector was 35.3 % above its 1995 level, while the hotels and restaurants sector was 4.7 % below its 1995 level. Similarly, growth in the average level of workforce jobs slowed to 0.2 % per annum last year, from 1.8 and 1 % per annum in 2000 and 2001. Much of this slowdown can be attributed to the deceleration in growth in the workforce, since the unemployment rate has simultaneously fallen. The claimant rate of unemployment has fallen from 3.6 % of the workforce in 2000 to 3.1 % of the workforce in 2002. However, the workforce is likely to be cyclical such that the deceleration in its growth over this period is partly explained by the slowdown in economic growth. Indeed, the population of working age has grown at broadly a constant rate per annum from 20002002 and the slowdown in economic growth has been associated with a small rise in inactivity. Nevertheless, the labor market has proved relatively resilient to the slowdown in economic growth. Growth in workforce jobs last year was supported by strong growth in self-employment. Employment in the public and distribution sectors expanded by 2.2 and 1.4 % year-on-year in the fourth quarter, respectively. Jobs growth in these sectors has helped to offset much of the decline in jobs in the production sector of the economy. The government expects growth in public sector employment to remain strong this year and next in line with our projections for public sector output. Jobs growth in the distribution sector is likely to be slightly weaker due to the anticipated slowdown in growth of distribution output. The government expects the rate of growth in workforce jobs to remain low this year and next as output growth is absorbed by the current level of employment, resulting in an increase in productivity growth. Growth in manufacturing output will also be supported by the depreciation of the exchange rate. With this in mind, the buying power of the local currency shall be more potent compared to the preceding years. Moreover, the grocery retail sector will benefit from this considering the probable increase of sale of major commodities among the general public. However this is thwarted with the expected decrease on the rate of employment throughout the land. Recently the United Kingdom has opted to join the monetary union. In doing this, it is perceived that adopting the euro eradicates exchange rate perils concerning the UK and Euroland. Similarly, it is also believed that an wearing away of public financial independence obvious in the acceptance of the euro. Moreover, it was also stated that if the UK joins the euro, failure to bend might have unfavorable corollaries. Similarly, joining the euro is believed to be expensive for many companies. Therefore, a common interest rate that may be suitable for Euroland as a whole will be the erroneous rate for a number of individual affiliates. In addition, the immediate interest rates, ownership of dwellings, and credit loans are comparatively more significant in the UK than in Euroland. Inside the euro, structural stringencies are more probable to multiply to the UK bearing in mind the superpower status of the said nation. Moreover, joining the union might have an effect on UK by Euroland’s enormous pension accountabilities. It is also believed that the euro will only mitigate the growth of UK’s economy through the growth and stability pact. This pact, which restrains the euro’s affiliates’ fiscal liberty, will be exceptionally damaging for the UK. Adopting the euro means joining the monetary union for UK. For the retail grocery industry, this is a significant opportunity for growth. By escalating the dimension of the market, the single currency give confidence to specialization, making it easier for businesses to take advantage of economies of scale and function at lesser unit expenses. Augmented demands for specialization and price equalization will give a free rein to larger rivalry and vitality. Moreover, This will bring significant net investments to many UK businesses and individual entrepreneurs, but will get rid of a source of proceeds for banks and others concerned in converting money. Similarly, UK short-term rates are now only faintly elevated, while UK long-term rates are either equivalent or inferior than in Euroland. Even so, poorer short rates diminish business outlays, arouse ventures and inclined to create a more viable sterling exchange rate. However, poorer UK short-range rates could also have disagreeable outcomes, because they would enhance further unwarranted customer spending and draw attention to the disproportion in the economy.   References: Finn, Mary G. (1995) “Variance Properties of Solow’s Productivity Residual and Their Cyclical Implications.” Journal of Economic Dynamics and Control 19 (July 1995), 1249-81.   Rasche, Robert, and John Tatom. (1981) “Energy Price Shocks, Aggregate Supply, and Monetary Policy: The Theory and The International Evidence.” Carnegie-Rochester Conference Series on Public Policy 14, 9-94.   Rotemberg, Julio J., and Michael Woodford. (1996) “Imperfect Competition and the Effects of Energy Price Increases on Economic Activity.” Journal of Money, Credit, and Banking 28, 549-77. Credit:ivythesis.typepad.com

UK Retail Grocery Industry

The retail grocery industry in the United Kingdom could be regarded as a perfect competition based on the existing forty labels that prov...

Competitive Theory by Viewing Capital Utilization of UK’s Retail Grocery Industry

The retail grocery industry in the United Kingdom could be regarded as a perfect competition based on the existing forty labels that provide the grocery needs of those living throughout the United Kingdom. The perfectly competitive theory was first developed by Finn (1995). It crucially differs from more traditional perfectly competitive models such as Rasche and Tatom (1981) and Rotemberg and Woodford’s (1996) perfectly competitive theory by viewing capital utilization as the avenue through which energy enters into the model economy–energy is essential for the utilization of capital. The reason why the said industry has a perfectly competitive milieu is because the disposition of its buyers, competition among each other, suppliers, substitute services and the industry’s new entrants. To illustrate, the industry’s buyers and primary customers are a characterized as a very powerful force in the industry. Powerful buyers drive down profitability because they bargain for lower prices, demand better product features for the same price, and play one competitor against another. Weak buyers are not likely to be as price-sensitive or to impose demands on companies in the industry. Similarly, the rivalry among competitors in the industry is considerably powerful. Competitors in the retail grocery industry could drive down industry profitability by cutting prices or offering more product features for the same price. When rivalry is most intense, competitors often compete head-to-head on price. When competition is disciplined and constrained by industry norms, rivalry is weak. On the other hand, the suppliers of the industry are a moderate force. Powerful suppliers drive down the profitability of companies in the industry because they can charge higher prices for the products and services they sell. Weak suppliers are not likely to bargain on price or impose demands on companies in the industry. The substitute services that serve as a threat to the players in the industry provides the same functionality but is not identical to potentially competitive services. Substitute products such as online grocery are a moderate force in the industry. Substitute products constrain industry profitability by limiting the selling price companies in the industry can charge. And lastly, the new entrants in this industry are potential competitors. New entrants are a powerful force in the industry considering they could easily get in and out of the industry. The easier it is for new companies to enter the industry the greater the competition in the industry. New entrants will often attempt to break into the industry with low prices, innovative products, or new features and benefits. When it is difficult to enter an industry, the threats of new entrants are low. Based on the description of the retail grocery industry of UK, the major players of the industry targets future growth in market segments composed of small and midsize buyers. They are less likely to bargain on price and will often pay more for less. They have less leverage and fewer options than the large customers everyone is trying to attract. Moreover, the grocery owners also seek new ways to differentiate their service that have value to the customer. Even if their product is a commodity, there are ways to differentiate it in terms of the services that surround it. Differentiation can occur from the very first time customers becomes aware of your product to the time when they must dispose of it. Likewise, they also started to offer additional services or support to customers in exchange for a larger share of their total purchases. Develop services that make it easier for them to work with the company as a single source supplier. The grocery owners as well combines a reduction in the buyers’ overall cost of doing business with you with the creation of switching costs while focusing on new growth initiatives on customer segments with the best profit margins. This way each competitor is less likely to beat one down on price. Moreover, these owners are also seeking the creation of a new distribution channel in order to figure out ways to disintermediate those in the distribution channel thus, getting closer to the end user. Furthermore, the players in the retail grocery industry started to work with regulatory bodies to establish industry policies and procedures. They are seeking legislations that would make it hard for new entrants to be certified. The more stringent the requirements, the lower the likelihood of new companies entering the industry; the cost will be too high. This is one time that the owners consider industry regulations as good business. In addition, the existing players are now quitting their wimpy disposition by aggressively going after newbies in the industry. They make sure they are adding more value than the new entrants. This way, new entrants fight for every customer. Complacency and the assumption that there is enough business for everyone are considered as a taboo among the main players of the retail grocery industry. In the preceding year, the manufacturing output of UK recorded a decline of 1% in the fourth quarter of last year. This left the average level of output for 2002 1.4% below the level for 1995. It was expected for manufacturing output to increase this year as world trade growth accelerates. Manufacturing output rose in both January and February this year. It is expected to grow of around ¼% in the first quarter of this year. The growth rate is forecast to improve throughout this year and next as the volume of UK exports increases, together with manufacturers’ increasing competitiveness in the domestic market in response to the depreciation of the effective exchange rate. Its expected growth per annum of around ½ and 2 ¼ % this year and next, rising to 2 ½% in 2005. Moreover, growth in the distributive services sector reached 4 % last year. It is expected to be more moderate growth of 2.6 % per annum this year as household expenditure slows. Growth in the distribution sector in the last years has been sustained by strong growth in the wholesale and retail sector. By the fourth quarter of 2002 the volume of output in the wholesale and retail sector was 35.3 % above its 1995 level, while the hotels and restaurants sector was 4.7 % below its 1995 level. Similarly, growth in the average level of workforce jobs slowed to 0.2 % per annum last year, from 1.8 and 1 % per annum in 2000 and 2001. Much of this slowdown can be attributed to the deceleration in growth in the workforce, since the unemployment rate has simultaneously fallen. The claimant rate of unemployment has fallen from 3.6 % of the workforce in 2000 to 3.1 % of the workforce in 2002. However, the workforce is likely to be cyclical such that the deceleration in its growth over this period is partly explained by the slowdown in economic growth. Indeed, the population of working age has grown at broadly a constant rate per annum from 20002002 and the slowdown in economic growth has been associated with a small rise in inactivity. Nevertheless, the labour market has proved relatively resilient to the slowdown in economic growth. Growth in workforce jobs last year was supported by strong growth in self-employment. Employment in the public and distribution sectors expanded by 2.2 and 1.4 % year-on-year in the fourth quarter, respectively. Jobs growth in these sectors has helped to offset much of the decline in jobs in the production sector of the economy. The government expects growth in public sector employment to remain strong this year and next in line with our projections for public sector output. Jobs growth in the distribution sector is likely to be slightly weaker due to the anticipated slowdown in growth of distribution output. The government expects the rate of growth in workforce jobs to remain low this year and next as output growth is absorbed by the current level of employment, resulting in an increase in productivity growth. Growth in manufacturing output will also be supported by the depreciation of the exchange rate. With this in mind, the buying power of the local currency shall be more potent compared to the preceding years. Moreover, the grocery retail sector will benefit from this considering the probable increase of sale of major commodities among the general public. However this is thwarted with the expected decrease on the rate of employment throughout the land. Recently the United Kingdom has opted to join the monetary union. In doing this, it is perceived that adopting the euro eradicates exchange rate perils concerning the UK and Euroland. Similarly, it is also believed that an wearing away of public financial independence obvious in the acceptance of the euro. Moreover, it was also stated that if the UK joins the euro, failure to bend might have unfavorable corollaries. Similarly, joining the euro is believed to be expensive for many companies. Therefore, a common interest rate that may be suitable for Euroland as a whole will be the erroneous rate for a number of individual affiliates. In addition, the immediate interest rates, ownership of dwellings, and credit loans are comparatively more significant in the UK than in Euroland. Inside the euro, structural stringencies are more probable to multiply to the UK bearing in mind the superpower status of the said nation. Moreover, joining the union might have an effect on UK by Euroland’s enormous pension accountabilities. It is also believed that the euro will only mitigate the growth of UK’s economy through the growth and stability pact. This pact, which restrains the Euros affiliates’ fiscal liberty, will be exceptionally damaging for the UK. Adopting the euro means joining the monetary union for UK. For the retail grocery industry, this is a significant opportunity for growth. By escalating the dimension of the market, the single currency give confidence to specialization, making it easier for businesses to take advantage of economies of scale and function at lesser unit expenses. Augmented demands for specialization and price equalization will give a free rein to larger rivalry and vitality. Moreover, This will bring significant net investments to many UK businesses and individual entrepreneurs, but will get rid of a source of proceeds for banks and others concerned in converting money. Similarly, UK short-term rates are now only faintly elevated, while UK long-term rates are either equivalent or inferior than in Euroland. Even so, poorer short rates diminish business outlays, arouse ventures and inclined to create a more viable sterling exchange rate. However, poorer UK short-range rates could also have disagreeable outcomes, because they would enhance further unwarranted customer spending and draw attention to the disproportion in the economy.   References: Finn, Mary G. (1995) “Variance Properties of Solo’s Productivity Residual and Their Cyclical Implications.” Journal of Economic Dynamics and Control 19 (July 1995), 1249-81.   Rasche, Robert, and John Tatom. (1981) “Energy Price Shocks, Aggregate Supply, and Monetary Policy: The Theory and The International Evidence.” Carnegie-Rochester Conference Series on Public Policy 14, 9-94.   Rotemberg, Julio J., and Michael Woodford. (1996) “Imperfect Competition and the Effects of Energy Price Increases on Economic Activity.” Journal of Money, Credit, and Banking 28, 549-77. Credit:ivythesis.typepad.com

Competitive Theory by Viewing Capital Utilization of UK’s Retail Grocery Industry

The retail grocery industry in the United Kingdom could be regarded as a perfect competition based on the existing forty labels that prov...

Investigating the UK retail grocery market

Investigating the UK retail grocery market       Introduction: This paper is an informal business report on the major trends, opportunities, and threats faced by retail grocery market participants in the UK. It discusses the structure of the market and the competing firms, competition law and the roles of the Office of Fair Trading (OFT) and the Competition Commission in the industry. It examines whether the OFT’s non referral of the Asda acquisition of Netto to the Competition Commission was beneficial to the economy and all stakeholders.   Consumer spending in the UK is continuously impacted by household budgets, unemployment , the banking crisis and credit availability, but the UK food and grocery market remains robust, compared to other sectors. The market was worth 141.7 billion pounds in 2008, which is an increase of 5.1% over 2007. Groceries represent the third largest household expenditure in the UK, following housing and transport. UK grocery stores are comprised of four sectors. Supermarket chains are stores selling a broad range of grocery items and with a sales area of 3,000-25,000 square feet, while superstores are those exceeding this sales area and also sell non-food items. Convenience stores are those having a sales area of less than 3,000 square feet, selling at least 8 different categories of grocery items and operating for long hours. Traditional retail stores are those having a sales area of less than 3,000 feet and cover news stands, green grocers, liquor stores and gas stations. The alternative channels group covers a broad range of outlets like the internet or catalogue home shopping, farmers’ and other such markets, and vending machines. The UK retail grocery market is projected to expand at an average of 2.9% yearly over the next five years.[1]   The oligopoly market form in which the market is dominated by a small number of sellers is the prevailing pattern in the UK, as is usually the case in modern economies. The few members in this group are interdependent of each other’s actions, with the responses on strategic planning by other members always taken into consideration to avoid internal conflict. New firms are hindered from easy entry into the industry by in- placed barriers within this market form.[2] This is supported by the finding that sites for new stores are becoming less, which in turn favors existing grocery stores. Four supermarket chains have 75% market share of the retail grocery sector in the UK, with the remainder comprised of hundreds of outlets. The market leader Tesco has a sizeable margin of 30.9% market share, followed by Asda/Walmart with 17.2%, Sainsbury’s with 15.7%  and Morrison’s with 11.5%. Other supermarket chains include Cooperative-Somerfield, Waitrose, Island and Aldi.[3]   The new trend in the UK grocery sector is discount retailing as practiced and led by the German-owned chains Aldi and Lidl which entered the market in the 1990s. Discount supermarket shopping is characterized by low priced items sold in smaller and relatively uniform-sized stores that carry limited product ranges and predominantly private label products. This group is growing fast and now accounts for 5.4% share in grocery spending.  Tesco entered discount retailing in 2008 and is now offering 700 discounter-style branded products. Each retailer generally concentrates on specific market segments. Tesco offers economy and up-scale products to the middle market, while Sainsbury’s is positioned slightly up-market of Tesco, and slightly down-market of the latter are Asda/Walmart and Morrison’s. The most up-market of the leading chains is Waitrose, while the price-focused outlets include Iceland, Aldi, Budgens, Netto and Lidl. Town planning regulations in the UK have resulted in limited sites suitable for supermarket chains and there is a move toward smaller stores sitting alongside convenience store formats like gas stations. The UK’s major chains dominate the private label market, which give them the opportunity for product diversification and new revenue development.[4]   Tesco, Sainsbury’s, Asda and Waitrose allied with Ocado dominate the internet and online grocery market in the UK, while a wide range of specialized retailers offer items not always available in the major stores. Online food shopping is most popular with the younger generation, families and more affluent consumers and has considerable growth potential. The number of convenience stores affiliated with a symbol group is on the rise in order to check the advance of major chains in the convenience sector. Such players as Spar UK, Premier/Booker and Musgrove offer small retailers strong marketing and branding, a broader range of products and more sophisticated supply chain systems.  The growth of the UK consumer’s taste for healthy, convenient and ethnic foods and the UK government’s increasing promotion of healthy eating habits and lifestyles have created a demand for quick meal solutions like ready meals or ingredients and single snack portions, which retail grocery markets can readily fill.[5]   The Office of Fair Trading (OFT) of the UK is a non-ministerial government department that acts as the UK’s economic regulator by enforcing both consumer protection and competition law. Majority of the body’s work includes market analysis, consumer and competition law enforcement, merger control, licensing and supervisory work and advocacy.[6] The UK competition law which is impacted by both British and European elements has the task of prohibiting practices restrictive of free trading and competition between business entities, banning abuses by a dominating firm in a market or anti- competitive practices such as predatory pricing, tying and price gouging, and overseeing large corporation mergers and acquisitions, with the possible prohibition of competition-threatening transactions.[7] The UK Competition Commission is also a non- departmental body tasked with investigating mergers, markets and enquiries linked to regulated industries under competition law in the UK to ensure healthy competition for the benefit of companies, customers and the economy.[8] According to a 2007-08 report, the OFT has estimated that its work had saved 98 million pounds for consumers during the period, but the body has also been criticized for its ineffective investigations of supermarkets and oil companies among others.[9]   The OFT has given supermarket giant Asda the go signal for its 778 million-pound takeover of budget retailer Netto in March 2011, and not referred the acquisition to the Competition Commission.  Asda will convert 147 Netto stores between May and the end of the year, retain all Netto store colleagues and create an additional 1,500 jobs including 430 jobs in Yorkshire and Humber  to upgrade the stores’ service levels. The chain would also retain the same prices of its bigger stores and expand the Netto product range from 1,800 to 10,000 that will allow customers a full weekly shop. The OFT required that Asda sell 47 of the original 194-strong Netto portfolio to provide competition benefits to local shoppers.[10]   The OFT action of not referring the Asda acquisition to the Competition Commission and of requiring Asda to sell 47 of the 194 Netto stores it acquired to rival supermarkets was a one-size-fits-all approach, because while it was able to generally ensure free competition in areas where Asda will be present, check possible abuses by a dominating firm, and protect and upgrade the consumers’ interests in shopping, the body failed to solve the possible problems at the local level. Based on two tests on the Asda acquisition, OFT’s closure of higher-priced stores that are nearer and more convenient to the people on the ground in favor of lower-priced stores a few miles away from them affected older consumers, those without transport and those who are less able to travel. Competition could also be greatly reduced in about one in four of the local areas where stores overlap.[11]   While the economy and consumers are benefited by open competition, government bodies at all levels have the responsibility of consulting local communities and people on the ground on how national and local policies will impact them. It was the legal duty of the OFT to refer the Asda acquisition to the Competition Commission for a 6-month investigation because areas where consumers’ interests would be compromised had not been solved.[12]   		 		 		 		[1] Julie Vasquez-Nicholson, 		“United Kingdom – Retail Food Sector”, Global Agricultural 		Information Network, pdf, 2009, <http://gain.fas.usda.gov/Recent%20GAIN%20Publications/RETAIL%20FOOD%20SECTOR_London_United%20Kingdom_11-13-2009.pdf>  		[accessed 16 June 2011] 		 		 		 		[2] “UK Retail Grocery Market”, 		Ivythesis.com, 2011, <http://www.ivythesis.com/samples/uk%20retail%20grocery%20market.htm>  		[accessed 16 May 2011] 		 		 		 		[3] Julie Vasquez-Nicholson 		 		 		 		[4] ibid 		 		 		 		[5] ibid 		 		 		 		[6] “Office of Fair Trading”, 		Wikipedia, 13 June 2011, <http://en.wikipedia.org/wiki/Office_of_Fair_Trading> 		[accessed 16 June 2011] 		 		 		 		[7] “United Kingdom Competition 		Law”, Wikipedia, 13 May 2011, <http://en.wikipedia.org/wiki/Office_of_Fair_Trading>  		[accessed 16 June 2011] 		 		 		 		[8] “Competition Commission (United 		Kingdom)”, Wikipedia, 4 June 2011, <http://en.wikipedia.org/wiki/Non-departmental_public_body>  		[accessed 16 June 2011] 		 		 		 		[9] “Office of Fair Trading” 		 		 		 		[10] “Asda Gets Go-Ahead for 778 		Million-Pound Takeover of Netto”, Yorkshire Post, 10 March 2011, <http://www.yorkshirepost.co.uk/business/business-news/asda_gets_go_ahead_for_778m_takeover_of_netto_1_3162743> 		 [accessed 17 June 2011] 		 		 		 		[11] Dave Anderson, “Supermarket 		Acquisitions (Tyne and Wear)”, 7 February 2011, <http://www.daveanderson.org.uk/110207supermarkets.htm>  		[accessed 17 June 2011] 		 		 		 		[12] ibid Credit:ivythesis.typepad.com

Investigating the UK retail grocery market

Investigating the UK retail grocery market Introduction: This paper is an informal business report on the major trends, ...

A REPORT_ASDA STORES LTD.

ASDA STORES LTD               Asda Stores Ltd is a chain of supermarkets in Great Britain which sells clothing apparels, toys, food and other all-purpose merchandise. They are also in the market for financial services. Aside from this, Asda Stores has Asda Moda, a mobile telephone network. Its main headquarter is located in Leeds, West Yorkshire.             In 1999, Asda was turned into an auxiliary of Wal-Mart, an American seller which is the largest in the world. Asda is next in line to Tesco in the United Kingdom as the largest retailer. Special offers abound in Asda supermarket chains which primarily accounts for its popularity among shoppers. The latest survey conducted in December 2010 showed that almost seventeen percent of supermarket shoppers go to Asda for their grocery needs.             In 1949, Associated Dairies & Farm Stores Limited was founded. It was later renamed as Asda Stores Limited in 1965 after the Asquith and Associated Dairies merger. In a buyout, the dairy group was sold out and became the Associated Fresh Foods.  From that time onwards, Asda has no longer any association from where its company name was taken from.             With its expansion in 1989 wherein it purchased large stores of Gateway Superstores, a rival store, it exceeded the financial capabilities of the business and came into difficulties when it expanded to various products.  Stockholders  were compelled to raise more money to help the floundering business.  Under the leadership of its CEO, Archie Norman, the company was able to bounce back on its feet. Archie Norman adapted the retail philosophy, system processes and marketing strategies of Wal-mart.             In 1997, they were able to get the Spice Girls to endorse their store. Forty various products named after the group became available in 1997. This includes items as official Spice merchandises, party supplies, and even Spice Girls meals for kids in restaurants inside the supermarket chain.             Allan Leighton, the protégé of Archie Norman, succeeded him as the CEO. At that time, Asda already has 230 stores. A plan was also  being set up to prepare a  merger with Kingfisher plc. However, the Asda chain was purchased instead by Wal-mart to the amount of 6.7 billion pounds on July 26, 1999.             Even after the buyout,  Asda still retained its headquarters at Leeds, West Yorkshire. Asda bought 12 Safeway stores from Morrisons signaling its expansion to Northern Ireland territory.             As part of Wal-mart’s restructuring, Asda was sold to Corinth Services Limited, a subsidiary of Wal-mart in 2009. Andy Clarke was appointed in May 2010 as Asda’s CEO.  In this month also, Asda announced its intention to buy Netto’s operations in the United Kingdom. This signifies Asda branching out into smaller but more contained markets as Netto’s store range is only one fifth of a regular Asda chain. But in September of the same year, forty-seven of the Netto stores out of 194  were sold by Asda owing to a regulation of the Office of Fair Trading. Asda has begun the renaming of all previously Netto stores early this year.             They also made known to the public in February 2011 their acquisition of a number of Focus DIY stores. These stores will also be modified into supermarkets.             The marketing campaign and strategies of Asda are  unforgettable and  employs celebrities as Julie Walters, Leonard Rossiter, the Spice Girls, Michael Owen, Hatti Jacques, and Sharon Osbourne.  They also sponsored successful programs and activities. Among those they sponsored were the football teams Sheffield Wednesday and AccringtonStanley; a Prenton Park stand; and kids’ Kwik crickets. Their advertisements usually  depict  Asda  as the most reasonably priced supermarket in the United Kingdom.             Their slogan, “That’s Asda price” was recommenced together with their store “jingle” in their advertisements even including it their radio station, “Asda FM”. Their purpose is to provide instant name recall of Asda in connection to low prices.  This advertisement campaign is supported by winning the award in the category for  the “Lowest Price Supermarket” given by The Grocer magazine for 12 consecutive years.             However,  they were advised by the Advertising Standards Agency to stop using their slogan after Tesco, a supermarket competitor, complained. According to the Advertising Standards Agency, the survey conducted by the award-giving body was only founded on inadequate evidence as only thirty-three products from different large supermarkets were compared and then formed as its basis. In consequence, Asda  changed their slogan to “Winner: Britain’s lowest price supermarket award”. Credit:ivythesis.typepad.com

A REPORT_ASDA STORES LTD.

ASDA STORES LTD Asda Stores Ltd is a chain of supermarkets in Great Britain which sells clothing apparels, toys, food and...