Rivalry in the grocery industry is a strong competitive force for several reasons. First, companies are using competitive weapons such as sales specials, coupons, company card to save additional money, and high use of advertising. Second, customers switching cost is low. Last, competitors are becoming equal in size and therefore able to achieve similar results. In this case, Winn Dixie, Publix, and Wal-Mart are the main competing firms within the industry in my area.
In a monopolistic competitive market profit is important. When a firm first enters a monopolistic market they can act like a monopoly until others join in the market which will lead to competition for lower prices. Kudler Fine Foods will compete with other fine foods for lowest prices on their goods; however, they have to make a profit in order to stay in business. In the short-run Kudler will have more profit, but in the long-run the profit will decrease to other competitors in the
Macroeconomics (8th ed.). Boston, MA: McGraw Hill/Irwin). Consumption is spending by households this is where the purchasing of groceries comes in. When food is purchased it is easy to recognize that it impacts the economy, the government imposes taxes on import and the sale of groceries this helps to increase the Federal treasury. It also affects the government in determining other commodities and where they should be sold.
Bloomingdales is a higher end store that sells high quality products at a high price. They are currently losing many customers because the economy will not move out of the stagnation period. Right now the customers need to be saving their money in case they need it later to pay bills rather than spending it on clothing. Many consumers are starting to shop at stores like Macy’s or Kohl’s where they are offered almost the same quality products at lower prices. Some of Bloomingdales biggest competitors are Neiman Marcus, Saks Fifth Avenue, Bergdorf Goodman, Barneys New York, Lord & Taylor and Nordstrom.
Porter’s Five Forces Buyer Power In the dairy market, buyer power is estimated to be a strong force. In fact, players like Saputo can only sell to a small number of larger buyers since the main distribution channels for this industry are dominated by supermarkets which accounts for roughly 75% of the total market value. (1) Furthermore, staple foods like milk and butter are undifferentiated products, which makes it easy for buyers to switch to one of Saputo’s competitor. This is enhanced with the fact that the dairy market is highly price sensitive. Luckily, this aspect is mitigated by the fact that Saputo also offers other products such as specialty cheeses, which are more differentiated.
However problems could quickly occur if the budget is not controlled and monitored effectively. Poor cash flow is extremely likely to bring the outcome in Debenhams not been able to shelter costs which may lead to bankruptcy; in a circumstance where a business has a poor cash flow produced by more outflows than inflows. In a case of poor cash flow due to poor budgeting, the business would have to lease the products and gather unresolved payments in order for the cash flow to recover. I would suggest for Debenhams to make better use of its premises. For example other stores have restaurants or cafes maybe they could add one to theirs to attract more customers and make more money.
Essay Plan Introduction: How shopping has become a major part of our lives Introducing the concept of the zero sum game What a consumer society implies Main Body: What makes the supermarkets powerful How do the supermarket dominate the high street What does zero sum game mean Conclusion: The negative impact of the big chains on family run shops Outline the argument that supermarket power is a zero-sum game. INTRODUCTION : Shopping has become a major part of our lives, from buying our essentials to becoming one of our favourite pastimes where we are buying more than what we need. We are now part of a consumer society. In our high streets, you are more likely to see big chain shops than small independent businesses like fishmongers, fruit and veg shops and local butchers. Consumers are having their choices restricted as these chains grow and branch out to retail parks.
A growth company tends to have very profitable reinvestment opportunities for its own retained earnings. Economic growth will affect Etisalat as it would increase their profits due to more people wanting more products and wanting to spend their money. As people have more money to spend on luxuries instead of the essentials it means that the higher value products will be brought. For example the Andrex toilet rolls will be brought instead of Etisalat value, because of this it means more money is being spent in the store which is an advantage for Etisalat. Recession occurs when people involved in business become more cautious and: * Customers cut back on spending, and start to save more * Manufactures and sellers cut back on their orders, produce fewer goods and start to cut back costs in general, including by laying off workers.
Essay 3 When businesses find ways to internalize externalities they can make more money. Discuss why shopping malls charge a low price per square meter to department stores like Galeria Kaufhof, a medium price to stores like H& M, and a high price per square meter to jewelry stores and food vendors. “Externalities are the costs or benefits that affect people who are not directly involved in the production or consumption of a good or a service.” 1Thus, externalities are not limited to the parties participating in the market i.e. to producers and consumers but also affect other people in the society. Externalities cause deadweight loss which can lead to market failure.
A market is where producers (like Tesco) and consumers (the customers) trade, e.g. goods are traded fort the consumers money. The market which Tesco fits into is the food and & grocery supermarket market, this market is very competitive as there are many large firms which rival it, these include; • Sainsbury’s • Morrison’s • Asda • Iceland • And Waitrose However despite there being many companies in a market, this is not an assurance that it will be particularly competitive, this is because the degree of competition is mainly based on market share, this is the % of the total unit or revenue produced by one company in a market, so it is possible for there to be 5 companies each owning 20% of the market, with each of the companies owning very similar (and therefore competitive percentages) this would be a lot more competitive then 20 or more companies all owning small percentages. The current market shares in the supermarket industry are; 1. Tesco: 30.6% 2.