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The Economic Environment of Business questions - Essay Example

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The Economic Environment of Business questions

In short, it can be concluded that Aldi’s share would increase substantially after opening of new stores in different areas across Britain.    (Hawkes, 2008)
The word downturn refers to a slump in sales due to economic recession and meltdown that because unemployment increases and consumption decreases. The business organisations observe negative growth in their businesses since customers are inclined to make purchases of necessities and are reluctant to make purchases of luxuries and other items with higher price elasticity.
Supermarket Industry is an oligopolistic industry since there are few businesses (large scale producers and retailers) that dominate the market and reap benefits. These businesses may set industry total output and prices of their products. Moreover, they have mammoth financial resources because of revenue they generate from their several in-town and out-of-town supermarkets. They also attract a large pool of customers compared to what a small retail shop attracts. It is worthwhile to mention that retailers face stiff competition with their rivals so that each could attract maximum customers.
Tesco is one of the leading retailers in UK’s supermarket industry that enjoys a market share of over 28%. Since, it has the potential of offering more than 40,000 products from its organised chain of retail outlets all across Britain; it enjoys monopoly like situation in many instances. Tesco offers various products that attract more buyers than any other retailers including Aldi and Sainsbury. It must not be forgotten that Tesco faces stiff competition from other retailers; therefore, it may not restrict or control production / supply of every product as well as set higher prices to reap abnormal profits. Instead, Tesco may take advantage from products that are not offered by any other retailer and therefore customers are dependent over it to make their purchases. (Hawkes, 2008)
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Aldi’s management has an ability to offer its various high quality products at below average industry prices since they pay special attention to cut down their costs by employing…
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The Economic Environment of Business questions essay example
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