Tesco Economic Analysis

Description

5 attachmentsSlide 1 of 5attachment_1attachment_1attachment_2attachment_2attachment_3attachment_3attachment_4attachment_4attachment_5attachment_5.slider-slide > img { width: 100%; display: block; }
.slider-slide > img:focus { margin: auto; }

Unformatted Attachment Preview

Management Coursework Specification
Module Title: Managerial Economics
Contribution to Final Mark for Module: 100%
Requirements:
Prepare a report undertaking an economic analysis of an organisation of your choice, its markets and the wider macroeconomic context using
evidence drawn from company reports, market reports, market data and academic journal articles, etc.
The report should include:
i) a description of the organisation’s basic characteristics;
Describe the firm’s main product(s) / lines of business and the internal organisational structure of the firm (e.g. U-form, M-form etc.).
Outline and explore the production and cost concepts affecting managerial decisions: economies of scale, relation between fixed and variable
costs; the state of technology in the
sector in which the firm operates and the degree of technological uncertainty involved.
ii) an analysis of the markets and economic environment in which it operates;
Analyse the markets within which the firm operates (market structure as implied by number of competitors, market concentration, entry
barriers and extent of product
differentiation; degree of innovation; availability of substitutes and nature of complementary products and markets). Use information on
relevant elasticities and / or demonstrate
how such information, if available, could be used to inform managerial decisions.
Assess the economic environment in which your chosen firm operates (domestic / international / global; macroeconomic conditions;
international trade conditions, exchange rate
volatility; institutional and regulatory environment, (effect of) government policies).
iii) an assessment of the firm’srecent and likely future performance;
Relative to a key competitor in the firm’s main sector, assess the firm’s performance over the previous 5+ years, including in relation to
profitability; market share; and innovation
(introduction of new products / processes and creation of new markets).
Outline the firm’s recent strategy and, based on all the data above and your preceding analysis, assess its likely performance prospects over
the next 5 years.
Note that your mark will depend primarily on the extent to which your report demonstrates knowledge and understanding of the economic
concepts
developed in the module and your ability to apply these in analysing your chosen organisation; the selection and use of data is also important.
Assessment Criteria:
Please note that the descriptors below are guidelines and should not be taken to correlate to precise percentages; they are indicative of a
level of
performance across the key criteria upon which the coursework is assessed.
Assessment
criterion
Hard Fail (0-39)
Soft Fail (40-49)
Pass (50-59)
Merit (60-69)
Distinction (70-79)
Distinction (80+)
Structure and focus
Minimal or no structure,
with little or no focus/logic
to selection and sequencing
of material.
Rudimentary structure,
albeit with limited and/or
confused focus/logic to
selection and sequencing of
material.
Solid, mostly coherent
structure, with broadly
consistent focus/logic to
selection and sequencing of
material.
Clear, fully coherent
structure, with consistent
focus/logic to selection and
sequencing of material.
Very clear, highly coherent
structure, with fully
consistent focus/logic to
selection and sequencing of
material.
Superbly clear, highly
coherent structure, with
exceptionally consistent
focus/logic to selection and
sequencing of material.
Knowledge and
understanding
Little/no knowledge/
understanding evident in
relation to key economics
concepts.
Limited but partial
knowledge/ understanding
evident in relation to key
economics concepts.
Broadly satisfactory
knowledge/ understanding
evident in relation to key
economics concepts.
High level of knowledge/
understanding evident in
relation to key economics
concepts.
Very high level of
knowledge/ understanding
in relation to key economics
concepts.
A fully comprehensive and
deep knowledge
/understanding of key
concepts, with some
evidence of advanced
material/ideas.
Application and research
Little or no application of
economic theory in the
specific business and market
context.
Some, albeit poor
application of economic
theory in the specific
business and market
context.
Adequate application of
economic theory in the
specific business and market
context
Good application of
economic theory in the
specific business and market
context.
Excellent application of
economic theory in the
specific business and market
context.
Outstanding application of
economic theory in the
specific business and market
context.
Solid engagement with
relevant literature in an
occasionally analytical
manner.
Draws upon a range of
relevant literature in a
mostly analytical manner.
Draws upon a wide range of
relevant literature in a
sustained analytical manner.
Good presentation and
analysis of relevant data
from a wide range of sources
to inform discussion and
support arguments made.
Skilful presentation and
analysis of relevant data
from a wide range of sources
to inform discussion and
support arguments made.
Draws upon an extensive
range of relevant literature
in a sustained and
authoritative analytical
manner.
Extremely limited/no
engagement with relevant
literature.
Little/no presentation and
analysis of relevant data to
inform discussion and
support arguments made.
Limited but superficial
and/or descriptive
engagement with relevant
literature.
Limited presentation and
analysis of relevant data to
inform discussion and
support arguments made.
Satisfactory presentation
and analysis of relevant data
from a limited range of
sources to inform discussion
and support arguments
made.
Sophisticated presentation
and analysis of relevant data
from an extensive range of
sources to inform discussion
and support arguments
made.
Presentation and style
Poor presentation with many
errors in syntax and
spelling. Little or no
signposting and poor/no
linkages/flow.
Lack of
appropriate
referencing
and/or inaccurate use of the
Harvard
system
of
referencing.
Minimally acceptable
presentation with a number
of errors in syntax and
spelling. Limited signposting
and weak linkages/flow.
Incomplete referencing
and/or sometimes
inaccurate use of the
Harvard system of
referencing
Solid presentation with
satisfactory syntax and
spelling. Reasonable use of
signposting and mostly clear
linkages/flow. Mostly
complete referencing and
largely accurate use of the
Harvard system of
referencing.
Good presentation with
good syntax and spelling.
Good use of signposting and
clear linkages/flow.
Complete referencing and
mostly accurate use of the
Harvard system of
referencing.
Excellent presentation with
good syntax and spelling,
with very clear signposting
and linkages/flow. Complete
referencing and sustained
accuracy in use of the
Harvard system of
referencing.
Superb, professional level of
presentation. Skilful use of
signposting and exemplary
linkages/flow. Complete
referencing and absolute
accuracy in use of the
Harvard system of
referencing.
Referencing:
You must reference your work correctly using the Harvard method. Failure to do so will result in the deduction of marks and possible proceedings under
the University’s Regulations as to the Use of Unfair Means.
Independence of working:
You are reminded of the University’s Regulations on the Use of Unfair Means and academic integrity which are outlined in the School’s Handbooks. If
there is a suspicion that your work is not your own and that you have used unfair means or there is suspicion of a breach of academic integrity in writing
this assessment then you may be referred to our unfair means officers to consider your work. Therefore, you are advised to ensure that you undertake
the relevant guidance on the module site or programme level sites that you have access too. If you cannot access these, please contact the Student
Experience Office.
Other Submission Details:
Formatting: The size of the fonts should be 12, with 1.5 line spacing and clear space between paragraphs and sections.
MGT6128:
Managerial Economics
2021-22
Don Webber
d.j.webber@sheffield.ac.uk
Welcome
Module Leader / Lecturer
• Prof Anthony Glass
• a.j.glass@sheffield.ac.uk
Lecturer
• Prof Don Webber
• d.j.webber@sheffield.ac.uk
Module schedule
Lecture
number
Topic
Book
chapter
1
Working of competitive markets
2
2
Consumers and demand
3
Y
3
Supply decisions in perfect competition
4
Y
4
Pricing and output in imperfect competition
5
Y
5
Business growth and strategy
6
Y
6
Regulation and policy
9
Y
7
Macro environment
10
8
Macro environment
11
9
Trade
12
10
MNCs
7
Workshop Tutorial
Y
Y
Y
Essential reading:
Sloman, J. and Jones, E. (2020) Essential Economics for Business (6th edition), Pearson
Background
• Key determinant of a business’s profitability is the price of its
products
• Should a business
– cut prices or raise prices, and how will this affect sales?
• What would a business’s competitors do? Does it matter whether
the business has many, few, or no close competitors?
• Do firms have perfect control over their own prices, or are their
prices determined by the market (e.g. auction / high street /
Internet / …)?
1. The Working of
Competitive Markets
In this lecture we will:
• Explore how perfectly competitive markets operate
• Investigate the determination of market prices
• Explore when firms are price takers
• Consider when consumer demand is responsive to
market prices
• Examine how a firm’s sales revenue is affected by a
change in price
The perfectly competitive market
• In a free market, individuals can make their own economic decisions
– Consumers are free to decide what to buy (demand)
– Firms are free to choose what to sell, and free to decide what production
methods to use (supply)
• In a perfectly competitive market, the numbers of consumers and
producers are so high that no one can control prices – everyone is a
price taker
• For many small firms, prices are determined not by them, but by the
market instead. This is through the interaction of demand and supply.
So, prices have risen, perhaps even doubled, as a
drinker of coffee, what would you do?
• Drink more
• Drink less
• Drink the same amount
Demand
Law of demand
• This is an illustration of the general relationship between price
and consumption:
when the price of a good rises,
the quantity demanded will fall
• which is due to two effects:
– Income effect
• People are not able to afford to buy as much of the good with their money.
The purchasing power of their income has fallen.
– Substitution effect
• The good may now be more expensive than other goods. People switch to
alternative (‘substitute’) goods.
As a drinker of coffee, what would you do?
• Drink more
• Drink less
• Drink the same amount
Price (pence per cup of coffee)
Demand curve
A
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Demand curve
B
A
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Demand curve
B
A
C
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Demand curve
Demand curves can correspond to individual
consumers or the total for all consumers
B
A
C
Demand
Quantity (number of cups of coffee per week)
What are the determinants of demand?
• Price (as we have seen above)
• What else affects your decision to purchase something?
Determinants of demand
• Tastes (the more desirable someone finds it, then the more
they will demand it) are affected by:
– Previous experiences
– Observing what others buy (e.g. friends, family, social media
influencers)
– Considerations for health (your own, and others perhaps)
– Advertising
– Fashion
– Can you think of examples?
Determinants of demand
• Substitute goods (i.e. competitors; number of and price)
– Higher price substitutes increase demand for the good, as people
switch away from substitutes
– Can you think of examples?
Determinants of demand
• Complementary goods (i.e. goods consumed together;
number of and price)
– Higher price complements reduce demand for the good, as people
switch away to substitutes
– Can you think of examples?
Determinants of demand
• Income
– As a person’s income increases, their demand for most goods will rise
• These are referred to as normal goods
– As a person’s income increases, their demand for some goods will not rise
• These are referred to as inferior goods
Determinants of demand
• Expectations:
– Of future price and/or quantity increases / decreases
– Of future income increases / decreases
– Can you think of examples?
Movements along and shifts
in the demand curve
Movements along and shifts in the demand curve
The demand curve is constructed on the assumption that ‘other things
remain equal’ (ceteris paribus, i.e. that none of the other determinants of
demand change)
• The effect of a change in price is illustrated as a movement ‘along’
the demand curve
• When one of the other determinants of demand change, then the
demand curve ‘shifts’ to the right/left
Price (pence per cup of coffee)
Movements along a demand curve
show how demand responds to price
B
pB
A
pA
C
pC
Demand
qB
qA
qC
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Shifts in a demand curve show how demand
responds to non-price determinants
A
pA
B
D2
D1
qA
qB
Quantity (number of cups of coffee per week)
Supply
Supply relationship
• The higher the price of a product, then the more a firm would be willing to
supply that product. So, in general:
when the price of a good rises,
the quantity supplied will also rise
• Note that at higher quantities of supply, the costs of supplying the good are
also likely to rise, so it is only worth producing more output if the price of the
good also increases.
• In general, the higher the price of a product, then the more profitable it would
be to supply that good to the market.
• E.g. a farmer will devote more of their land to the production of a particular
type of crop when the price of that crop increases.
Price (pence per cup of coffee)
A supply curve
Supply
A supply curve could relate to an individual
firm or an entire market
B
pB
A
pA
pC
C
qC
qA
qB
Quantity (number of cups of coffee per week)
Determinants of supply
• Price (as we have seen above)
• What else affects your decision to supply something to the
market?
Determinants of supply
• Costs of production
– When costs increase, there are less profits to be made at that price.
• Costs could change as a result of changing input prices, changes in
technology, organisational changes within the firm, changes in
taxation, etc.
– As costs rise, firms often cut back on production, perhaps switching to
produce an alternative good whose costs have not risen by as much.
Determinants of supply
• Profitability of substitute products
– Many firms produce a range of products, and they may shift
production (and hence output levels) from one product to another
product in response to changing circumstances.
• E.g. if the price of carrots go up or the cost of producing carrots go
down, farmers may switch to producing carrots and away from
growing, say, parsnips.
Determinants of supply
• Profitability of goods in joint supply
– E.g. cheese production creates the by-product of whey, which is a
primary ingredient of many protein powders (often sold as a product
to enhance the growth or maintenance of muscle mass)
Determinants of supply
• Random shocks
– Nature / unpredictable events
– Weather
– Industrial disputes
–…
Determinants of supply
• Aims of producer
– A firm maximising profit will probably supply a different quantity of a
product than a firm maximising sales, or another aim
Determinants of supply
• Expectations of future price changes
– If prices are expected to rise, firms may temporarily reduce the
amount that they supply to the market, and instead build up stocks.
• E.g. if you are going to sell a house, and expect the price of the
house to rise in the near future, then you may delay putting it on
the market.
Price (pence per cup of coffee)
Movements along a supply curve show
how supply responds to price
Supply
A supply curve could relate to an individual
firm or an entire market
B
pB
A
pA
pC
C
qB
qA
qC
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Shifts in a supply curve show how supply
responds to non-price determinants
S1
pA
A
qA
S2
B
qB
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Shifts in a supply curve show how supply
responds to non-price determinants
S3
pA
C
A
qC
qA
S1
S2
B
qB
Quantity (number of cups of coffee per week)
Break
Price and output determination
The interaction of demand and supply (in a free and
competitive market) determine the price of a product
and the quantity bought and sold
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
Equilibrium
point
A
pA
Demand
qA
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
Surplus
B
C
pHigh
A
pA
Demand
qB
qC
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
Surplus
B
C
pHigh
A
pA
Demand
qB
qC
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
A
pA
pLow
D
E
Demand
Shortage
qD
qE
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
A
pA
pLow
D
E
Demand
Shortage
qD
qE
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
Surplus
B
C
pHigh
A
pA
pLow
D
E
Shortage
Demand
Quantity (number of cups of coffee per week)
What happens to the market clearing price and quantity of a good if
there is an initial increase in a non-price determinant of demand?
(e.g., an increase in incomes)
Price (pence per cup of coffee)
Determination of market equilibrium
S
A
p1
B
D1
q1
D2
q*
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
Supply
p2
C
A
p1
B
D1
q1
q2
D2
q*
Quantity (number of cups of coffee per week)
What happens to the market clearing price and quantity of
a good if there is an initial decrease in a non-price
determinant of supply?
(e.g., there is an increase in the profitability of
producing a substitute good)
Price (pence per cup of coffee)
Determination of market equilibrium
S2
p1
B
S1
A
D1
q*
q1
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Determination of market equilibrium
S2
S1
C
p2
p1
A
B
D1
q*
q2
q1
Quantity (number of cups of coffee per week)
Price elasticity of demand (P?D)
• When the price of a good rises, the demand for the good will fall
• But by **how much** will it fall?
• How **responsive** is demand to a rise or fall in price?
• The responsiveness of demand to a change in price is called the
price elasticity of demand
• If we know the P?D for a product, we can predict the effect on
price and quantity when the supply curve for that product shifts
Price (pence per cup of coffee)
If there is a shift in supply, then how will
demand react?
S2
S1
B
p2
A
p1
D1
q2
q1
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
If there is a shift in supply, then how will
demand react?
S2
S1
B
p2
p3
C
A
p1
D2
D1
q3
q2
q1
Quantity (number of cups of coffee per week)
Proportional (or percentage) change
in quantity demanded
P?D =
Proportional (or percentage) change
in price
P?D = –10% / +20% = –0.5
Unit elasticity
-2
-1
Inelastic
Elastic
P?D = %?QD
%?P
• P?D = –10% / +20% = –0.5
• P?D = –10% / +10% = –1
• P?D = –20% / +10% = –2
0
Price (pence per cup of coffee)
Why is P?D important?
S2
4
S1
A
20
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Why is P?D important?
S2
S1
B
C
4
A
D2
D1
20
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Why is P?D important?
Revenue at A = £4 * 20 = £80
Revenue at B = £8 * 15 = £120
P?D = –25% / +100% = –0.25
8
B
5
C
Revenue at C = £5 * 10 = £50
P?D = –50% / +25% = –2
A
4
D2
D1
10
15 20
Quantity (number of cups of coffee per week)
Price (pence per cup of coffee)
Why is P?D important?
Revenue at A = £4 * 20 = £80
Revenue at B = £8 * 15 = £120
P?D = –25% / +100% = –0.25
8
B
5
C
Revenue at C = £5 * 10 = £50
P?D = –50% / +25% = –2
A
4
D2
D1
10
15 20
Quantity (number of cups of coffee per week)
Other elasticities
Income ?D =
Cross-price ?D =
Price ?Supply =
Proportional (or percentage) change
in quantity demanded
Proportional (or percentage) change
in income
Proportional (or percentage) change
in quantity demanded for good A
Proportional (or percentage) change
in price of good B
Proportional (or percentage) change
in quantity supplied
Proportional (or percentage) change
in price
Luxury (elastic)
vs.
Necessity (inelastic)
Substitutes
(+ve)
Complements
(-ve)
Spare capacity
and costs
Other elasticities
Income ?D =
Cross-price ?D =
Price ?Supply =
Proportional (or percentage) change
in quantity demanded
Proportional (or percentage) change
in income
Proportional (or percentage) change
in quantity demanded for good A
Proportional (or percentage) change
in price of good B
Proportional (or percentage) change
in quantity supplied
Proportional (or percentage) change
in price
Luxury (elastic)
vs.
Necessity (inelastic)
Substitutes
(+ve)
Complements
(-ve)
Spare capacity
and costs
In this lecture we:
• Considered how perfectly competitive markets operate
• Examined the determination of market prices
• Explored when firms are price takers
• Questioned when consumer demand is responsive to market prices
• Investigated how a firm’s sales revenue is affected by a change in
price
Next time…
Consumers and demand

Purchase answer to see full
attachment

Explanation & Answer:
2800 words

Tags:
economics

market

tesco

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.