...Discuss the main factors affecting product pricing in the UK (1000 words) Two surveys on the price-setting behaviour of UK firms published by the Bank of England in 1996 and 2008 concluded that the price, the amount of money expected, required or given for a certain level of output, was most often set as a result of market conditions. The same report however found that the second largest price differential was the objective of the specific firm surveyed, and thus product pricing in the UK can be seen to be determined primarily by the objectives of its firms, which are bounded by the differing market structures under which they operate. In the UK these dominant structures are monopolistic, oligopolistic and perfectly competitive, within which there are differing degrees of price setting ability and inter-firm competition, both of which influence the individual objectives the firms choose to pursue. As witnessed in recent years with the impact of the global recession however, all markets are vulnerable to external shocks to their product pricing. The classical theory of the firm assumes that they will pursue the objective of profit maximisation. As Milton Friedman put it in his 1970 article, ‘‘There is one and only one social responsibility of business - to use its resources in activities designed to increase its profits so long as it... engages in open and free competition without deception or fraud’1. Within a profit-maximising objective, the price charged will still be...
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..."Discuss the main factors affecting product pricing in the UK". • Product and price: one of the 7 ps • Pricing of a product is extremely crucial for a business because “the price of your product can either break or make your business”[i] • Examples of any 2 companies where pricing has helped in it’s success and other where it has caused a major downfall: Wal-Mart have gained and retained leadership position in its industrysimply because of their unique pricing strategy. They devised a unique pricing strategy that set them apart and gave them competitive edge.[ii] • There are several factors that need to be taken under consideration before deciding your product pricing strategy. • Intensity of competition/ type of market structure. The 3 main market structures in UK. Perfect competition, monopoly, oligopoly. Selling a product with a high profit margin would obviously be any entreneurs’ wish. However this will not be possible in perfect competition but will only work in a monopolistic market. Thus while determining it’s product pricing strategy one of the major factors is the level of competition. For example if a rival firm sells the same product at a lower price then this could have an adverse effect on your sales. The greater the number of close substitutes, the more flexible one’s product pricing strategy will have to be(details. Example. Graph). It is often assumed that setting lowest prices for your product as compared to your rivals is the...
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...Discuss factors affecting product pricing in the UK. Product pricing in the UK is dependent on several factors. Market structures such as monopoly and oligopoly play a major part in setting price. Market structures can then influence the objectives and behavior within a firm (Sloman & Wride, 2009). This can lead to the use of different pricing strategies, thus having varied effects on the level of price set. Traditional theory suggests that a firms’ main objective is profit maximization. Therefore, prices will be set in line to meet this objective. A monopoly is defined as one dominant firm in the industry. In theory, a monopoly will have inelastic demand due to no available substitutes. Therefore the firm will be a “price maker”. They can use their market power to control price and raise it to a level where price is greater than marginal cost (Sloman & Wride, 2009). Average cost Marginal cost Average revenue Marginal revenue Output Price 0 Q1 P1 Average cost Marginal cost Average revenue Marginal revenue Output Price 0 Q1 P1 Source: Adapted from Sloman & Wride, 2009. Fig.1. Diagram shows that a profit maximizing monopoly has the ability to profit maximize where marginal cost equals marginal revenue, and will therefore produce at output (Q1). Hence they will charge price (P1) that consumers are willing and able to pay for Q1. At price P1, the monopolist is making excess profit (highlighted). In perfect competition firms...
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...Discuss the main factors affecting product pricing in the UK? The Oxford English dictionary defines price as “ a value that will purchase a definite quantity, weight, or other measure of a good or service”. Simply put, the price of an object represents the overall demand for that product at a specific time. However, every firm had a different ideology about price and they way they set price. One of these main factors that affect price is the actual objective of the firm. Traditional theory suggests that firms will charge a profit-maximizing price where price is determined when marginal cost equals marginal revenue. They operate to seek a maximum return on the investment and costs they have input. The diagram below shows how firms produce at the profit maximisation point (MC=MR) and what costs they incur (point C). It also shows that most firms that follow a profit maximizing strategy incur a profit (price is greater than cost) . Figure 1 From Wikipedia.org Figure 1 From Wikipedia.org Although profit maximization looks like the most viable business objective that a firm can adopt, the majority of firms tend not to follow it. Research done by economist Shipley in 1981 states that “of 728 firms studied only 15.9% are true profit maximizers” (Sloman, Wride (2009). Economics. 7th ed. London: Pearson Education. p7.). Baumol in 1959 and Williamson in 1963 stated that this was because managers were more focused on sales revenue since their salaries were matched with how much was...
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...3.1: Explain how market structures determine the pricing and output decisions of businesses? How market structures determine the pricing and output decisions of Ollo: Firms’ pricing and output decisions depend onbarriers to entry and the behaviour of competitors.The actions of one’s competitors can easily influence the behaviour of afirm.This is proper for an oligopolistic industry whereby firms display mutual interdependence.Ollo is an oligopolistic business with Banglalion & Qubee as their major competitors.If Ollo sets a price higher than that charged by others, the company can expect to lose a lotof sales.Moreover, there are some barriers of entry Ollo must consider before expanding theirbusiness.Barriers to entry are obstacles that deter new firms from entering a market to compete withthe existing firms. They give firms a degree of market power such that decisions can bemade by existing firms without risking their market share.The most common types of barriers to entry are as follows: 1. Availability of key resources. 2. Government restrictions & legal barriers. 3. Exclusive rights & patents. 4. Initial capital cost. We must keep in mind that, the degree of barriers of entry can determine firms ‘pricing decisions. The wireless industry requires a big sum of capital and it uses mobile data network as its main resource.Ollo had to put down a lot of money just to enter this market still they must consider thefact that their competitor Banglalion...
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...M2: Discuss the factors likely to influence current and future patterns of health in the UK D1: Evaluate the influence of government on factors that contribute to the current patterns of health and illness in the UK There are many factors that are likely to influence current and future patterns of health in the UK. I will be discussing binge drinking particularly in teenagers and obesity issues in the UK. This is because I believe that the biggest health issues affecting the UK at present are influenced by lifestyle choices. There are many current health issues within the UK that are affecting current health patterns and are likely to affect the future patterns of health. The government has introduced policies and legislations that should tackle these factors affecting health patterns. Binge drinking used to mean drinking a lot of alcohol over consecutive days, however now binge drinking refers to drinking a lot of alcohol over a short period of time whether this is to get drunk or to feel the effects of the alcohol on them. This has only more recently changed as teenagers have been seen to drink considerably more alcohol. Different Medias have shown that teenagers have been seen to binge drink more than the average adult drinks. “Media coverage has been given to news that “British teenagers are the third worst binge drinkers in Europe” Teenagers may have many reasons to drink such as issue as home, to fit in, peer pressure or even to feel a sense of thrill from the alcohol...
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...Business Environment Assignment |Qualification |Unit number - title - level | |BTEC Level 5 HND in Business |Unit 1 – Business Environment - Level 4 | |Student name |Assessor name | |Simon Varga |Susan Simei-Cunningham | | |Berlin Asong | |Internal Verifier |Alan Jeffery | |Date issued |Completion date |Submitted on | |26th January 2015 |27th March 2015 before midday | | |Assignment title |Business Environment - Shaping Your Future – A Vocational Scenario ...
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...TASK 1 1.1 Identify the purpose of different types of organization The most basic objection of any business is to undertake endeavors for the profit of the owners/stakeholders. All business activities are undertaken for the benefit of its stake holders. Business undertakings are selected by organizations based on the nature, size and purpose of the organization. A brief over view of different types of organization are as follows: Sole Proprietorship: Sole proprietorship is one individual or married couple in business alone. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate, and may enjoy greater flexibility of management, fewer legal controls, and fewer taxes. However, the business owner is personally liable for all debts incurred by the business. Partnership: Partnership comprises of 2 or more persons who mutually agree to contribute money, labor, or skills to a business. Each partner shares the profits, losses, and management of the business and each partner is personally and equally liable for debts of the partnership. Formal terms of the partnership are usually documented in the Partnership Deed. Private Limited Company: Private Limited Company is whereby shares of the company are issued to a limited number (usually within a family of friends) of individuals. These share holders are owners of the business and their liability is limited to the extent of the investment in the business. Since the...
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...Course: - Edexcel HND in Business Module: - Business Environment Assignment Prepared by: Lecturer: Mr Term: Sepember-December2012 Course Start date: September2012 (Birmingham Central Campus) Introduction: This Assignment is about Business Environment and I have to complete the flowing tasks for the purpose of the assignment: Task 1 1. Types of Business Organisations, their purposes: There are three main types of Organisation in UK A) Private sector organisations. B) Public sector organisations. C) Voluntary sector organisations. The main types of Business organisation in the Private Sector is: The Sole trader: A sole trader is a business that is owned by one person. It may have one or more employees. It is the most common form of ownership in the UK. (e.g. Window cleaning, and Plumbing, etc.). Nowadays lots of people are setting up their own businesses by creating small web-based companies working from home. The Partnership: In a partnership, partners are personally liable for the debts of the business, although partners in a limited partnership (not to be confused with a limited liability partnership) who play no part in the management of the business, may have a limit on their liability set out in the Partnership Deed.. Companies: are owned by shareholders that each contributes a stock of money into a central pool. This pool of...
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...this assessment you will have the opportunity to present evidence that shows you are able to Task No. Evidence (Page no) 1 Be able to compile marketing audits 1.1 1.2 1.3 1.4 2 3 Understand the main barriers to marketing planning Be able to formulate a marketing plan for a product or service 2.1 2.2 3.1 3.2 3.3 Review changing perspectives in marketing planning Evaluate an organization’s capability for planning its future marketing activity Examine techniques for organizational auditing and for analysing external factors that affect marketing planning Carry out organizational auditing and analysis of external factors that affect marketing planning in a given situation Assess the main barriers to marketing planning Examine how organizations may overcome barriers to marketing planning Write a marketing plan for a product or a service Explain why marketing planning is essential in the strategic planning process for an organization Examine techniques for new product development 2 (b) 1 (b) 1 (a) 1 (e) 1 (c) 1 (d) 2 (e) 2 (a) 2 (c) 1 3.4 3.5 4 Understand ethical issues in marketing 4.1 4.2 4.3 Justify recommendations for pricing policy, distribution and communication mix Explain how factors affecting the effective implementation of the marketing plan have been taken into account Explain how ethical issues influence marketing planning Analyse examples of how organizations respond to ethical issues Analyse examples of...
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...that shows you are able to Task No. 1.1 Review changing perspectives in marketing planning Evaluate an organization’s capability for planning its future marketing activity Examine techniques for organizational auditing and for analysing external factors that affect marketing planning Carry out organizational auditing and analysis of external factors that affect marketing planning in a given situation Assess the main barriers to marketing planning Examine how organizations may overcome barriers to marketing planning Write a marketing plan for a product or a service Explain why marketing planning is essential in the strategic planning process for an organization Examine techniques for new product development 2 (b) 1.2 1.3 1.4 2 3 Understand the main barriers to marketing planning Be able to formulate a marketing plan for a product or service Submitted on 2.1 2.2 3.1 3.2 3.3 Evidence (Page no) 1 (b) 1 (a) 1 (e) 1 (c) 1 (d) 2 (e) 2 (a) 2 (c) 1 3.4 3.5 4 Understand ethical issues in marketing 4.1 4.2 4.3 Justify recommendations for pricing policy, distribution and communication mix Explain how factors affecting the effective implementation of the marketing plan have been taken into account Explain how ethical issues influence marketing planning Analyse...
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...MacDonald’s Corporation History: McDonald’s Corporation is an American based world’s leading company in the fast food industry. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice. McDonald in 1948 they reorganized their business as a hamburger stand using production line principles. Ray Kroc joined the company in 1955 as a franchise. A McDonald's restaurant is operated by either a franchisee, an affiliate or the corporation itself. McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, McDonald's Corporation had annual revenues of $27.5 billion, and profits of $5.5 billion. Products: Macdonald’s primarily sells hamburgers, cheeseburgers, chicken burgers, French fries, breakfast items, soft drinks, milkshakes and deserts including ice-creams. Currently restaurant also expanded its menu to include salads, fish, wraps, smoothies and fruits in order to change the taste of the consumers. Company also serve soup in the Asian countries. The menu of the company differs according to the serving countries like prawn burger in Singapore. In Germany and western European countries MacDonald’s serve beer also. Operating countries: Macdonald’s corporation is one of the largest fast food selling company. It have 31,800 flagship restaurants serving nearly 68 million people in each day among the 119 countries worldwide. Mainly,...
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...Various Elements Of The Marketing Process Introduction [pic]This assignment will discuss and summarise key issues and elements of the Marketing process. It generates the strategy that underlies sales techniques, business communications, and developments. It is an incorporated process that can be modelled in a sequence of steps: the situation is analysed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is achieved and the results are monitored. TASK ONE • Explain the various elements of the marketing process Marketing Marketing is the social process by which individuals and organisation obtain what they need and want through creating and exchanging value with others. (Kotler & Armstrong, 2010). The marketing process of accompany typically involves identifying the viable and potential marketing opportunities in the environment, developing strategies to effective utilise the opportunities, evolving suitable marketing strategies, and supervising the implementation of these marketing efforts. (M. Patidar, 2012). Upload Your Assignment 1. Discuss and summarise key issues and element of the process Sainsbury’s which is one of the most prosperous companies in the world has been chosen for case study. There are four key elements of marketing process, environment analysis, and strategy development, the choice of the marketing mix and implementation and control. The Marketing Process Marketing process has several...
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...Values Quality of service Establishing long lasting relationships with clients by exceeding expectations. Customer loyalty will be a direct result of customer satisfaction Deliver benefits to our customers Accept personal responsibility to meet commitments; be accountable Integrity Be honest, forthright and trustworthy Use straight talk; no hidden agendas Respect ethics; law and regulation Employees/People A culture where employees are valued and growth is encouraged within the company Treat people with respect and dignity Recognise and reward accomplishment Foster teamwork and collaboration Welcome Diversity and diverse opinions Excellence Continually improving performance Achieve innovation in all we do Stress quality, productivity, growth, best practices and measurement Always strive to be the best Our Mission statement; values and culture all shape the day to day activities of the business DEAL & KENNEDY (2000) defined organisational culture as ‘the way things get done around here’ they also created a culture model based on 4 types of organisations (see appendix A.) This business seems to fall into the ‘Work hard play hard culture’. This tacit understanding is further influenced by its corporate presence – both determine the kind of employees we attract. Our ‘Work hard play hard culture’ gets results fast but can often be stressful particularly with the processes we need to follow and the already increased workload for managers resulting from...
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...continuing to evolve. Identify and explain what in today’s marketplace you consider to be the important elements in the making of quality decisions within the overall marketing planning process. Illustrate your answer with appropriate contemporary examples. Question 3 (a) Identify and briefly explain the key factors and sub-factors that influence consumer behaviour. (b) Discuss the nature and importance of reference groups in the context of consumer buying behaviour. Question 4 Identify and describe the nature of the major elements of the communications mix, and state under which conditions each would be more appropriate. Provide an example of each element. Question 5 Identify the type of information required by a marketing department before a pricing strategy can be agreed, and explain how this information can assist in the formulation of an appropriate pricing strategy. Question 6 Using specific examples by way of explanation what is meant by the following three types...
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