Examining Business Markets
In this part of my report, I am going to evaluate how my business will respond to changes in the
market for example if price and demand changes and how the business will react to any future
changes.
To begin with, I'm going to talk about the type of market in which my company operates because the
market structure defines the amount of power and competition that my company faces in the
market.
Sainsbury operates in an oligopoly market which is a market dominated by small groups of large
businesses that sells identical or differentiated product. One feature of an oligopoly market will be
that each business will be affected by how other businesses set prices and make business
decisions. Sainsbury comes under this one as they are a large firm operating within the top 3 retail
market that contain a small amount of large market leaders dominating the market like Tesco and
Asda.
Current Changes
One change Sainsbury has responded to in the market will be the arrival of Covid-19, which is an
infectious disease that is now a global pandemic. This can affect Sainsbury as it limits their trades of goods
as employees and stakeholders are force into quarantine by the government to isolate and prevent the
spread of the virus, the government has also implemented strict regulations like the 2 meters rules that limit
the interaction of customers in stores. This outcome can affect Sainsbury as it limits the number of
customers in branches which can decrease profit.D.D3. However, an advantage of this is that it encourages
Sainsbury to close branches and operate online as they can better target and attract more customers, by
them doing this they can decrease the outflow of cash that would have been spent on corporation tax,
recruitment and employees for operating those closed branches. They can charge customers extra through
online payments methods which can increase profit.D.D3
Another change Sainsbury has responded to in the market will be automation which refers to the use of
technology to execute recurring tasks or processes in a business which were manual. For example, cashier
being replaced by self-checkout tills. This can affect Sainsbury as an increase in automation will decrease
the outflow of cash spent on employing a large workforce as only a few employees will be needed to
oversee their technology.D.D3 This outcome can increase Sainsbury capital usage as they can reduce
funding into recruiting, therefore providing them with additional capital to fund future plans to overtake
Tesco in the market, and with market dominance come financial benefits as they can sell their goods and
services for higher price that will further increase their profit and reputation.D.D3. Despite that, the arrival of
technology presents new problems that will begin to occur, such as equipment issues which can be highly
expensive for Sainsbury to resolve as it greatly impact the outflow of cash. The increase in automation will
also decrease human contact with staffs and customers, therefore preventing customer loyalty from being
formed which can provide recurring customers for Sainsbury, and free promotion by them recommending
the business to others.D.D3
In this part of my report, I am going to evaluate how my business will respond to changes in the
market for example if price and demand changes and how the business will react to any future
changes.
To begin with, I'm going to talk about the type of market in which my company operates because the
market structure defines the amount of power and competition that my company faces in the
market.
Sainsbury operates in an oligopoly market which is a market dominated by small groups of large
businesses that sells identical or differentiated product. One feature of an oligopoly market will be
that each business will be affected by how other businesses set prices and make business
decisions. Sainsbury comes under this one as they are a large firm operating within the top 3 retail
market that contain a small amount of large market leaders dominating the market like Tesco and
Asda.
Current Changes
One change Sainsbury has responded to in the market will be the arrival of Covid-19, which is an
infectious disease that is now a global pandemic. This can affect Sainsbury as it limits their trades of goods
as employees and stakeholders are force into quarantine by the government to isolate and prevent the
spread of the virus, the government has also implemented strict regulations like the 2 meters rules that limit
the interaction of customers in stores. This outcome can affect Sainsbury as it limits the number of
customers in branches which can decrease profit.D.D3. However, an advantage of this is that it encourages
Sainsbury to close branches and operate online as they can better target and attract more customers, by
them doing this they can decrease the outflow of cash that would have been spent on corporation tax,
recruitment and employees for operating those closed branches. They can charge customers extra through
online payments methods which can increase profit.D.D3
Another change Sainsbury has responded to in the market will be automation which refers to the use of
technology to execute recurring tasks or processes in a business which were manual. For example, cashier
being replaced by self-checkout tills. This can affect Sainsbury as an increase in automation will decrease
the outflow of cash spent on employing a large workforce as only a few employees will be needed to
oversee their technology.D.D3 This outcome can increase Sainsbury capital usage as they can reduce
funding into recruiting, therefore providing them with additional capital to fund future plans to overtake
Tesco in the market, and with market dominance come financial benefits as they can sell their goods and
services for higher price that will further increase their profit and reputation.D.D3. Despite that, the arrival of
technology presents new problems that will begin to occur, such as equipment issues which can be highly
expensive for Sainsbury to resolve as it greatly impact the outflow of cash. The increase in automation will
also decrease human contact with staffs and customers, therefore preventing customer loyalty from being
formed which can provide recurring customers for Sainsbury, and free promotion by them recommending
the business to others.D.D3
