Task 1: explain how market structures would determine the pricing and output decisions of twinnings. Market structure: The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market. There are some determents of market structure which are The level of entry and exit barriers
Identity of products
Control of prices
Anonymous A (2012)
Perfect competition: if a market structure has these points described its perfect competition: Free entry and exit to market
Number of buyers and sellers
Information about seller and buyers.
In this type of strategy the twinning’s have to watch the competitors. If they reduce or increase their prices then twinning’s also have to do same like others. Duopoly: in this type of marketing structure the industry is dominated by two firms like the apple and Microsoft. In this case the twinning’s has to compete with their competitor. If the other one reduce the price this organisation have to reduce price. If its looking the brands then it have to give good quality and interest some more money to the brand to give it good name so other one not compete with it. Monopoly: A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. Monopoly is characterized by an absence of competition, which often results in high prices and inferior products. In this strategy there is only twinning’s in the market so they have to produce the good brand so the any other competitor not to be competing with it. Oligopoly: An oligopoly is a market form in which a market or industry is dominated by a small number of sellers. Because there is small number of sellers so its competitors are not too much in the market but some competitors they are too strong to compete with them. Market structures are determining the pricing for the twinnings. By selecting the Oligopoly strategy it would determine the pricing of twinnings. Because the twinning made by different small companies. Its branding is high and it can compete with others like pg tips and Tetley. To measure the pricing by oligopoly there is a concentration ratio which means the proportion of market share accounted for by X numbers of twinning’s. There are four major theories about oligopoly pricing:
(1) Oligopoly firms collaborate to charge the monopoly price and get monopoly profits (2) Oligopoly firms compete on price so that price and profits will be the same as a competitive industry (3) Oligopoly price and profits will be between the monopoly and competitive ends of the scale (4) Oligopoly prices and profits are "indeterminate" because of the difficulties in modeling interdependent price and output decisions. Anonymous B (2012)
When one firm has a dominant position in the market the oligopoly may experience price leadership. The firms with lower market shares may simply follow the pricing changes prompted by the dominant firms. By the oligopoly marketing strategy the twinning’s can determine the outputs. The outputs of twinnings are to get some good profit from their organization. In this strategy there are a small number of sellers so it is easy for them to put some work on their organization to improve the outputs. If they give the small price then everyone going towards the twinning’s brand, it gives the good output. Most of sellers and buyers in the market know about product. In most cases they tell to other sellers about their product and pricing.
Task 2: Draw a porter five forces diagram for twinnings.
Michael E. Porter (1980)
Task 3: Discuss how the cultural environment shapes Twinning’s selling behavior. The business culture of UK is one in which it is necessary for organizations to formulate...
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Anonymous B. (2012). Perfect competition. Available: http://www.tutor2u.net/economics/content/topics/competition/competition.htm. Last accessed 20th Nov 2012.
Michael E. Porter (1980). Competitive strategy: techniques for analyzing industries and competitors. Free press. 6-35.
Anonymous D. (2012). Twinning 's behavior. Available: http://twinings.co.uk/benefit-blend-infusions. Last accessed 21st Nov 2012.
Anonymous E. (2010). International trade. Available: http://www.economywatch.com/international-trade/benefit.html. Last accessed 22nd Nov 2012.
Justin Paul (2008) Business environment. 2nd ed. London: oxford university press.
BBC (2012). UK coffee culture. Available: http://www.bbc.co.uk/news/uk-wales-mid-wales-19982128. Last accessed 3rd May 2013.
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