Table of Contents
EXECUTIVE SUMMARY 3
The perfect competition 4
The supermarkets are oligopoly 6
Anti-competitive behaviour 8
British farming 9
The supermarkets relationship with farmers make an oligopsony 10
Regulatory bodies and the competition commission 12
Understanding the relations between the UK and theEuropean Union 14
Importance of the international trade and global market 14
The UK farmers and the international trade 15
The common agricultural policy (CAP): 15
The European social policy 16
Economic implication enter to the EMU 16
Bibliography 21EXECUTIVE SUMMARY
The aim of this report is to apply to a real situation the concepts learned in business environment lessons.
This report is mainly focus in the British farming, its current situation and the micro and macro factors that have affected this industry in the recent years. This report is divided into two stages; thefirst one introduced the model of the perfect competition and analysed how the relationship between UK farmers and Big branch supermarkets vary from it, also in this stage how organisation respond to a determinate number of market forces, finally in this stage the role of regulatory bodies and the competition commission will be explained and analyzed.
The second stage of this report reflects therelationship between the UK and the EMU, British faming in mention in relation with two European policies; the CAP common agricultural policy and the European social policy and the end of this report is also analyse and list the economic implication for the UK to entry into the EMU.
The sources used to write this report are mainly found in the internet and books in the library. Newspapers WebPagessuch as BBC, the Guardian, the Independent and the farmers guardian were the most useful tools to find the current situation of the British farming, its economic problems the past and the forecast of this industry as well as the regulations that it follow and the influence of the European Union.
The Behaviour of Organisation and the Market Environment
The perfect competitionA market structure in which the following five criteria are met:
1. All firms sell an identical product.
2. All firms are price takers.
3. All firms have a relatively small market share
4. Buyers know the nature of the product being sold and the prices
charged by each firm.
5. The industry is characterized by freedom of entry and exit.
The model of perfect competition willbe a useful theory as a point of reference to compare and contrast imperfectly competitive markets in relation with British farmers and the supermarkets in the UK, the supermarkets which mainly will be listed in this study are known as the UK's big four - Tesco, Asda, Sainsbury's and Morrisons which hold almost three-quarters (74.4%) of the grocery market in 2006 according to an article called“supermarket competition concerns” published in the BBC.
The perfect competition model occurs when no one of the participants owns the market power, the perfect competition is unlikely to work in real life because the conditions to fill up this model are strict and the real market in more likely to be an imperfect competition because:
* Some suppliers have a degree of control over market supplyTesco, Asda, Sainsbury's and Morrisons for example are big retailers of groceries and daily stuff.
* Some consumers have monopsony power against suppliers because they purchase a significant percentage of total demand
Big supermarkets have power over UK farmers
* Most markets have heterogeneous products due to product differentiation
Own brands make products price quality and...