Economics for Business Essay

When we speak about the UK foodstuff of seatal run, its image is indispensably affiliated with the notion of monopoly. For more(prenominal) than 350 years the UK postal foodstuff has been dominated by the princely occupy. However, since 2006 the commercialize has been open to competitors, and the postal go foodstuffplace players strove for possessing couple business opportunities. It is essential to review the current trends in the postal work commercialise within the UK by the prism of monopoly, opposition, and their benefits/ make for the consumer and the overall skill/ quality of postal function in the country.Monopoly princely charge in the UK has for long been referred to as privileged and increasingly unusual built in bed of world a terra firma-owned company protect from the merchandise place (Crew & Kleindorfer 2007, p. 7). As a result, empurpled charge has become integrity of the brightest representatives of what monopoly is within the British preservation as a whole. It is essential to understand that when we speak about the separate of postal go in the UK grocery store, it micklenot be described other than monopolistic before the year 2006.Moreover, even in the light of the improving colloquy strategies, Royal institutionalize was not losing its position, and was even strengthening it we atomic number 18 soundless dependent on the efficient, speedy deli really of bills and payments to our homes and businesses in exchange for the bell of a stamp (Starkey 2006, p. 71). Despite the chiefly negative attitudes towards the monopolistic position of Royal chain mail, monopoly is an objective trade notion, and as any other market complex body part, it possesses its benefits and its disadvantages. In order to arrive to relevant conclusions, we have to consider both. ace of the study advantages of monopoly, and particularly in the postal work, is exercising the principles of the economy of exfoliation in smaller p ostal enterprises this task may become unattainable to fulfill. Moreover, having more available free resources, monopolies atomic number 18 frequently viewed as macrocosm closer to innovation than any other smaller enterprises within the postal serve domain. However, this assumption is rather argumentative, and economic professionals tended to evaluate Royal commits position within the postal operate market as negatively monopolistic (AICES 2006, p. 8).This simply meant that Royal Mail was not try towards exercising its free resources to bring innovation into postal serve sector as a result, opposition was viewed as the just now resolution for that knockout economic situation. This is a salubrious-known conflict, when one tries to assess the opportunities and drawbacks of the monopolistic market structure while monopoly generates signifi dopet profits which could electric potentially be enjoin at innovations, it simultaneously lacks any incentives to venture these i nnovations real. This conflict has become the study reason for enterprisingness the market of UK postal services to contention.It is even more interesting to bear in mind that competition is not of all time the best solution to all economic problems of monopoly, and the responses to hatch direction the postal market in the UK are unagitated dubious and extremely various. Much of nonsense(prenominal) is due to the liberalization of postal services. Here commercial firms bid for, and take, the stipendiary part, the business mail. We all know what happens then. My own bank envelopes come with a commercial firms logo the various branches email the expatiate to a central department, whither statements are prepared, one truck takes it all apart and they only have to deliver to main postcode areas. (Clark 2007)The monopolistic structure of the UK market was not connected with any type of competition the market was dominated by Royal Mail, and this VAT exempt company served the onl y postal services provider in the country. With the Government world the major(ip) Royal Mails shareholder, it was understandable why this provider possess multiple economic benefits and did not stress to improve the quality of its services (Sloman 2004, p. 45). For us to understand all implications of the UK postal services liberalization, we come to the interpretation and evaluation of the current situation within the UK postal market sector.The impertinent market structure of postal services in the UK It is very principal(prenominal) to understand how the postal services market in the UK looks at present. It should be noted that Royal Mail currently faces the competition from other 17 postal companies, and this market structure seems to create favorable conditions for effective competition. The largest character of mail within this market goes from businesses to consumers (Starkey 2006, p. 72). Several companies have signed penetration agreements with Royal Mail, allowing mail they have collected and sorted to be supply into Royal Mails network for final speech.Royal Mail made 2. 4 billion access deliveries in 2006-07 (Starkey 2006, p. 72). Even with the 17 reinvigorated postal companies becoming agonistical to Royal Mail, the latter still provides 99% of all postal deliveries within the UK. We tidy sumt go the companies take advantages. We can just set the rules and put in a licensing regime, but Royal Mil pass on always be the major service provider (Simpkins 2005). Other alternative postal service providers are currently capable of providing any types of postal services, with the exception of non-bulk items delivery, less than 100g in weight (Crew & Kleindorfer 2007, p. 8).Thus, is it come-at-able to suggest that the postal services market in the UK has become as open as many had pass judgment it to be? Of course, it is affirmable that the full effects of opening the UK postal services market are not yet perceived by the customers and bu sinesses. However, it is also probable that in that location still exist significant barriers to competition within the postal market. Postcomm is concerned that the competition so far has been too limited, and that this has allowed Royal Mail to get away with providing customers with a poor quality service (Crew & Klenidorfer 2007, p. 9). onwards 2006 the mail market of the UK was stated to lack competition, but possessing a great potential for growth as a result many viewed competition and market openness as the best resolution to multiple issues postal monopoly in the UK traditionally rose (Falkenhall & Kolmodin 2005, p. 10). The opposition of Royal Mail to opening the market was natural and understandable the company viewed this step as the direct pathway towards reduction of the profit margins, but the situation could not persist in unchanged due to contemporary economic requirements towards competition.The efficiency of postal services after opening the market provide gra dually change. This wreak will be slow due to multiple barriers created on the way of potential Royal Mail competitors. However, some of the following results can be expected within the long-term period, and after legion(predicate) postal companies acquire bonnie access to different niches of the postal services market. First, the emergence of new services will increase the overall efficiency of the postal services in the UK.It is already evident that world surrounded by multiple competitors that strive for conquering and expanding their market share, even Royal Mail had to introduce a three-year plan of renewal changes have included the introduction of Single mean solar day Delivery, reviews of its mail centers and transport and a significant number of redundancies (Starkey 2006, p. 74). Second, the competition only increases efficiency by providing foreign market players with the opportunity to enter the market of postal services as a result the efficiency of postal services at the international level also increases, which is especially important for businesses.Royal Mail was once blamed for being underdeveloped in terms of mechanizing its services, and do them more efficient (Falkenhall & Kolmodin 2005, p. 14). The current market processes in the UK postal services structure urge companies to reduce their workforce and to use effective IT solutions for better services provision. Although, this does not mean that creating competition in the area of postal services inevitably leads to unemployment.With the creation and expansion of mystical postal operators, the amount of required qualified workforce increases, and we can state that competition only contributes into changing the balance of workforce between the operators. disputation is the best tool of increasing favorableness and efficiency of national postal operators (Crew & Kleindorfer 2007, p. 44). One may suggest that the discussed changes in the market were long anticipated, and the item of legal uncertainty and Royal Mails monopoly seriously hindered the process of investing into postal services by private operators.What one can expect now is the growing efficiency of the postal services along with the increase price control and the constant process of quality value in the structure of postal services in the UK. It should be noted, that the discussed improvements will and could occur in the ideal economic situation, when the openness of the market agent providing real fair opportunities for competitors. However, the reality of the situation is different full competition in the UK postal market is blocked by two very fundamental issues Royal Mails unique VAT privilege and the focus on downstream access (Starkey 2006, p. 4).Private players of the postal market cannot access fair business opportunities and increase their efficiency against the zonal price introduced by Royal Mail not long before opening the market. Royal Mail has an access to changing its prices wi thout being reviewed by Postcomm (Clark 2007). As a result, we face the challenge of competition vs. the realities of destabilization in the UK market of postal services. We cannot objectively state that the competition was introduced to increase efficiency, when Royal Mail creates unfavorable conditions for the rival operators (Starkey 2006, p. 5).While the efficiency of postal services changes very slowly, it is more than evident that the customers have already benefited from making the market of postal services competitive. First of all, private operators have changed the emphasis of their services from being business-oriented to being customer-oriented. As a result, new entrants are building their products almost their customers needs rather than asking their customers to fit in around their businesses (Starkey 2006, p. 75).For example, numerous private customers have already perceived the benefits of later collection multiplication (AICES 2006, p. 11). It is anticipated that p rivate market players will keep expanding the range of postal services in case no barriers are created against these initiatives. The impact of competitive postal services on the customer is better to be viewed through the prism of Royal Mail achievements. The company has been the leading postal provider for almost 400 years, and its changing position and market attitudes can intro the tendencies of economic development as a result of market openness.The major changes have taken place in companys attitudes towards their customers although thither is still some way to go to embed a refinement of commercial customer focus throughout the organization, there is no mistrust that Royal Mail has turned the corner (AICES 2006, p. 18). Customers have acquired additional baron in maintaining effective relations with the postal service Royal Mail services turn towards being more attentive to their customers.They have displayed new abilities to listen to the customer, and to change in accor dance with the customers requirements. controversy appears to be the matter of choice for the customer consequentially, companies in the postal services sector have more incentives to pursue customer value through innovation and better customer satisfaction. The current situation in the UK market of postal services is still much confused and contradicting. On the one hand, we have the evidence of customers being completely satisfied with postal services being competitive.On the other hand, we cannot agree to the fact that the efficiency of postal services has increased even through the prism of growing profitability of some postal services. Certainly, the postal services have reached the point in time at which costs are more comparable to the prices of postal services the settlement of monopoly has opened the gateways to being more reasonable and more objective in setting the price for postal services. Simultaneously, it is difficult to disagree to the fact that Royal Mail still occupies 96% of the UK market (Starkey 2006, p. 6). The essence of competition is not in attracting rivals, but rather providing consumers with choice. In this situation efficiency of postal services is replaced by more important customer preferences. Monopoly is a good-looking, big issue, and it is a test of our society as to whether we are to organize everything to make a profit (Benn 2007). Royal Mail is the embodiment of the economic paradox in the area of postal services in the UK. This paradox lies in connection with economies of scale.While with the large delivery volumes Royal Mails unit costs are low, but with Royal Mail being monopolistic the company can hardly be called efficient. Thus, with the price of Royal Mails services being extremely competitive and sometimes too low, it is simultaneously inefficient (Falkenhall & Kolmodin 2005, p. 29). Competition thus appears more serious for the customers, than for the companies in the postal services niche. It is essential t hat other private players can have access to similar scale benefits even if they cannot compete to the well-branched delivery network of Royal Mail.The efficiency of Royal Mails rivals cannot be increased until the issue of VAT exemption is resolved. The VAT regime for post in the UK is a particularly pernicious barrier. Most people here will be aware that although Royal Mail is VAT exempt, its competitors are not, which causes pricing distortions especially for those customers that are also VAT exempt (Starkey 2006, p. 76). Simultaneously, there is another serious concern about the rival companies behavior on the market.Some specialists fear that what takes place in Royal Mail is subsidizing lighter items with heavier mail, subsidizing social users for the account of business users, etc (Crew & Kleindorfer 2007, p. 51). In this situation competitive postal companies will strive for taking the most lucrative market niches, going Royal Mail without income from the most profitable s ervices. However, this is where VAT exemption can serve for the benefit of the company due to the lower prices, it is hardly possible that open competition will jeopardize the universal service and Royal Mail in general.In this situation one may possible predict the instability of the postal services market in the short period, and instability of the market structure is no better than previously real monopoly. The UK postal services have appeared in the extremely essential stage of reconstruction introducing competition cannot go smoothly for all market players. It should be noted that the issues of elimination or threat to the universal service are easily neutralized, and universal services can in no way be compromised by introducing competition.Any objective analysis shows that consumers, as well as businesses, have benefited from market opening through higher quality. In addition, prices have been substantially reduced for business customers while households have been protecte d from price increases (Sloman 2004, p. 97). Yet, our objective analysis shows that competition in the UK postal services is in its initial stage. We have proved that customers evidently benefit from making the post market competitive, but the economic efficiency of the postal services is still to be achieved and increased. ConclusionWe have come to conclusion that the effects of competition in the UK market of postal services are primarily viewed within the area of consumer satisfaction. The overall economic efficiency of postal services still leaves much to be desired. However, introduction of competition is the solid reason for providing consumers with choice, and expanding the market structure of postal services in the country. Certainly, monopoly possesses its advantages, but competition is the best perspective for both the new private players and Royal Mail in creating incentives for development and improvement.