A survey conducted by the Consumer Watchdog in your country on the retail industry for Fast Moving Consumer Goods (FMCG) showed that the market is dominated by five (5) major retail chains with outlets in all major centres of the country. These outlets account for more than 90% of the market. The remaining 10% is taken up by several hundred small outlets owned by local people within their areas. This situation has always caused a lot of consternation among the local people who feel that these big companies are crowding them out and make it difficult for them to grow their businesses in this sector. They have been calling on the government to intervene as they feel that these big companies should be regulated to allow for more competition. (a) Based on the survey, what market structure does the retail industry fall? Justify your answer. (b) Discuss the barriers that may be preventing the entry of new firms in the FMCG retail sector. (c) Discuss the measures that you would recommend the government of your country to take to address the concerns of local people.
A survey conducted by the Consumer Watchdog in your country on the retail industry for Fast Moving Consumer Goods (FMCG) showed that the market is dominated by five (5) major retail chains with outlets in all major centres of the country. These outlets account for more than 90% of the market. The remaining 10% is taken up by several hundred small outlets owned by local people within their areas. This situation has always caused a lot of consternation among the local people who feel that these big companies are crowding them out and make it difficult for them to grow their businesses in this sector. They have been calling on the government to intervene as they feel that these big companies should be regulated to allow for more competition.
(a) Based on the survey, what market structure does the retail industry fall? Justify your answer.
(b) Discuss the barriers that may be preventing the entry of new firms in the FMCG retail sector.
(c) Discuss the measures that you would recommend the government of your country to take to address the concerns of local people.
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