IF1105 Microeconomics Coursework – October 2021 Work in groups of up to four peo

IF1105 Microeconomics Coursework – October 2021
Work in groups of up to four people. You submit one report for the group and each member of the group will get the same mark. In your overall mark for the course, the exam in January counts for 80% and the coursework 20%.
“Analyse the main forces driving the market for any specific product of your choice.”
This may be a broad commodity, a specific product like New Zealand white wine, or even more specific like Cloudy Bay Sauvignon Blanc. Avoid financial assets such as gold or oil. Discuss the long-term forces driving demand and supply (income, technology etc.) and discuss the position of the main substitute products and producers. Consider the evolution of the market price and the forces driving it. What choices are available to the main suppliers and what are their future prospects? This exercise is intended to make you apply the analysis we have covered during the lectures. Choose a product in which you are interested, but where you can get hold of recent relevant information such as on price and sales trends. Maximum length 2500 words (but additional tables, charts, data appendices and reference lists are OK). Reports must be typed and must start with a one page executive summary (not included in word count).
There are four main areas. Marks will be allocated roughly equally to each, though what is appropriate will vary with the type of product chosen, so the advice here is not intended to lay down rigid rules:
• What exactly is the product you are focusing on? What is the geographical location of the market you are looking at? Are there any special characteristics of the product that give its market special features? (For example, is it like a homogenous primary commodity, is it a differentiated product like a branded consumer good, are there quality issues?) What kind of information do you have on this market i.e. what are the key facts that you intend to explain?
• What are the supply conditions in this market? Are there many producers or just a few…..is it perfect competition, monopoly, monopolistic competition or oligopoly….and what does this imply for understanding the way in which rival suppliers interact? Is there aggressive price competition or do competitors seek to preserve fat margins? Are there barriers to entry: patents, brands, economies of scale etc. Is there competition in this product area to develop new technologies? Is there any government role in the market, e.g. regulation, protection or government production?
• What is likely to be driving demand for the product? What are likely sizes of income and price elasticities etc? Is it an essential product or is it a luxury good etc? What could suppliers do to increase demand….advertise, improve quality, improve design?
• Finally, assess how you think this market will develop. Do you see opportunities for new entry e.g. grabbing of market share by some new improved product, or is it a market in which further profits can only be squeezed out by improved efficiencies of production? If so, what aspect of market appears to have profit making opportunities for either existing firms or new firms?
One way to think of this exercise is to put yourself in the position of an adviser to a company that is thinking of entering this market. What would you want to know about the market for your chosen product in order to give valuable insights……and the company a good chance of successful entry?