Question

The retail industry in Singapore consists of several large retailers, such as Giant, NTUC Fairprice and Metro in prominent locations, and thousands of small neighbourhood retailers scattered all over Singapore. Nowadays more internet retailers also enter the retail market to compete with brick and mortar retailers. Competition is very keen and many small retailers have ceased operations. While large retailers often seem to be able to survive better than the small retailers, large retailers have also exited the market from time to time. (a) Describe the differences in the cost structure of larger versus small retailers in Singapore in a market for a well-defined good (or category of goods). Conduct research into the reasons for these differences in cost structure, and the role that these differences play in explaining why large retailers tend to have competitive advantages. Be sure to name specific examples of the larger and smaller retailers you discuss. (b) Explain and discuss the market structure of the industry you are examining. Is the market structure closer to that of perfect competition or to monopoly, and why? (c) From the perspective of the long run market equilibrium, what are the prospects for whether small retailers can continue to exist in the market you are examining? Explain and support your answers with suitable real life illustrations.

Answer 1

Answer(a): Singapore is a very versed and competitive market due to the range of products it offers. It is said that there is almost nothing in the world, that cannot be found in Singapore. This fact in itself shows the number of business operators there would be in Singapore to sustain such a large business operation. There is a huge mix of both small and large retailers in the markets of Singapore. Both large and small retailer seem to gain equivocally from their business. They earn as per their establishment and the nature of products they offer to the consumer. It has been seen that Singapore has become highly competitive and advanced in terms of market competition. This therefore draws in a huge amount of investment to start and consequently manage and sustain a business establishment in Singapore. This is why it is comparatively easier for the larger retailers in their sustainability in the Singapore market.

                                                            There have been many instances where, some of the very small industries and forms have slowly gown on to become large business establishments, also there are innumerable instances where the biggest of the forms have fallen prey to this competitive nature of business in Singapore. For example, King.com was a very large establishment which was taken over by Activision. Similarly, small entrepreneurs like Mighty bear games, Honestbee, CoinPip etc. are growing very fast although they are small scale retailers. The larger establishments, due to the higher availability if capital at their disposal is comparatively better off in surviving the scenarios where the company is making temporary loss, as compared to the small scale industries.

Answer(b): The Singapore market structure can be comparatively compared more with a perfect competition than a monopoly. This is because, in monopoly, is one entrepreneur that leads one market, however, in Singapore, within one market, we will find various small and large firms coinciding. The larger firms, although dictate some terms in the markets, but do not lead their markets completely. The entry and exit of firms are almost free and the number of consumers in the Singapore market is so high that the desires of the consumers also do not matter in the decision to determine the equilibrium in the market. Moreover, the market entrepreneurs are free to produce any amount of product and any type of product they choose. Therefore, Singapore market structure is closer to a perfect competition.

Answer(c): In the type of market structure Singapore is, the small businesses or the retailers have enough opportunity to grow and develop as large business units. There is absolutely no restriction in the operations of a business unit and there is no pressure of the market side. It is the competition in the market, that the small firm has to sustain. This sustainability is however, not easy as business being free is being operated by various small and large players, thereby making competition tougher for the smaller operators to sustain the higher and lower situation of the market in the longer run. IN the longer run, therefore, all small entrepreneurs can survive and profit, if they are able to sustain the market. An example of Honestbee can be put up here. This unique startup had started by proving the items of groceries within an hour to the consumers residence. This small entity has now grown up considerably although there was the presence of many like operators in the market.