Question

n this chapter, we have noted how businesses are dynamic and constantly looking to exploit new opportunities that involve changing the way they operate production. What might not have been a success for some firms does not mean to say that there are no other firms that will be able to benefit. This article shows how problems faced by one firm in making sufficient profits are not necessarily shared by other firms as the use of factor inputs is changed.    

Best Buy Fails to Break UK Market.

US electrical retailer, Best Buy, made an attempt to enter the UK electrical retail market in 2010. The retailer is known across the united states for its high-quality sales staff and discount prices and attempted to bring its business model to the crowded UK market which features the likes of Currys, Argos, Dixons, and Comet.

The plans to enter the UK market arose when Best Buy Inc. brought half of the Carphone Warehouse's retail interests. Plans were made to open up to 200 so-called 'Big-Box' stores throughout the UK within the first one opening in Thurrock, Essex in April 2010. However, facing strong competition a lack of brand recognition by UK consumers, and the rapid growth of online retailing from firms like Amazon, Best Buy found things difficult and by January 2012 a decision was made to close down its 11bricks and mortar retail operations following losses of around 62 million pounds.

The decision to close down was made after consideration was given to commit more capital to its operations in an attempt to secure the advantages of large-scale production - economies of scale. In the end, the cost of such an investment in relation to the expected benefits in a market which was challenging (given the economic situation in the UK, the income elasticity of demand for electrical goods in general, and the increasing use of online as the medium of choice for shoppers), meant that option was discounted.

The decision to close down operations will have been takin in the light of the expected costs of trying to maintain its presence on the high street and the future of the industry as a whole. it would not have been taken lightly as reports suggested closing down would cost Best Buy and Carphone Warehouse around 100 million pounds.

One option being considered was selling its stores to the UK's fourth-largest supermarket group by share, Morrisons. Morrisons was reported to have expressed interest in acquiring the stores, mostly in large out-of-town retail sites, for its Kiddicare brand of baby, infant, and small children's products such as toys, pushchairs, costs, and so on.

The reports caused interest in the markets and some surprise given the challenges that exist in that market for some of the reasons that Best Buy found life difficult. An increasing trend to purchase goods online and the economic climate had already seen retailers like Mothercare and its Early Learning Centre stores facing declining sales and profits. Kiddicare had been an almost exclusively online operation and so the decision by Morrisons to move into the bricks and mortar sector was seen as a high-risk move.

Questions:

1. For Morrisons, what is the difference between the short run and the long run in this case?

The answer I get are either general short run and long run or the answer would be for Best Buy as mentioned bellow. Please provide me the answer for the Morrison not Best Buy. Tell me For the Morrison the short run and long run difference considering the case study itself.

this answer that I got is not according to Morrison it is according to Best Buy:

The difference between short and long run according to Morrisons is

in short run, the Best Buy was confident to take over its business as it assumed that eah businesses have their own uniqueness in reaching its customers and brought half of the Carphone Warehouse's retail interests. but it didn't work well due to lack of brand recognition by UK consumers and not only that the other retailers were also growing tremendously like, Amazon(online store) and it faced loss.

In the long run, it decided to shut down its business but that might cause huge lose(100 Million pounds) so it decided to sell its stores to the UK's fourth-largest supermarket group by share, Morrisons and it decided to acquire the store.

Finally, it observed that the mortar sector was seen as a high-risk move as the whole world i undergoing the technological revolution.

Answer 1

In economics the the short run and long run other time durations which decides the the factors to be used in in the production.

Short run production function is the the time period which one factor is variable and the other factor inputs are held to be constant that is fixed.

If the producer want to change the the output the variable factors of production will be changed.

Assuming that there are only two factors of production labour and capital.

So in order to increase the output the firm will increase the the quantity of variable factor that is labour keeping capital unchanged.

Long run is the time duration where all the inputs are variable.

therefore if the firm want to increase the output it can be done by increasing all the factors made bhi labour or capital or simultaneously both in some proportion.

The elasticity of demand in the short run is is more than unity as compared to in the long run.

Morrison is the fourth supermarket of UK,which has now entered into the partnership with Amazon and they together will be selling the food and frozen items.