The Economic Environment of Business

You are required to analyse the UK carbonated soft drinks market and should answer the questions below.
Each question states the mark allocation, indicating the importance of each question.

You should do about 100 word introduction to your project. [5 % of marks]
Outline the trend in sales of the leading manufacturers’ in the UK carbonated soft drinks market over
the last 5 years, and analyse the structure of the market for the whole UK carbonated soft drinks
industry. To do this, you should;
 identify the main manufacturers or companies who produce carbonated soft drinks in the UK and
their market shares (you may get up-to-date data from sources such a Mintel and Keynote).
 explain what type of market structure exists, with supporting evidence.
 comment on barriers to entry in this market.
 explain, using economic theory (a diagram), how price and output is determined for a soft drink
product/brand by a typical firm (i.e. one soft drink manufacturer) which is operating in the market.
(Note that your market will be imperfect competition, not perfect competition. Thus, you cannot
use supply and demand diagrams in this question).
[25% of marks]
(a) The British government recently introduced a tax on sugary drinks; using economic theory
(diagrams), explain the effects of this policy on producers and consumers of soft drinks in the UK.
(b) Give 3 examples of how a carbonated soft drink manufacturer may use non-price competition to
increase sales. [20% of marks]
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Assignment Brief Template
Page 3 of 8
(a) On a chart, show what has happened to the UK pound (sterling) against the US dollars between
the 1st June 2016 and the 1
st June 2018. Using economic theory (a diagram) explain the reasons for
any significant changes in the sterling exchange rate.
(b) Using a simple numerical example, explain how a depreciation of the pound may affect the UK
carbonated soft drinks industry. [25% of marks]
(a) Identify the possible impact on carbonated soft drinks manufacturers, who are located in the UK
and export to the European Union (EU), if the UK does not reach a trade agreement with the EU
following Brexit.
(b) With the aid of aggregate demand and aggregate supply diagram, explain how a higher inflation
may possibly lead to a recession or slower than expected economic growth in the UK. [20% of
marks].
As part of your conclusion, assess the future of carbonated soft drinks manufacturing in the UK. Do
you anticipate future growth, stagnation or decline?