Ocado Group Plc

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 Ocado Group Plc

Introduction

Ocado is an online supermarket that operates in the United Kingdom. Unlike other

supermarkets, Ocado has no brick and mortar stores and does all of its home deliveries from its

warehouses. The company has a nationwide network within the UK with its main product being

groceries. The purpose of this essay is to provide a detailed analysis of Ocados political

environment by evaluating the political climate in the region within which the company operates.

Political Analysis

Ocado operates in the United Kingdom, a region which has for a long time enjoyed high levels

of political stability. As a result of the political stability, setting up a business is very safe in

comparison to other countries faced with political strife, war and even terrorism. The political

stability of the UK provides Ocado with an opportunity to make long-term decisions while also

guaranteeing a wide range of economic actions. The adoption of 2011 emergency budget that

raised VAT from 17.5% to 20% lead to an increase in supermarket product prices (Crossley et al.

2009, P. 9) leading to a lower customer power. All of Ocados income comes from sales revenue

and thus the low customer purchasing power has an effect on profitability. (Atril, 2009, P. 33).

The greatest political risk affecting Ocado is UKs decision to leave the European Union

(EU). The EU is an economic block and leaving the EU therefore translates to leaving a trading

zone. The full impact of this decision still remains uncertain but has still created anxiety with the

market. Some of the products sold by Ocado are imported from EU member countries, the

exporting firms may therefore be reluctant to sell to Ocado because of possible tariffs by virtue

of the UK not being a member of the EU. The UK is free market with little no government
interference on commodity prices (Prasad, 2006). Ocado therefore faces no political

impediments in setting its prices and thus is able to set prices that are competitive and still

remain profitable.
 Works Cited

Atrill, P. (2009) Financial Management for Decision Makers. Fifth Edition. London: Financial

Times Prentice Hall.

Crossley, T. F., Low, H. and Wakefield, M. (2009) 'The Economics of a Temporary VAT

Cut'. Fiscal Studies, 30(1), 3-16.

Prasad, M., 2006. The politics of free markets: The rise of neoliberal economic policies in

Britain, France, Germany, and the United States. University of Chicago Press.