Introduction
Active intervention approach is the process through which the market forces are of a given industry are interfered with to ensure the sustainability of the market (Sparks, 2002). In most cases, the government initiates active intervention to protect the interests of producers and/or consumers in the industry from unfair competition and biased pricing mechanism. This therefore ensures that every individual enjoys a fair share of the market.
Several mechanisms are used to achieve the desired goals and objectives of active interventions. These include: price ceilings, price floors, taxation of commodities, formation of cartels and collusions (Sparks, 2002). These mechanisms are mainly used as measures to correct any irregularities that the market may be facing. They therefore ensure that the market runs smoothly, effectively and efficiently.
The UK food retailing industry is among the strongest markets of the region. The entire chain of the industry is composed of farmers, producers, distributors, food retailers and caterers. The industry is well established and earns a lot of revenue. Due to this fact, the market has been attracting many potential investors.
The easy entry and exit into the market has increased the intensity competition within the industry. As a result, several problems have emerged amongst them being fluctuating prices of commodities and reduced earnings. To ensure the sustainability of the market, active intervention is required.
Practices and Competition
The food industry is the largest manufacturing industry in the UK. It constitutes over 15% of the manufacturing force of the region and earns an average revenue of £70 billion annually (Sparks, 2002). However, the industry has been experiencing gradual changes that have affected its traditional mode of operation.
Initially, the market was made up of a large number of small-scale retailers who owned small shops and grocery stores in rural and urban areas. However, the rapid increase in urban population coupled with increased demand for the commodity has attracted new firms into the industry.
Huge supermarkets and large-scale grocery stores are now replacing the small shops and grocery stores. These new firms are huge, comprise a wide variety of products in a single setting and are owned by relatively fewer individuals. They are more convenient for the urban population since they meet their needs and demands. As a result, small-scale shops and grocery stores are being wiped out of the urban market. Firms such as Tesco and Walmart are replacing them.
To ensure that the interest of the retailers and consumers are met, there should be a reduction in the number of individual shops and an increase in the number of superstores. At the same time, proper planning and development should be done. This should aim at improving on the primary points of sale and weakening tertiary ones. In addition, the market should be diversified to minimize congestion and competition in urban areas.
Convenient shops and grocery shops should therefore be distributed especially in rural areas. This will ease the market congestion in urban centres. The retailers should also have a wide variety of products that the consumers can choose from. The government should also control the prices of the goods and services that are offered in the industry to ensure fair competition in the industry. All this can only be achieved through active intervention.
Conclusion
The UK food industry is the largest manufacturing industry in the region. Due to this fact, a lot of changes have occurred in the market. New firms have joined the market. As a result, the competition in the industry has become stiff. To ensure that the industry remains viable and sustainable in the short run and in the long run, active intervention is should therefore be enforced.
Reference
Sparks, L. (2002) Retailing in Scotland: Retrospect and Prospect. CSRS. Web.