NAME: Saikat Raha Section: M8 ROLL NO: 1726008 Assignment:01

NAME: Saikat Raha
SECTION: M8
ROLL NO: 1726008
ASSIGNMENT :01
Marginal and average cost
1. The marginal cost and average cost curves are related. When
marginal cost exceeds average cost, average cost must be rising.
When marginal cost is less than average cost, average cost must be
falling.
2. Marginal cost curves always intersect average cost curves at the

minimum of the average cost curve.
3. The position of the marginal cost relative to average total cost

tells us whether average total costs rising or falling.
4. The Relationship Between Marginal Cost and Average Cost If MC >

ATC, then ATC is rising. If MC > AVC, then AVC is rising, if MC < ATC,
then ATC is falling if MC < AVC, then AVC is falling If MC = AVC and
MC = ATC, then AVC and ATC are at their minimum points 12-5
5. Costs per unit MC The marginal cost curve ATC goes through the
minimum point of both AVC the ATC and AVC curves Q 12-6
6. To summarize: If MC > ATC, then ATC is rising. If MC = ATC, then

ATC is at its low point. If MC < ATC, then ATC is falling.
7. Marginal and average total cost reflect a general relationship that

also holds for marginal cost and average variable cost. If MC > AVC,
then AVC is rising. If MC = AVC, then AVC is at its low point. If MC <
AVC, then AVC is falling.
8. As long as average variable cost does not rise by more than

average fixed cost falls, average total cost will fall when marginal
cost is above average variable cost,
Short-Run Total Cost Average Costs & Marginal Cost (MC)
A. When output is zero, cost is positive because fixed One can gain a better insight into the firm’s cost
cost has to be incurred regardless of output. structure by analyzing the behavior of short-run average
Examples of such costs are rent of land, deprecia-
and marginal cost.
tion charges, license fee, interest on loan, etc. They
are called unavoidable contractual costs. Such costs Another concept to learn in short-run average costs is
remain contractually fixed and so cannot be avoided Marginal Cost. Marginal cost is the addition made to the
in the short run.
cost of production by producing an additional unit of the
output. In simpler words, it is the total cost of producing t
units instead of t-1 units.
B. The only way to avoid such costs is by going into a. If the average cost falls due to an increase in the
liquidation. The total fixed cost (TFC) curve is a output, the marginal cost is less than the average cost.
horizontal straight line. Total variable is the
difference between total cost and fixed cost. The b. If the average cost rises due to an increase in the
total variable cost curve (TVC) starts from the origin, output, the marginal cost is more than the average
because such cost varies with the level of output cost.
and hence are avoidable. Examples are electricity
tariff, wages and compensation of casual workers, c. Marginal cost is equal to the average cost when
cost of raw materials etc.
the marginal cost is minimum
NAME: Saikat Raha
SECTION: M8
ROLL NO: 1726008
ASSIGNMENT :02
Walmart’s in INDIA opportunities and threats.
The retail chain Wal-Mart was established by Sam Walton in 1962 in the US. Over the
years, the retail chain grew leaps and bounds to be the most successful retailer in the
US. The retail chain operates in various formats such as discount stores, supercentres
and warehouse clubs. Wal-Mart stores are huge stores with size varying from 42,000
sq. feet to more than 200,000 sq. feet. The business model of Wal-Mart is based on
selling a wide variety of merchandize at “always low prices” often referred to as
“everyday low prices”. Wal-Mart successfully expanded its operations to 14 countries
which included Mexico, UK, China, Argentina, Brazil, Canada, Chile, India and Puerto
Rico. By 2010, the chain operated 2,980 stores outside the US. Wal-Mart also ranks
the topmost global retailer in the world with revenues of more than $ 400 billion
from worldwide operations in 2009.
About Bharti Enterprises of India

Bharti Enterprises is an Indian business conglomerate established by Sunil Bharti
Mittal. The group was founded in early 1990s. The group is involved in variety of
businesses such as telecom, insurance, fresh foods, retail and realty. Outside India,
the company has a presence in Bangladesh, Sri Lanka, Jersey, Guernsey and
Seychelles. The group is in the process of establishing itself in countries like Burkina
Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya,
Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia in
the African sub-continent. The brand names “Airtel” and “Beetle” are household
names in India. Its revenues for the year 2009 were estimated at $ 10 billion.
Bharti – Wal-Mart Tie Up

After entering into discussions with Tesco of UK and Carrefour of France which did
not materialize, Bharti Enterprises of India finally struck a deal with Wal-Mart
of US in November 2006. According to the deal, Bharti would handle front end
retail stores while Wal-Mart would act as a wholesale and back-end partner.
However, Bharti would use the name “Wal-Mart” for its stores. The joint
partnership planned to make investments in the retail sector to the tune of
$100 million which could go upto $1.46 billion. Wal-Mart was already
procuring goods from various Indian companies to the tune of $1.5 billion.
Industry observers say that the Wal-Mart would benefit from Bharti’s
experience in India while Bharti would benefit from Wal-Mart’s experience in
overseas markets. However, after tremendous opposition from local people
and political parties, the first store opened in Amritsar in late 2009.
Opportunities
According to a report by McKinsey & Company, the rise in disposable income of

Indian consumers would be a major factor in contributing to the growth of retail
consumption. The factors contributing to the growth of organized retailing in India
include growth in working population, double income households, one stop
destination for all needs, changing consumer lifestyles and easy availability of credit.
Data by Investment Commission of India, 2007 revealed that significant retail
opportunities existed in product categories like food and beverage, consumer
durables and home improvement. It further forecasted that home improvement and
consumer durables would grow at a compounded annual growth rate of 20 % in 10
years’ time. It further mentioned that India had a significant potential to emerge as a
sourcing base for a wide variety of goods for international retailers. Leading
international retailers including Tesco, GAP and JC Penney are already sourcing from
India.
A report prepared by Ernst and Young for India Brand Equity Foundation (IBEF)
reveals that there are significant opportunities for organized retailers in various cities
of India. This is because these cities have households with tremendous spending
power and lower penetration of organized retail compared to metro cities such as
Delhi, Mumbai and Bangalore. The online retail business progressed in India with
growth of internet connections and e-payment service users. Retailers such as
ebay.in, indiatimes.com and rediff.com were early entrants. Many small retailers also
had their portals for online sale of merchandize.
70 % of India’s population is in the rural areas which offer tremendous opportunity

for retailers. Key players in the rural retail market include Indian Tobacco Company’s
Chou pal Segar, DCM Shriram group owned Hariyali Kisan Bazaar and Indian Oil
Corporation’s Kisan Seva Kendra among others. The main product categories
marketed in rural areas include seeds, urea, FMCG goods and farm produce.
Airport retailing is another emerging area for retailers. Raheja Group’s Shopper’s
Stop partnered with Nuance Group, a leading Swiss global retailer to set up retail
outlets at Bangalore and Hyderabad airports. Airport retailing offers opportunities in
luggage, clothing and related accessories, food and beverage and souvenirs. The
growing tourism industry has created significant demand for retailers dealing in
artifacts.
Challenges
Logistics infrastructure in India has always been a cause of concern for global
retailers. Lukas Ruecker, who oversaw emerging market business as vice president at
Staples commented that the overall logistics is so much more difficult from a port in
Chennai or a port in Shanghai to stores. Sumant Sinha, CEO, Aditya Birla Retail, is of
the view that the logistics and supply chain infrastructure has to be built from
scratch; it’s really about creating a new industry. India’s retail industry seems
promising but “is tempered by the fact that the country is grappling with severe
infrastructure and policy issues,” says the CII in the report it produced with A. T.
Kearney. Cold chains (distribution chains for perishable items), warehousing and
logistics infrastructure will create problems for global retailers if the Indian
government does not focus on infrastructure. The report also points at inadequate
quality control and the lack of a skilled workforce in India.
Global retailers would have to customize their formats to suit Indian conditions. The
Government of India fears that entry of global retail giants could put many retailers
in the unorganized sector out of business. However, discussions at various retail
forums have often proved that there is enough space for organized and unorganized
retail in the country. Inspite of repeated discussion on the issue at various
government levels to further liberalize the retail sector, no headway had been made.
Indian retailers in organized and unorganized sector had geared themselves to face
global competition. The organized retailers have focused on mall space acquisition,
store expansion and diversification into various formats in addition to above and
below the line promotional activities. The unorganized sector has focused on value
added services. A report by PriceWaterhouseCoopers and Confederation of Indian
Industry mentioned that small retailers in India had inherent advantages. They were
located next to the consumer, making it convenient for top-up purchases. They knew
the consumers well, some even by name. The report further mentioned that fixed
costs for small retailers was very low thereby reducing their breakeven point to as
low as 46 % of sales. They were also focusing on re-organizing their stores and
stocking new products.

NAME: Saikat Raha Section: M8 ROLL NO: 1726008 Assignment:01

Uploaded by

Copyright:

Available Formats

NAME: Saikat Raha Section: M8 ROLL NO: 1726008 Assignment:01

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

NAME: Saikat Raha Section: M8 ROLL NO: 1726008 Assignment:01

Uploaded by

Copyright:

Available Formats

NAME: Saikat Raha

2. Marginal cost curves always intersect average cost curves at the

3. The position of the marginal cost relative to average total cost

4. The Relationship Between Marginal Cost and Average Cost If MC >

6. To summarize: If MC > ATC, then ATC is rising. If MC = ATC, then

7. Marginal and average total cost reflect a general relationship that

8. As long as average variable cost does not rise by more than

About Bharti Enterprises of India

Bharti – Wal-Mart Tie Up

According to a report by McKinsey & Company, the rise in disposable income of

70 % of India’s population is in the rural areas which offer tremendous opportunity

You might also like