Every Wednesday I send out actionable tips, tricks and real-world application insights from my 13-year experience coaching students to achieve As and A* in their Economics and Business A Levels.

A: In an oligopolistic market structure, where a few large firms dominate the market, understanding and catering to consumer behaviour and preferences become even more critical. The reasons are:

Product Differentiation: In oligopolies, products are often close substitutes. Thus, a nuanced understanding of consumer preferences allows a firm to differentiate its product from competitors, fostering customer loyalty and potentially increasing market share.

Barriers to Entry: High-street retail, for instance, has significant barriers to entry, including brand reputation and economies of scale. By deeply understanding and responding to consumer behaviour, firms like Wilko can further strengthen these barriers. If consumers feel a particular retailer "gets them", they are less likely to shift loyalties to a newcomer.

Strategic Behaviour: Firms in an oligopolistic market often engage in strategic behaviour, reacting to the moves of their competitors. A firm grounded in consumer insights can better predict how consumers will react to competitors' moves and adjust its strategy accordingly.

Wilko's growth from a single store to 400 is a testament to the power of aligning business strategy with consumer behaviour. By closely listening to its customers, Wilko could offer products and services that met their needs, thereby ensuring repeated visits and establishing a loyal customer base.

A: Economic cycles, consisting of booms and recessions, have profound effects on businesses. The impact is multifaceted:

Demand Fluctuations: During booms, consumer spending tends to rise, leading to increased demand. Conversely, during recessions, spending contracts, and businesses might see dwindling revenues.

Cost Pressures: Recessions can lead to cost pressures as suppliers hike prices or credit becomes costly. Conversely, booms might see increased wage demands from workers.

Liquidity Concerns: Recessions can lead to liquidity concerns, especially for businesses operating on thin margins or with significant debt.

Investment Decisions: Booms might see firms expanding, while recessions can lead to cutbacks in investments.

Using Wilko as a case study, its survival through events like the great depression and the second world war shows remarkable resilience. Factors that likely contributed include:

Diversification: Offering a wide range of household and garden products might have shielded Wilko from sector-specific downturns.
Adaptability: Their ability to listen and adapt to changing consumer needs could have helped navigate shifting economic landscapes.
Strong Values and Brand Loyalty: With roots going back to significant historical events, the brand could have forged a deep connection with its customers, making them less likely to abandon it during hard times.

A: Company administration is a double-edged sword when it comes to employment:

Short-Term Preservation: Initially, administrators may keep the business running, preserving jobs temporarily. This helps in maintaining incomes and spending in the local economy, especially in areas where Wilko or similar firms have a significant presence.

Restructuring and Layoffs: However, as administrators assess the business's viability, they may decide to restructure, which can lead to store closures and layoffs. This can have negative repercussions for local economies, leading to reduced consumer spending and potentially a domino effect on other local businesses.

Potential for Revival: If administrators successfully find a buyer or a rescue deal, the company can come out of administration, potentially preserving many of the jobs in the long run.

In areas where Wilko has a significant presence, prolonged administration without a clear resolution can create economic uncertainty. Local suppliers might face receivable issues, and employees might cut back on spending due to job security concerns.