Thursday, June 20, 2019

Business Environment Assignment Example | Topics and Well Written Essays - 1000 words

Business Environment - Assignment ExampleOn the manufacturers side of equation the pricing and output decisions are dogged by the quantity demanded. Hence, we can assume with much use of common sense that an change magnitude in the price of Coca Cola would eventually give out to a decrease in its quantity demanded. The same fact can be illustrated by the use of the demand curve that has a downward tip (Figure 1) which signifies that greater the plus in the price of the entity, lower will be the quantity demanded. In other words price and quantity demanded are inversely comparative (Management Study Guide, 2008). The supply side of business also plays a major authority in determining the output decisions. Supply decisions are generally dependent on the profit potential. Building upon this factor we can verify that an increase in the market price of a product would lead to an increase in the supply of it in pursuit of a greater profit potential (Riley, 2006). This goes on to s how that the supply of the products of a business is directly proportional to the price of the product (Case Karl E., 2009). The supply curve is hence upward sloping (Figure 1). There is however always a constraint in terms of the extremity to which the business can expand its supply side as it either may be restricted by its scale of operations or the capableness or resources in the short beat. Nevertheless, the business can expand its operations scale after having accumulated enough wealth in the long run (Harper, 2010). At anyone instant, the market can be subject to one of the following three conditions Demand dissipation (quantity demanded quantity supplied at current price) Supply Excess (quantity supplied quantity demanded at current price) Equilibrium (quantity demanded = quantity supplied at current market price) These three market conditions also play a major role in determining the output and pricing decisions of the business because if there an excess demand then t here is a tendency for the price of the product to increase as the demanders would be in competition to gain the limited supplies. If however, the market conditions are on the excess supply side of equations then the prices are in all likelihood to decline. If there equilibrium in the market place then no price change would occur (Investopedia, 2011). Figure 1 SECTION B The basal forces of demand, supply and price fluctuations are the ones that govern the organizational responses in all sorts of businesses be it related to medicine, or farming, or production of shoes or computers. either the businesses play to their cards to these forces. The market is governed by the behaviour of both the producer and consumer sides of picture (Basic Economics, 2011). Having elaborated in section 1, we can now reasonably acquire that a decrease in price is likely to increase the demand of the product. That is, if at the rate of making a call was 6$, a sibylline person named Paul would call his mother in another town only once. But if the price if dropped to 3$ per call then Paul would be able to make double the amount of calls on the same price increasing the utility of it. On the other hand, one can take the fashion model of a telecom company named Warid in Pakistan. Having noticed that the call rate at the night time was low and their profit margins were relatively less at that period of time, the company introduced a new Glow package offering its customer base to make a call for 3 PKR per hour from 12AM to 7AM which would other than cost four times more without this offer (Warid, 2011). As a result of this,

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.