Week 16 Business Supply & Demand

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Learning
Aim D2

RELATIONSHIP BETWEEN DEMAND, SUPPLY AND PRICE
THIS WEEK WE AIM TO :
IDENTIFY THE FACTORS THAT AFFECT SUPPLY AND
DEMAND

TO EXPLAIN THE INFLUENCES THAT AFFECT SUPPLY AND
DEMAND.

BE ABLE TO CONDUCT A SWOT ANALYSIS ON A CHOSEN
BUSINESS.

Influences on Demand write these 5
headings down in your planners/notes

•When you go shopping, what influences your
purchasing decisions?

•Do you think these factors would be common amongst
other customers in the market?

•There are 5 common factors which influence demand
for a business’ products and services, these are:

•Affordability

•Competition

•Availability of substitutes

•Level of Gross Domestic Product (GDP)

Needs and aspirations of consumers

This Photo by Unknown author is licensed under CC BY.

Affordability
•THE AFFORDABILITY OF A
PRODUCT IS BASED ON THE
SELLING PRICE CHARGED BY
THE BUSINESS.

•WHETHER CUSTOMERS CAN
AFFORD OR ARE WILLING TO
PAY THE PRICE BEING
CHARGED IS A VERY
INFLUENTIAL FACTOR WHICH
IMPACT BUYER BEHAVIOUR
AND DEMAND.
SNIP TOOL THIS POINT

Affordability

•THE IMPACT OF AFFORDABILITY ON DEMAND

1.CADBURY’S TWIRL (£1.50, £1, 70P, 25P)
?
2.20 X MCNUGGETS (£8, £5, £4, £2.50) ?
3.Nike Dunk TRAINERS (£1K, £575,
£300, £150)?
WHAT WOULD YOU BE WILLING TO PAY FOR EACH PUT IT
IN THE CHAT
WHAT BEHAVIORS DO YOU THINK MIGHT AFFECT THE
PRICES ? PUT IT IN THE CHAT

This Photo by Unknown author is licensed under CC BY-NC.

Competition
write this down

•DEMAND FOR A BUSINESS’ PRODUCTS AND SERVICES CAN BE
SEVERELY IMPACTED BY COMPETITION.

•THIS CAN BE DUE TO VARIOUS REASONS SUCH AS:

1. MORE COMPETITORS ENTERING THE MARKET AND PROVIDING

CUSTOMERS WITH MORE CHOICE.

2. THE ACTIVITY OF CURRENT COMPETITORS SUCH AS A

PROMOTION/SALE.

3. THE INTRODUCTION OF A NEW AND INNOVATIVE PRODUCT BY A

COMPETITOR.

ALL OF THE ABOVE CAN DRIVE CUSTOMERS AWAY FROM THE BUSINESS AND
DECREASE DEMAND IN THEIR PRODUCTS AND SERVICES

Competition

•WHEN THE DEMAND FOR A
BUSINESS’ PRODUCTS AND
SERVICES IS THREATENED BY
COMPETITION,

•

IT’S CRUCIAL THAT THE
BUSINESS ADAPTS BECAUSE IT
CAN INITIALLY IMPACT SALES
AND PROFIT MARGINS BUT
OVERTIME IT CAN LEAD TO
THE BUSINESS CEASING TO
EXIST.

•CONSIDER THE EXAMPLE OF
BLOCKBUSTER AND NETFLIX
BLOCK BUSTERS FAILED TO
GET THEIR FILES ONLINE .

•BBC COMPETES WITH
STREAMING SERVICES

£159 a year
License FEE

https://edition.cnn.com/2020/02/16/media/bbc-
license-fee-future/index.html

Availability
of Substitutes

••THE AVAILABILITY OF SUBSTITUTES CAN ALSO HAVE AN IMPACT

ON DEMAND.

•FOR EXAMPLE, IF A BUSINESS WAS CURRENTLY SELLING A
PRODUCT WHICH WASN’T GENERATING SUFFICIENT DEMAND
OR PROFIT, WHAT ALTERNATIVE OPTIONS HAS IT GOT?

•THIS COULD BE IN THE FORM OF SEEKING THE SAME OR
SIMILAR PRODUCT FROM A NEW SUPPLIER WHICH IS MORE
COMPETITIVELY PRICED TO INCREASE THE PROFIT MARGIN.

•ALTERNATIVELY, CAN THE BUSINESS FIND A COMPLETELY NEW
SUBSTITUTE PRODUCT TO GENERATE DEMAND FROM ITS TARGET
AUDIENCE?

•HOWEVER, IF THERE IS THE OPPORTUNITY FOR THE BUSINESS TO
USE A SUBSTITUTE PRODUCT, IT MUST CONSIDER THE IMPACT
THIS WOULD HAVE ON DEMAND AND THE BUSINESS’
REPUTATION IF THE QUALITY OF THE PRODUCT FROM THIS NEW
SUPPLIER IS INFERIOR OR DOESN’T MEET THE NEEDS OR WANTS
OF ITS CUSTOMERS ETC.

•THEREFORE, IT’S KEY THAT A BUSINESS EXAMINES THE EXTERNAL

ENVIRONMENT AND CONDUCTS MARKET RESEARCH BEFORE DECIDING
ON A CHANGE TO ITS PRODUCT PORTFOLIO TO ENSURE IT IS LIKELY TO
INCREASE DEMAND AND NOT HAVE THE REVERSE EFFECT.

Level of Gross Domestic
Product (GDP)

•GROSS DOMESTIC PRODUCT AKA GDP IS A MEASURE OF THE SIZE AND HEALTH OF A COUNTRY’S

ECONOMY OVER A PERIOD (USUALLY ONE QUARTER OR ONE YEAR) (BANK OF ENGLAND, 2021).
WRITE THIS DOWN

THE LEVEL OF GROSS DOMESTIC PRODUCT -GDP IS VERY INFLUENTIAL IN RELATION TO THE DEMAND
OF A BUSINESS'S GOODS.

•FOR EXAMPLE:

••WHEN GDP GOES UP, THE ECONOMY IS GROWING, AND PEOPLE ARE SPENDING MORE

WHICH IS GOOD FOR BUSINESS AS THE DEMAND FOR GOODS AND SERVICES WILL INCREASE.

•HOWEVER,

•THIS ISN’T ALWAYS THE CASE FOR LOW END RETAILERS WHO THRIVE IN TIMES OF RECESSION AS

THEY MAY SEE A DECREASE IN DEMAND AS CUSTOMERS SPEND THEIR MONEY ON MORE EXPENSIVE
OPTIONS.

•WHEN GDP GOES DOWN OR THE COUNTRY ENTERS A RECESSION, IT IS LIKELY THAT THE

DEMAND FOR LUXURY GOODS AND SERVICES WILL REDUCE. THIS CAN BE ANYTHING WHICH ISN’T
PERCEIVED AS AN ESSENTIAL EXPENSE BY CUSTOMERS SUCH AS A GYM MEMBERSHIP, EXPENSIVE
CLOTHING, OR EVEN ENTERTAINMENT.

••EITHER WAY, IT’S CRUCIAL THAT BUSINESSES ARE AWARE OF THE ECONOMIC CLIMATE AND THE
LEVEL OF GDP SO THEY CAN ADAPT THEIR PRODUCT PORTFOLIO, MARKETING ACTIVITIES AND

SELLING PRICES ETC. ACCORDINGLY.

https://www.bankofen
gland.co.uk/knowledg
ebank/what-is-gdp

Needs and Aspirations of
Consumers

•THE NEEDS AND ASPIRATIONS OF CONSUMERS
ARE ARGUABLY ONE OF THE MOST INFLUENTIAL
FACTORS ON THE DEMAND FOR A BUSINESS’
PRODUCTS AND SERVICES.

•HOWEVER, THE NEEDS AND ASPIRATIONS OF
CONSUMERS ALTER OVERTIME AND IT’S CRUCIAL
THAT BUSINESSES ARE AWARE OF THESE CHANGES
AND ADAPT ACCORDINGLY.

•IF A BUSINESS FAILS TO ADAPT TO A CHANGE
RELATING TO THE NEEDS AND ASPIRATIONS OF THE
CONSUMERS IN THE MARKET THEY OPERATE
WITHIN, THIS COULD RESULT IN DEMAND
DECLINING FOR THEIR PRODUCTS AND SERVICES
AS CONSUMERS SWITCH TO COMPETITORS WHO
CAN MEET THEIR NEEDS AN ASPIRATIONS.

https://thriveglobal.com/stories/7-tips-
for-entrepreneurs-to-adapt-to-
changes-in-business/

Why is it important for businesses to adapt to change?
Flexibility and adaptability can deliver cost savings, increased productivity,
enhanced job satisfaction and, most important of all, the ability to thrive in a
rapidly changing world.

Influences on

Supply
•ONE OF THE GREATEST DIFFICULTIES BUSINESSES FACE IS THE CHALLENGE
OF ENSURING SUPPLY OF THEIR PRODUCTS MEET DEMAND SO THEIR
SHELVES AREN’T EMPTY, WHILST AT THE SAME TIME NOT HOLDING TOO
MUCH STOCK AND CAUSING WASTAGE.

•TO EFFECTIVELY ANTICIPATE BOTH CURRENT AND FUTURE LEVELS OF
DEMAND, A BUSINESS WILL ANALYSE A VARIETY OF INTERNAL AND
EXTERNAL FACTORS INCLUDING PAST SALES DATA, LEVELS OF GDP, AND
THE INTENSITY OF COMPETITION IN THE MARKET. MAKE A NOTE SO THAT

•ONCE A BUSINESS HAS ANTICIPATED THE LEVEL OF DEMAND FROM THE
CUSTOMERS IN THE MARKET, IT CAN THEN ENSURE IT IS HAS THE RIGHT
LEVEL OF SUPPLY TO MEET THIS DEMAND.

•HOWEVER, A NUMBER OF FACTORS INFLUENCE SUPPLY, SUCH AS:

•AVAILABILITY OF RAW MATERIALS AND LABOUR

•LOGISTICS

•ABILITY TO PRODUCE PROFITABLY

•COMPETITION FOR RAW MATERIALS

•GOVERNMENT SUPPORT

https://www.economicsdiscussion.
net/supply/8-factors-that-
influence-the-supply-of-a-
product/3369

i. Price:

ii. Cost of
Production:

iii. Natural
Conditions:

v. Transport
Conditions:

vii. Government’s
Policies:

viii. Prices of Related
Goods:

Availability of Raw
Materials and Labour
SHIP THAT GOT STUCK IN THE SUEZ CANNAL ??

•THE AVAILABILITY OF RAW MATERIALS AND LABOUR BOTH HAVE A SIGNIFICANT

INFLUENCE ON SUPPLY.

•IF THERE IS A SHORTAGE OF RAW MATERIALS WHICH ARE USED IN THE

MANUFACTURING PROCESS, THEN THE BUSINESS MUST EITHER CHOOSE AN ALTERNATIVE
RAW MATERIAL OR SUPPLY WILL BE IMPACTED.

•HOWEVER, EVEN IF THERE IS SUFFICIENT STOCK OF RAW MATERIALS, IF THERE IS A

SHORTAGE OF LABOUR E.G. NOT ENOUGH PEOPLE TO MANUFACTURE THE BUSINESS’
PRODUCT, AGAIN SUPPLY WILL BE IMPACTED.

•THE COVID-19 PANDEMIC AND BREXIT ALONGSIDE VARIOUS ADDITIONAL FACTORS

HAVE IMPACTED THE AVAILABILITY OF BOTH RAW MATERIALS AND LABOUR ACROSS
MANY INDUSTRIES.

••

Nationwide the average percentage
of EU workers in meat processing
companies stands at about 70%.

How will this affect the
NHS and what is
already affecting the
work force and why
put it in the chat Click
to add text

Availability of Raw Materials and Labour

•FOR EXAMPLE, IN 2021 THE UK CONSTRUCTION INDUSTRY STARTED TO FACE
A SHORTAGE OF RAW MATERIALS WHICH HAS BEEN BLAMED ON SEVERAL
FACTORS INCLUDING:

•A SURGE IN DEMAND FROM CONSUMERS ACROSS THE BOARD, RANGING FROM
DIY PROJECTS TO NATIONAL INFRASTRUCTURE PROJECTS SUCH AS HS2 AS
LOCKDOWN RESTRICTIONS HAVE BEEN EASED AND THE UK HAS FACED A
VARIETY OF SUPPLY CHAIN ISSUES.

•SCANDINAVIA EXPERIENCED A WARMER WINTER WHICH IMPACTED TIMBER
PRODUCTION AND TEXAS EXPERIENCED A COLDER WINTER WHICH IMPACTED
THE PRODUCTION OF CHEMICALS, PLASTICS, AND POLYMER.

•INCREASED SHIPPING COSTS.

•ALL OF THE FACTORS ABOVE HAVE IMPACTED THE AVAILABILITY OF RAW
MATERIALS USED IN THE UK CONSTRUCTION INDUSTRY.

•THIS HAS RESULTED IN POOR AVAILABILITY FOR CUSTOMERS WITH DEMAND
FAR OUTWEIGHING SUPPLY WHICH HAS ULTIMATELY LED TO PRICE RISES OF
10-15% ACROSS THE BOARD, RISING TO 50% ON TIMBER AND 30% ON
CEMENT.

https://www.bbc.com/future
/article/20210308-rubber-the-
wonder-material-we-are-
running-out-of
Rubber trees

Logistics

••DURING THE SUMMER OF 2021, THE UK

EXPERIENCED A HGV DRIVER SHORTAGE AND THIS
SHORTAGE OF LABOUR CAUSED MANY SUPPLY
ISSUES ACROSS A VARIETY OF INDUSTRIES
INCLUDING FOOD RETAIL.

••RICHARD WALKER, ICELAND’S MANAGING

DIRECTOR, SAID “THE UK FACED A SHORTAGE OF
100,000 HGV DRIVERS THAT WAS CAUSING 30-40
DELIVERIES TO ITS STORES TO BE CANCELLED
DAILY, AND WOULD UPEND PLANS TO BEGIN
BUILDING CHRISTMAS STOCK”. (GUARDIAN, 2021)

••BUT ICELAND AREN’T ON THERE OWN,

MCDONALD’S HAD TO STOP SERVING
MILKSHAKES, WHILST NANDO’S CLOSED
APPROXIMATELY 50 OF THEIR RESTAURANTS
BECAUSE THEY DIDN’T HAVE ENOUGH CHICKEN
TO SERVE CUSTOMERS.

Logistics
Write these three
headings down

•Logistics play a pivotal role in any

business’ supply-chain management and

without an effective logistics network,

businesses would cease to exist.

•But what is meant by the term logistics?

Pop it in the chat

•Logistics involves three main elements:

•Transportation – the process of moving

goods from one part of the supply chain to

the next. For example, goods being
manufactured in one location e.g. in
China and being shipped over to a
warehouse in the UK for them to be
delivered to the business’ shops or

customer’s house.

•Storage – at various points throughout the

supply chain, goods need to be stored.

Therefore, many businesses have their own

warehouses. This could be a nationwide

distribution centre alongside storage space

in the business’ shops.

•Distribution – the final step in the supply
chain is distribution of the product to the
customer, which could be goods being

delivered to a business’ shop for

customer’s to purchase, goods being

delivered to the customer’s house, or more

recently goods being delivered to a

collection point for customers to pick up at

a suitable time for them.

Logistics

••THIS SHORTAGE OF HGV DRIVERS HAS BEEN

CAUSED BY A COMBINATION OF

•POST-BREXIT EU IMMIGRATION RULES,

•COVID-19 RESTRICTIONS AND

•SELF-ISOLATION GUIDANCE. WRITE THIS

DOWN !!!!!

•HOWEVER, CRITICS OF THE UK’S BIGGEST

FOOD RETAILERS HAVE ALSO CALLED FOR
BETTER PAY AND WORKING CONDITIONS TO
HELP ATTRACT LOCAL WORKERS.

•THE HGV DRIVER CRISES IS A CLEAR

EXAMPLE OF A SHORTAGE OF LABOUR
IMPACTING SUPPLY AS THE RAW MATERIALS
AND PRODUCTS FOR MANY OF THESE
BUSINESSES ARE AVAILABLE, BUT THE
BUSINESSES CAN’T GET THEM INTO THEIR
STORES DUE TO A SHORTAGE OF LABOUR.

Group Task

Get into the following groups:

• Group 1- Lucy, Andres, Sanuli, Cam

• Group 2 – Charlie, Finn, Ame, Hannah,

• Group 3 – Riddhi, Sophie, Rowan, Seb, Flo

• Group 4 – Trupal, Josh, Maddie, Thomas, Evie

• Task – Use Flipchart paper and conduct a SWOT for a

Business. Ensure you use colour as you will present this!

TASK: Conduct a SWOT on Businesses

Conduct a SWOT for 1 Business.

Conduct a SWOT for 2 Business.

Conduct a SWOT for 3 Business.

Think about using PESTLE FOR each analysis.

Learning
Aim D2

RELATIONSHIP BETWEEN DEMAND, SUPPLY AND PRICE
THIS WEEK WE AIM TO :
IDENTIFY THE FACTORS THAT AFFECT SUPPLY AND
DEMAND

TO EXPLAIN THE INFLUENCES THAT AFFECT SUPPLY AND
DEMAND.

BE ABLE TO CONDUCT A SWOT ANALYSIS ON A CHOSEN
BUSINESS.

Any questions?

Our Core focus this week was RELATIONSHIP BETWEEN DEMAND, SUPPLY
AND PRICE D2

In two weeks', time this
will be your next
assignment

Today we covered D2
Learning aim

YOU SHOULD have notes on each Learning aim also in the C criteria … have you ?
Is your study planner full of notes and snipping tools from lead lectures seminar and workshops ? Plus,
samples of your own mock task work you have also inserted into the group chat and notes from the
interactive links I put in to support your core reading and additional reading to develop your English ?
If the answer is Yes well done you are an active learner making it happen Fantastic!!! Well
done you are on route to distinction

if not....

You are perhaps a passive learner waiting for it to happen ….....waiting for someone to
come and give it all to you …... NOBODYS COMING !!!!!! you have choices remember

Where are we ….. how can we be helping ourselves ?

In 2 weeks, the next assignment comes out
1.Are you making and taking quality notes?

2.Are you using the TEAM page to gleam any
additional samples of good work and useful
info ? Are you RE Reading your notes and
making Sub notes if you don’t bank info by
just listening and reading ?

3.LENS is an app you can download that will
turn handwritten notes in to a WORD doc
this may help you

4.Are you using your Study planner in an
organized fashion ?

5.Remember the accountability Ladder are
you an Active or passive learner ?

6.HOW do you want to feel when you start this
next assignment ?