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M2 Analyse the impact of changes in demand and supply on a selected business
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M2 analyses the impact of changes in demand and supply within ASDA.
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M2 – Analyse the impact of changes in demand and supply on a selected businessBusiness: ASDA
Advantages:
High supply – The advantage of high supply within a business is that the company is
supplying the consumers/ customers with the desired product. One advantage in ASDA’s
case is the common daily products that their customers will always buy whether it becomes
rare or not. An example of this would be ASDA’s home branded milk. Milk is a product that
will always be bought. Another advantage of high supply is being able to keep up with the
demand ahead of time. This means there is no shortage in middle of high demand for a
particular product. Going back to the milk scenario, milk is again one of those products that
a company like ASDA should never have out of stock.
Low supply – Alternatively to high supply having many advantages there are also many
advantages to having low supply depending on the particular product itself. For example if
there is a product within ASDA that people are buying but is not an essential part to living.
An example of a product like this would be a HD TV that they may have in store at random
points in time; if the TV is a great sell but ASDA do not want to oversell it at this price they
will never have too much stock. This will make sales more prominent when they stock a few
of the TVs in their stores as they will fly of the shelves with them being such a good TV at a
good price and customers do not see the TV on offer commonly they will feel more inclined
to buy it.
High Demand – Similar to high supply, high demand can present many advantages as well as
insights to a particular company. In ASDA’s case, this would reveal that a particular product
is constantly selling and the sales are not dropping. This consequently means that there is a
high demand for the product. High demand links very closely with high supply as ASDA does
not want to lose sales by not having the particular product in stock however; they also do
not want to overstock the product so much that demand decreases hence reducing the
sales.
Low Demand – Although there are advantages to low supply there are not any advantages a
product having low demand unless a particular product is expensive to make by the
company and this reveals that they should lower the supply or stop the product altogether.
Low supply can show advantages as there can still be a high demand, however if there is a
low demand there is no reason for a company like ASDA to have high supply of the product
as the product is not wanted by the consumers.
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