How environment affects organizations
This assignment sample can be helpful to all those students who are trying to understand how organizations adapt themselves to environmental changes. If you are someone who often requires help with economics assignments and this is the topic you are currently battling with, go through this content. It discusses the changes which are likely to shift the supply curve of a certain organization. Afterwards, it elaborates on the changes which are likely to shift the demand curve of the same organization. Assessing both of them, it finally reflects and recommends how the organization can evolve and adapt itself to the rapidly changing environment.
Report on the Current Economic environment and how it affects organisations using a real-world case. With the aid of supply and demand diagrams discuss what you consider to be the two most important changes likely to shift the demand curve for a particular organisation.
Importance of fluctuations in demand and supply has been focussed on in order for the sole purpose of understanding the way the prevailing economic environment can affect business-related decisions of various organisations present within the market structure. For the purpose of highlighting the way changes in the economic environment might tend to affect the demand and supply curve of UK based retail organisation namely Arcadia Group has been provided acute focus. In addition, a brief recommendation based on the way the Arcadia Group can adapt itself to the kind of changes faced has also been discussed. The recommendations are provided for the sole purpose of helping the organisation concerned to continue to attain its profit maximising motive by adapting the changes.
Discuss changes that are likely to shift the supply curve of the organization
Arcadia Group has remained committed to improving the sustainability of its various clothing products across the lifecycle (Arcadiagroup.co.uk, 2017). For the sole purpose of achieving this, it has aimed to reduce water and carbon content at the time of manufacturing clothing products.
Change in preference level on part of customers targeted
In recent times, the people of the UK are observed to demand good quality products or services. This might be mainly owing to the fact that people are found to become greatly conscious of their health condition. Thereby, it automatically became a key concern on part of the business organisation concerned to appropriately select the kind of fibre to be used that can not only help enhance the quality of cloth manufactured but can also help reduce the environmental footprint associated with clothing (Arcadiagroup.co.uk, 2017). This is also very likely to extend the life cycle of clothes manufactured. The adequate focus of Arcadia Group on this fact, can, in a way, help it get access to quite a high level of market price as a result guided by the fact that people of UK are found to choose quality over prevalent price level (Wilhite et al. 2014). The shift in the supply curve of Arcadia Group as a result of this specified factor can be illustrated by the figure below:
Figure 1: Decrease in supply curve level of Arcadia Group as a result of focus on clothing quality
(Source: Livingeconomics.org, 2017)
From the figure above, it can be stated that a prime focus of Arcadia Group has resulted in a decrease in the quality of clothes manufactured by it from OQ to OQ2. As opined by Fernandez-Feijoo et al. (2014), this is mainly owing to the sole fact that focus on quality made the retail-based organisation concerned incur a greater amount of cost in buying good quality fabrics in order to the improved demand level on part of its targeted customers. Although this resulted in leftward shift of the supply curve of Arcadia Group from S to S2 as a result of presence of lesser quality of raw materials but in near future, this is likely to help the organisation concerned meet the expected needs of its customers in a better way as a result of increased level of revenue earned that could possibly be earned by the organisation. Such increase in profit margin would mainly be guided by the fact that an attempt on part of Arcadia Group to continue manufacture of good quality clothing items even at the cost of high price would enable the organisation get access to market price as per its desire (Bassett et al. 2014). However, the act of charging a market price level higher than that prevalent within the market price (a change in the price level from P to P2) is unlikely to hamper the demand level of its targeted customers. This would enable the business organisation concerned to enhance the aggregate level of revenue earned by it with and thereby help it shift its demand curve rightwards. This is very likely to take place as a result of efficient utilisation of financial resources in manufacturing activities.
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Need for utilising the limited level of resources available within the economy of UK
The fact that the aggregate amount of resources available in the economy of the UK is likely to affect the supply level of the retail-based produced manufactured by Arcadia Group. As mentioned by Wu et al. (2014), this made Arcadia Group adopt suitable technologies at the time of undertaking all the manufacturing process that helped it obtain the optimum amount out of the resources incurred by the organisation concerned. This attempt on part of the organisation can be analysed with the help of the figure provided below:
Figure 2: Increase in Supply as a result of the efficient utilisation of resources
(Source: Livingeconomics.org, 2017)
From the above figure, it can be seen that the adoption of technology helped Arcadia Group enhance its overall productivity level as a result of optimum utilisation of all its available resources. The supply curve of Arcadia Group is found to get shifted from S to S1 as a result which helped it meet the needs or demands of its targeted customers in a better way and thereby earn a reputed position within retail industry of UK.
Discuss changes that are likely to shift the demand curve of the organization
Arcadia Group is found to undertake the adequate initiative to meet demand level of its customers to the fullest extent possible.
Occurrence of natural disasters in the UK
The fact that the economy of UK faces winter storms almost every year tends to affect the demand level on part of the targeted customers of Arcadia Group (Arcadiagroup.co.uk, 2017). This makes Arcadia Group plan its manufacture of clothing products accordingly. This is mainly guided by the fact that people show a tendency to save financial resources at times when the economy is likely to face such storms and whatever demand gets raised is found to be mainly for woollen garments (Burke, 2017). This makes the organisation concerned devote a greater amount of its available resources in the production of some other products associated with retail and at the same time manufacture a small number of woollen garments to meet the prevalent needs of its customers (Farahani et al. 2014). The demand curve of Arcadia Group in such a situation can be depicted with the help of the figure below:
Figure 3: Decrease in demand for clothing as a result of the expectation of natural disasters in the economy
(Source: Livingeconomics.org, 2017)
The above figure illustrates the fact that the motive on part of the customers targeted by Arcadia Group to save enough financial resources to sustain themselves at times of facing natural disasters like winter storms is found to be powerful enough to affect the manufacturing pattern of the business organisation concerned related to clothing. This result in a decrease in the number of clothes demanded from Q to Q2. Such leftward shift of the demand curve is also very likely to decrease the price level of such products from P to P2 as a result of initiative on part of the organisation to sell all its clothing products left out as inventory (Brown, 2014). This, as a result, can help it get access to adequate financial resources that can help it manufacture various other retail-based products during such off-season.
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Increased level of digitalisation
Arcadia Group has been found to display all the retail-based products especially clothing items on its official website in a well-designed manner. It is also found to take the adequate initiative to look after the kind of products usually searched in various social media websites by the customers targeted by it. As cited by Sherwood et al. (2015), this analysis helped Arcadia Group display products manufactured by it in accordance with that in those specific sites randomly visited by its targeted customers. Such increased level of digitalisation, in a way, helped the business organisation earn profit to a far greater extent as a result of its ability to share information of the products manufactured by it in an eye-catching manner at the right place and on the right time (Hirschey, 2016). This also contributed to providing a greater level of convenience related to shopping to its customers which showed a tendency to enhance its profit level. This can be illustrated by the figure below:
Figure 4: Effect of digitalisation on-demand level
(Source: Livingeconomics.org, 2017)
With reference to the figure provided above, it can be stated that increased level of digitalisation enabled providing a greater degree of convenience to customers to get hold of products desired by them at just a single click. This contributed to the enhancement of demand level from D to D1 on part of the customers targeted. In the opinion of Hayes (2014)), this increment in demand level encouraged the business organisation concerned manufactured greater amount of retail-based products for the sole purpose of maintaining its existence within the retail industry of UK and at the same time keep all its customers intact. This increased level of supply from S to S1 on part of Arcadia Group helped it meet the increased needs or demands of its targeted customers in a more efficient manner.
A brief recommendation on how the organization can adapt itself to environmental changes faced
The discussion conducted in this study provides a clear reflection of demand and supply shift due to changes in the external environment. The factors influencing these changes can further be categorised as economic, social, and environmental. In dealing with such shifts in demand and supply the primary suggestion can be identifying the nature of influencing factors. This helps to conduct an in-depth analysis for a better understanding of their features and their implication on business. Once the implications of such factors are clear to an entity, it becomes easier for them to develop profit-optimisation strategies accordingly. Precisely, identifying socio-economic factors pulling demand of an organisation downward can help those developing strategies for eliminating, or at least minimising their impacts. On another hand, recognising possibilities of demand increment in advance can facilitate pricing strategies of a firm. Along with enhancing the present revenue of an organisation, it can derive a comparative advantage to the firm in the long run.
Based on the demand-supply analysis of Arcadia Group, it can be suggested that the organisations might consider enhancing their focus on predicting sales. In this relation, they need to collect time-series data on demand and supply of their products. This can help the management identify the factors causing shifts in demand and supply. At the same time, this can contribute to the development of strategies in accordance with identification from collected data. Another suggestion for the chosen organisation can be developing advanced strategies for managing inventory. In the case of natural disasters, demand for retail sector products rises remarkably post-disaster. However, insufficient stock can restrict firms from utilising the benefits of this increase in demand. Emphasising more on estimating demand in times of natural calamities and developing inventory strategies accordingly can help the organization derive a higher amount of revenue.
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It can be concluded that demand level prevalent on part of the customers is found to play a major role in case of planning the manufacturing process required to be undertaken on part of the business organisation concerned. From the assignment, it could be seen that change in preferences on part of the people of UK tends to affect the supply curve of Arcadia to a great extent. This is mainly owing to the fact that the unwillingness on part of the organisation concerned to waster the valuable resources possessed by it makes it undertake the initiative to undertake all its manufacturing process taking into consideration the demand structure prevalent within the market structure. This strategy on part of the organisation concerned is found to be capable enough in helping it attract customers by delivering its manufactured products at the right time and to the right customers. In addition, the concern of customers to meet all their needs at times of arousal of the certain abnormal situation within the economy is found to affect the demand structure to a great extent. At such situations, the people of the economy are found to develop a habit to save as many financial resources as possible that tend to hamper the usual revenue generation process of Arcadia Group. This, thereby, is found to shift the focus of Arcadia Group from the manufacture of clothing products to other retail-based commodities manufactured by it in a larger amount.
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Hirschey, M. (2016). Managerial economics. US: Cengage Learning.
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Arcadiagroup.co.uk (2017). Arcadia. Retrieved from https://www.arcadiagroup.co.uk/ [Accessed on 12-11-2017]
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