BCEC002: Business Economics – Workplace Analysis Using Key Concepts
Perform an analysis of your workplace or an organisation by applying the key economic principles. To make your analysis more relevant, apply the key economic principles including demand and supply, elasticity, government intervention, market structures, central economic problem, output and cost, marginal analysis, agency theory, comparative advantage that can be clearly identified in your chosen organisation. While analysing these aspects, take into consideration the following factors:
- Provide details about your company, scarce resources and opportunity cost scenarios faced by the company.
- Analyse demand and supply for the products or service by your selected organisation along with changes in equilibrium price and quantity.
- Analyse any price control mechanism that you would apply in case of changes in the price of products and services introduced by the government.
- Perform an analysis of the elasticity of your selected product/service and what strategies you can apply to make the product more price inelastic.
- Analyse fixed and variable cost and evaluate the impact of the law of diminishing marginal return.
- Perform an analysis of the market structure faced by your company and how pricing strategies are affected by it.
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Central economic problem
Background of the organisation: The organisation selected for the purpose of analysis is a Singapore based e-commerce company that sells consumer electronics items. The company has both the online as well as offline presence and provides quality products at affordable prices.
Scarce resources: An analysis of the operations of the company indicates that it is faced with scarcity across certain resources like skilled labour such as IT staff and sales staff, and also has scarcity with enough capital for inventory and technology management.
Choices the company should consider between: The company needs to decide whether it performs additional investment in online platforms or perform expansion of offline stores. It also needs to make a balance between hiring more staff or improving its existing automation system.
Opportunity cost: The opportunity cost from performing online expansion means forgoing the benefits from expansion of physical outlets and potential sales from walking customers.
Demand and supply
Product/ service analysed: The products selected are smartphones sold by the company, and the demand increases mainly because of increasing levels of digitalisation in Singapore along with remote working trends. However there is a direct impact on supply because of issues at the global level such as global semiconductor shortages.
Factors affecting demand and supply
Demand factor: There is a significant rise in the income level of consumers and there is a need for Digital devices.
Supply factor: The increase in the production cost and disruption in the supply chain are the major factors affecting supply.
Effect on equilibrium: The increase in the demand and reduction in the supply would result in higher equilibrium price and lower equilibrium quantity. This can be best analysed from a diagram whereby the demand curve shifts rightward and supply curve shifts leftward.
Government intervention and price controls
Government can lower the prices by imposing a price ceiling on essential electronic devices. As a result of this, the prices would fall below equilibrium, the demand in the quantity would exceed compared to quantity supplied, and this would contribute towards shortages of the product.
Elasticity
With respect to smartphones, the demand is relatively elastic because there are many substitutes available in the form of other brands and models.
Making demand more price inelastic
The demand can be made more price inelastic by way of strengthening the brand loyalty, bundling services by offering warranty and subscriptions together, or by way of differentiating the product using unique features.
Output and cost: The fixed costs are mainly in the form of rent of retail outlets, salaries to staff, hosting environment for the website whereas the variable costs are inventory purchases, packaging cost and delivery cost.
Law of diminishing marginal Returns: With the increase in the sales staff, the contribution by each additional worker would be less to the total output because of limited resources.
Market structure
The market structure is monopolistic competition because there are many sellers, products are differentiated and there are low barriers to entry.
Impact on pricing strategy: The company has the opportunity to charge higher prices by way of differentiation but at the same time, it needs to be competitive as well because of many alternatives available.
| This model answer is reviewed by Dr Enze Huang, economics expert having sound knowledge and understanding of microeconomics concepts. Disclaimer: This answer is a model for study and reference purposes only. Please do not submit it as your own work. |
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Applying the economic concepts to a real organisation is challenging because it requires the consideration of various economic concepts including demand and supply, elasticity, cost and market structure. Getting guidance from a professional economics assignment helper can help you address the marking rubrics easily as they make the complex concepts easy to understand, and also support the correct use of diagrams, calculations and economic terminology.
