Business and Managerial Economics

Most organizations invest their resources in different sectors of the economy so as to generate revenue that can lead to the improvement of the livelihood of its organization and citizens. The management of these organizations should set up strategies that are geared towards improving the performance of the company’s activities as this can lead to the growth and development of those organizations in the economy.

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Mars bar market is a company that deals with the production of different kinds of products in the market such as confectionery, chocolates, food, pet care products, beverage, health, and nutritional products. It was first started by Frank and Forest Mars in the year 1922 after they realized that the production of those commodities would lead to increased revenue for the organization. It is located in the United Kingdom while its headquarters are in McLean Virginia and conducts its businesses in

over 66 countries in the world. The chocolate bars are made through solidifying malted chocolate milk that consists of softly whipped naught known as Milky Way, caramel that has a chocolate shell and filling at the top of the chocolate. The company mostly sells its products to countries such as Britain and America. The management of the company has employed over 48,000 employees in different countries in the world. It was reported that its annual sales increased by $22 billion this was as a result of setting up good structures that contributed to high sales for the organization.

During the war period, the management of the company realized that it could produce large quantities of the produce. It found out that its chocolate products would meet the needs of the customers as it would supply its citizens with real food that would feed their children. The chocolate products demand later on increased since it would provide its customers with energy that would supplement them with nutrients at the appropriate time, therefore was considered as a staple food.

The management of the company faced stiff competition from the competitors due to selling similar products to the customers. It, later on, set up strategies that were meant to ensure that the company’s products were sold effectively in the market such as: repackaging its products, produced different kinds of products that were of a different brand name such as Snickers, Milky Way, and twit products.

The impact of a worldwide shortage of sugar due to unfavorable weather conditions in major growing regions
Figure 1. The impact of a worldwide shortage of sugar due to unfavorable weather conditions in major growing regions
  • P represents the price of prices of goods supplied
  • Q represents the quantity of goods supplied into an organization

The shift in the supply curve occurs when the number of goods supplied changes even though prices remain constant. This shift arises from a change in quantity supplied that results from factors such as natural disasters, unfavorable climatic conditions, but no change in prices. If the price of a good is at p, the quantity supplied decreases from q1 to q2 hence the shift of supply curve from s1 to s2, thus fewer goods would be supplied to the customers, Ehrenberg and Smith (2003).

Sugar is used in producing different kinds of products produced in the company such as; chocolate products. The low supply of this commodity contributed to higher prices for the commodities produced by the company. The impact of the shortage of sugar contributed would be a lower supply of sugar since the producers would incur more expenses when trying to search for the raw material. Organizations can only generate revenue by increasing the prices of their products so as to compensate for the expenses the company incurred as a result of trying to run the affairs of the organization.

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The impact of the manufacturer’s workers union action of negotiating on boards wage rise for the workers that was based on its confectionery plants.

The impact of the manufacturer's workers union action of negotiating
Figure 2. The impact of the manufacturer’s workers union action of negotiating

Dr. Represents is a rightward shift of the demand curve which shows an increase in quantity demanded, Dl is a leftward shift that indicates a decrease in the number of goods demanded by the customers.

The increase of wages by workers’ unions led to increased demand for goods demanded, as customers would be in a position to purchase more commodities. Increased demand for commodities leads to higher prices.

Workers union is an organization that is composed of a group of people who gather together so as to ensure they appoint a representative that negotiate on their behalf for better terms of pay and employment in their places of work. It deals with other issues such as promotions, firing, hiring process and working conditions of the workers.

The impact of the Mars Bars company workers union action of negotiating for better terms of pay for the workers lead to increased productivity within the organization as workers got pay increments. Reviewing the workers terms of employment leads to improvement of their performance as it’s considered to motivate them incase their morale decrease with time, due to doing their jobs repeatedly for longtime. The increase of the level of income for the employees can lead to higher demand for goods produced by the manufactures that can lead to impulse buying since money is available in the hands of the customers Ehrenberg and Smith (2003).

Impact of favorable general economic conditions, whose average household incomes increased by 5%.
Figure 3. Impact of favorable general economic conditions, whose average household incomes increased by 5%.
  • P represents prices of goods demanded
  • Q represents quantities of goods demanded and supplied
  • S represents supply that shows goods supplied at different prices within an organization.

When the weather conditions are favorable producers tend to produce more goods and services, in order to generate more revenue for their organizations. The economic conditions are factors that are used to determine how the companies are performing in the market. In instances where they are favorable then growth and development of a country can be experienced.

The gross domestic products of a company can increase due to well-established structures with an organization. There can be creation of employment opportunities when there are favorable economic conditions since investors can have a chance to utilize the existing resources within their reach appropriately in all sectors of the economy, therefore can lead to increased revenue for an organization. The Mars bar market makes use of the favorable economic conditions to produce more of its products so that the revenue of the company can increase with time, Ehrenberg and Smith (2003).

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Impact of Rowntrees Headleys decision to manufacture the violet crumbles products through enforcing aggressive marketing strategies within an organization through reducing the prices of the commodities by 10%.
Figure 4. Impact of Rowntrees Headleys decision to manufacture the violet crumbles products through enforcing aggressive marketing strategies within an organization through reducing the prices of the commodities by 10%.
  • P represents prices of goods demanded
  • Q represents quantities of goods demanded and supplied
  • D represents demand for goods and services in an organization

Advertising refers to the process of informing the public about the existence of a product in the market. When the customers are informed about product they tend to demand more of the product hence shift of demand curve to the right (dr) when other things are constant. The actions of having Rowntrees Headley introduction of a new product into the market contributed to stiff competition between the companies within the industry. The reason for having increased competition is because each of the companies would have wished the customers to be informed about the existence of their products in the market as sales volume of the company would decrease.

The best strategies that would have been implemented within the organization would be that of improving on the appearance of the products in the market.The management of the company attract the attention of the customers and advertise their products so that they could learn about the existence of the products in the market through repackaging and offering affordable prices to the customers so that they would be in a position to purchase them while in the market, Skott and Nakatani (2006).

Impact of development of an improved system for manufacturing bar that can result to increased output per hour by 20%
Figure 5. Impact of development of an improved system for manufacturing bar that can result to increased output per hour by 20%
  • SL represents the decrease of goods supplied to a firm,
  • Sr represents an increase in the goods supplied to an organization.
  • Technology refers to the use of advanced skills and knowledge to increase

Output within an organization. The use of technology helps in increasing the amount of goods supplied to an organization. The improved systems of manufacturing can be used to improve on the performance of an organization. According to research that was carried out it was revealed that technology brought about changes within an organization therefore organizations that use these technologies within their organization leads to greater output within an organization. The implementation of technology leads to greater output, hence the shift of the supply curve to the right side, Skott and Nakatani (2006).

The benefits of using technology within organizations are that customers can save on time and labor used for undertaking tasks within an organization. The number of laborers required to produce goods and services can be reduced since the machines can be used on behalf of the employees hence can reduce on the cost of running the operations of an organization.

Theory of supply and demand

It is a theory that is used to explain the effects that are observed in prices and quantities of products in the market. This principle is used to analyses quantities of goods sold and associated prices that result from changes in an economy due to factors such as macro environments and micro environment. Macro environment is composed of various factors such as political factors, legal systems, economic factors and social cultural factors that affect the external system of a company Hamid (2003, ” pp. 28–45 [28 & 38]).

Demand refers to the quantity of goods and services that the buyers may be willing and are in a position to purchase at a given price in the market. The demand theory is a theory that analyzes the customers’ preference for commodities which is dictated, by their income, tastes and prices of those commodities in the market. The law of demand states that the price and quantity of goods demanded by the customers is inversely related, that is if there is a change in prices then the quantities demanded would also change. For instance, if the price of a product is high then fewer people may be willing to purchase the products in the market this is because of having the purchasing power of the customers been lower which leads to lower demand for expensive goods.

The law of demand
Figure 6. The law of demand
  • P represents prices of goods demanded
  • Q represents quantity of goods supplied to the customers

Expensive goods and services are considered to luxurious goods that are meant to provide comfort to the customers; therefore where there are economic crises then the demand for those commodities also decreases. The other factor that may lead to changes in demand for a product is the increase in the incomes of the customers. The increase of income of the customers leads to higher purchasing power therefore the customers may demand for more goods and services in the market. If the demand for goods and services increases it leads to increased prices since inflation can occur Hamid (2003, “pp. 28–45 [28 & 38]).

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The supply of goods and services states the relationship that exists between price of goods and quantities of goods availed to the customers for sale by the suppliers at specified prices. Producers mostly produce goods and services that can generate greater returns for an organisation. When prices of goods are high, producers tend to produce greater amounts of those products since higher prices leads to increased prices as they tend to reduce cost of production yet organization can generate more revenue for an organization.

The supply of goods and services
Figure 7. The supply of goods and services

The harassment of the persons wearing natural fur coats by the environmentalists anti-groups lead to declined prices for the fur coats and sales to tumble because it lead to conflicts of interests which lead to bad reputation for an organization.Fewer people may demand the product in the market. It can be noted that the natural fur coats demand can decline hence the sales volume can also decrease thus leading to higher profits for an organization. The law of demand and supply states

That, if the demand for a commodity increases more people can demand for the product, hence price of the commodity decreases.

The reasons why the prices and sales of the luxury woolen and angora coats rose was because there were fewer coats that were been supplied to the market,hence higher prices for the product. The law of supply states that in case the producers may not be supplying large quantities of commodities in the market it can lead to higher prices for the products. The supply and demand model shows how the prices of goods and services differ in the market since its determined by the availability of the commodities in the market.The upward shift of the demand curves indicates that demand for commodities has increased therefore due low supply of the commodities in the market. The prices of commodities and supply of commodities in the market can dictate whether it can reach the equilibrium level or not Paul and Nordhaus (2001 pp. 157).

It is important that the management of organizations set up strategies that are geared towards improving on the performance of a company this is because it can lead to higher returns.The market mechanism can also dictate the way goods are supplied and demanded by the customers so as to meet their needs and wants. It is paramount that the managers of an organization study the environment in which they are conducting their businesses as this can contribute to lower revenue for an organization.

References

  1. Dutt, A. K and Skott, P 2005, “Keynesian Theory and the AD-AS Framework: A Reconsideration,” Working Papers 2005-11, University of Massachusetts Amherst, Department of Economics.
  2. Ehrenberg, R.and Smith, R. 2003, Modern Labor Economics: Theory and Public Policy. Boston: Addison-Wesley.
  3. Filer, R., Hamermesh, D. and Rees, a 1996, the Economics of Work and Pay. New York: Harper-Collins.
  4. Hamid, H., S 2003, “Contributions of Medieval Muslim Scholars to the History of Economics and their Impact: A Refutation of the Schumpeterian Great Gap”. in
  5. Biddle, Jeff E.; Davis, Jon B.; Samuels, Warren J. A Companion to the History of Economic Thought. Malden, MA: Blackwell. pp. 28–45 [28 & 38].
  6. Pleasure You Can’t Measure (Mars) VinodgmName
  7. Skott, P and Nakatani, T 2006, “Japanese growth and stagnation: a Keynesian Perspective,” Working Papers 2006-04, University of Massachusetts Amherst, Department of Economics.
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