This report discusses the economic theories of the 21st century in relation to the Clydebank Co-operative Society. It explores the law of demand and supply and contrasts the economic models of the 21st and 20th centuries. The report provides an overview of the organization and its operations in the retail sector of Clydebank, Scotland.
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Contemporary Business Economics
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Contents INTRODUCTION.......................................................................................................................................3 TASK 1.......................................................................................................................................................3 Overview of Organization.......................................................................................................................3 Explaining Law of Demand.....................................................................................................................4 Explaining Law of Supply.......................................................................................................................6 TASK 2.......................................................................................................................................................8 CONCLUSION...........................................................................................................................................9 REFERENCES..........................................................................................................................................10 Books and Journals................................................................................................................................10
INTRODUCTION Economic theories are at the centre of any discussion or analysis that has some economic aspects involved in it. Economic theories brings a lighthouse effects to these discussions. And hence a guidance gets seen, which rarely allows any deviation from the core aspect and objective of discussion(Montag and et.al., 2019). Economic theories are not new phenomenon, but has been studied and prevailing from centuries, based on the requirement of time and circumstances of socio-political orders. In this report, as discussion of economic theories of 21stcenturies is made, with regards to a prominent firm in the cooperative sector of United Kingdom, Clydebank. The report is divided in two tasks. In Task 1, 21stcentury economic models of demand and supply are discussed and in Task 2, a critical evaluation and contrast between models of 21st century and 20thcentury is made. TASK 1 Overview of Organization TheClydebank Co-operative Society Limitedis a type of one of the smallest consumer cooperative society, operational in the retail sector ofClydebanknear Glasgow. The organization has its origin in the Scotland, United kingdom. The Clydebank is one of the most popular three cooperative retail stores of Scotland, which are all operating alongside, and it never decided over merging into a National society or any other such entity that damages its core business nature. However, unlike any other cooperative society of United Kingdom, Clydebank have also not been part ofCooperatives UK(Cooper and Davis, 2017). Clydebank consider itself as a community that is oriented towards businesses of Food and Non- Food stores, post offices, Funeral Homes and non-trading property interests. Clydebank has a team of employees which are dedicated and energetic, continuously engaged in working towards company’s goals and objectives. Cooperative society of UK are at the heart and soul of Clydebank, together they having history of nearly 130 years. Clydebank, several time mentions of its pride over the glorified history it has and the competence it has in serving its customers.
According to figures of 2015, the society seven food stores operational ranging from just over 6,500squarefeet at Dunn Street, to its smallest, 1,800 square feet (170m2), at Great Western Road & Sylvania Way South, Clydebank. These stores are: Great Western Road,Knightswood Faifley Road, Faifley Sylvania Way South, Clydebank Kilbowie Road, Clydebank Dunn Street,Dalmuir Duntocher Road, Parkhall Explaining Law of Demand The law of demand states that while other factors market are assumed constant, under the functioning of market forces, prices of commodity and demand of commodity are inversely proportional. It explains that with increase in prices, demands of products are supposed to fall. Law of demand is explanation of consumers’ behavior for products of Clydebank. When other factors, like preferences or taxation policy are constant, consumers of Clydebank will behave in manner where prices will be influencing demand of products. Increase in prices will decrease the demand and decrease in prices will increase the demand. Law of demand consider it as natural behavior of consumers(Makowski and et.al., 2017).
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Figure1Demand curve Movement along Demand cure Movement along demand curve is influenced by changes in prices of Clydebank products. The increase in prices will lead to contraction of demand curve and decrease in prices will lead to expansion. Contraction in demand- If prices of food products of Clydebank increases from $12 to $16, the demand of products will decrease, say 80 units per consumer to 60 units, consumer behaves in this manner to save their income. Expansion in demand- If prices of food products decrease from $16 to $12, consumers will be able to buy more, with the same income and demand of products will increase, called expansion over same curve. Leftward shift in Demand curve
Leftward shift indemand is the economic phenomenon where demand is seen decreasing because of the factors other than prices, for the Clydebank cooperative group. There are number of reasons that can lead to this shift including a fall in income, assuming a good is a normal good, a fall in the price of a substitute and a rise in the price of a complement. All these factors leads to fall in consumers income or change of preferences, where shift towards left or decrease in demand are outside the market forces for Clydebank. Rightward shift in Demand curve Shift of demand curve towards the right of its existing point is indicative of increase in demandat the same prices of Clydebank products prevailing earlier in market. This happens due to influence of other factors besides decrease in prices such as consumer trend or taste, has risen for it. Any such factor, that can lead to increase in consumers income, other that falling prices are also influencing increase in demand of products by consumers. The Rightward shift can lead to situation of excess demand and equilibrium for market products of Clydebank is disturbed for a while(Franks and Bryant, 2017). Explaining Law of Supply The law of supply, is the law that explains the stand of Clydebank cooperative group and the stature of the policy of management in organization. It is themicroeconomiclaw that states that when all other external factors in market are constant, supply of products of Clydebank increase with increase in price and decreases with decrease in price, as Clydebank management would be intending to save its revenue. In the increasing price, Clydebank supplier behavior is obvious and clear, where they will be increasing its supply, because the company wants to maximize its revenue and profiteering(Dinga, 2018).
Figure2Supply curve Movement along Supply curve Movement along the supply curve is the phenomenon that explains that the basic nature of law of supply, that is supply and prices of products are positively related with each other, remains consistent. For the Clydebank, a movement along the supply curve can be seen occurring when prices of its products influences the behavior of suppliers in the company, in the manner which is original to nature of supply or law of supply. In other words, the Clydebank will be intending to maximize its revenue, and the rising prices of products will support this motive of company, and at the decreasing prices they will be intending to save their revenue and therefore they will decrease the supply. Leftward shift in Supply curve Leftward shift in supply curve is the decrease in quantity supplied by Clydebank of its products and services, where the prices are not seen changing or decreasing but the influence is rather different beside prices of products. These influences can be multiple, as taxation and duties are increased by government, or recession has hit economy, or raw materials are scarce
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etc. Due to all these factors, supply of products can be seen decreasing at prevailing prices and shift of supply curve towards left is seen. Rightward shift in Supply curve Rightward shift is indicative of increase in supply. Similar to leftward shift in supply curve, the increase is the one that occurs due to factors besides the prices of products(Zafirovski, 2020). When, Clydebank is rendered with some favorable factors in the market, which supports its business and production objectives, supply of its products can be seen increasing at the same prices itself. TASK 2 Economic models are helpful in getting complete picture of the economic situation of a company, or a country or a period of time. These models are not new phenomenon that are established in 21stcentury but has been prevailing in previous century as well. In the 20thcentury, the economic models were more driven by socialist ideas, when Marx and Weber were more emphasizing their beliefs of class based society, but in the 21stcentury, successful economic models are those which lead to maximum profits for company. The models that satisfy goal of profits for Clydebank. In 21stcentury economic models are required to take overall view of the Clydebank, and hence they are required to be very rational in this context. Successful model must consider circular flow of income and resources of company. Circular flow of such model undertakes two groups into consideration, one is Clydebank and others are households or consumers of Clydebank(Robinson, 2017). These consumers interact with goods and services of Clydebank and they wither offer their support by purchasing them or decline their procurements. Under these models itself, households are also seen offering factors of production to Clydebank, like capital, land and labor. Therefore, under the circular flow, profits that Clydebank earns from procurements by households ultimately fall to these households as income. When these are the thoughts of economics for 21stcentury, when profits and incomes are at the centre of discussion, 20thcentury economic thoughts were way different, socialistic and
idealistic. The centre of discussion at that time was social welfare, reducing class and income disparities, eradication of poverty and many others(Marx, 2018). Firms like Clydebank, when motivated to profits at that time, often attracted criticism of economic philosophers and people in general. CONCLUSION From the above discussion a readercan avail significant idea about the usage and effects of economic theories. One can understand that there are various nuances and aspects that constitutes a theory, some are helpful in describing how the economic world is working and whereas some other are helpful in describing how it should be working. This is the difference between pragmatic and idealistic economies. These theories varies very widely but they all have full potential in accomplishing their respective goals. There are certainly economic theories that are wrong, but nonetheless deserve to be on the list.
REFERENCES Books and Journals Montag, C. and et.al., 2019. Addictive features of social media/messenger platforms and freemium games against the background of psychological and economic theories.International journal of environmental research and public health.16(14). p.2612. Cooper, J. and Davis, L., 2017. Exploring comparative economic theories: Human capital formation theory vs screening theory.The Journal of Applied Business and Economics,19(6), pp.68-73. Makowski, M. and et.al., 2017. Profit intensity and cases of non-compliance with the law of demand/supply.Physica A: Statistical Mechanics and its Applications.473. pp.53-59. Franks, E. and Bryant, W. D., 2017. The Uncompensated Law of Demand: A ‘Revealed Preference’approach.Economics Letters.152. pp.105-111. Dinga, E., 2018. A comment on ‘Comment on the law of supply and demand’.Journal of Philosophical Economics.11(2). pp.81-94. Zafirovski, M., 2020. Economics in sociology? Original economic theories, concepts and approaches in classical sociologists.Review of Social Economy. pp.1-53. Robinson, T. J., 2017.Economic theories of exhaustible resources. Routledge. Marx, K., 2018.A history of economic theories: From the Physiocrats to Adam Smith. Pickle Partners Publishing.