Contemporary Business Economics

This document explores the concepts of contemporary business economics and its impact on the retailing business. It discusses the examination of demand and supply laws, the analysis of factors affecting the movement and shift of demand and supply curves in the retail sector. It also evaluates how the concept of emerging theories and models has changed from the twentieth century to the twenty-first century in modern business practices. The document focuses on Dunelm Soft Furnishings Limited, a British home furnishing retailer, and provides insights into the factors affecting the demand and supply of its products.

Contemporary Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Examination of Demand Law to analyse impact of different factors on movement and shift
of demand curve of retailing business.........................................................................................1
1.2 Examination of Supply Law for determining impact of factors on movement and shift in
supply curve of retailing goods....................................................................................................5
TASK 2............................................................................................................................................8
Evaluation of how concept of emerging theories and models has changed from twentieth
century to twenty-first within modern business practices...........................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics refers to one of the most concern topic, that mainly emphasis on production,
distribution and consumption of commodities, for measuring monetary condition of a country.
For this purpose, in today’s period, economists apply contemporary economic theories and
models despite of traditional ones, to analyse how dramatic effects of changes in price, money
and other factors effect demand and supply of commodities (Aiginger and Rodrik, 2020). The
present report helps in studying these concepts, for evaluating impact of such factors on
economic activity of businesses. Here, retail sector is chosen by focusing mainly on Dunelm Soft
Furnishing Limited company, which is a British home furnishing retailer firm. In addition to
supply and demand laws, a comparison is also made under present report to examine the changes
made in 21st economic models and theories, with traditional ones of 20th century.
TASK 1
1.1 Examination of Demand Law to analyse impact of different factors on movement and shift of
demand curve of retailing business
In today’s business organisation, there are number of factors present like income
distribution, price, substitute and alternative goods etc. that highly effect on volume of items, its
demand and supply at marketplace (Rahman and Thelen, 2019). As per law of demand, if such
factors keep constant except rate of any product, then quantity and its will vary inversely with
each other, i.e. with increase price rate, its demand from marketplace will automatically reduce.
This would can be analysed by using below figure,
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It has been interpreted from this figure that, with change in price from P to P2, volume of
quantity is reduced from Q to Q2. So, it creates movement in demand curve from A to C and
similarly, with decrease in price from P to P1, demanded quantity will increase from Q to Q1 and
move curve from A to B. But shifting in curve is quite different from movement, as shown in
above figure, where decrease in price moves curve from right side and vice versa. So,
considering the concepts of demand of law, companies that deal in different-different sectors like
retail, manufacture and more, develop strategies to prevent business from decline of sales (Stank
and et. al., 2019). In context one of the such industries i.e. retail industry, any changes in price
and related factors, highly effect core business activities of such companies.
In context with Dunelm Soft Furnishings Limited, this British home furnishings retailer
has more than 169 superstores, with 3 high street stores and 100 Pausa coffee shops, in UK. It is
considered as the largest homewares firm which is headquartered in Watermead Business Park,
England (Eriksson, Norrman and Kembro, 2019). It has also its own production factor, where
items like curtains, accessories and blinds are manufactured. It has a large workforce with
approx. 6,470 number of employees, who give their support in meeting client’s needs on time.
Since, it offers a wide range of products like Homewares – dining, crafts, mirrors, decorative
items, lighting, flowers and more, as well as having its own coffee shop (Narayanan, Sahin and
Robinson, 2019). So, availability of range of such home-products at a single place in its each
store, helps in attracting and retaining customers more easily. But there are number of factors
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present that reduces or increases demand of its products continuously at market, as examined
below -
 Change in fashion: This factor highly impacts on demand of retail products, where
present firm i.e. Dunelm Soft Furnishings Limited deals in home-furnishing items, so,
trends in this sector continuously changes. So, this would attract people towards its new
range of goods, but also increases inventory levels of old ones (Li and Jiang, 2019).
Therefore, it shifts demand curve for new products in right side and existing ones in left
side as shown below –
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 Income of people – It is another main factor that affects demand curve of a certain
commodity, when there is good economic condition at marketplace, then people seek to
purchase home-décor products as per desire (Dreyer and et. al., 2019). But people having
low income level, avoid to buy the same, as it doesn’t consider as basic needs. Therefore,
this factor shifts or moves demand curve in following way –
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 Availability of complementary goods: Having a range of goods at stores, also affect
demand of a certain commodity (Fontaine, Martin and Mejean, 2020). For example – As
Dunelm Limited has its own factory of curtains which are offered at best quality with
reasonable rates, therefore, when people buy it then they also demand for other matching
home decors. This would shift demand curve towards right as shown below –
Thus, from all above factors, it has been analysed that for enhancing sales of
products at stores, retailers like Dunelm Ltd. develop better strategies like offer items on
attractive discounts (Coe, Kelly and Yeung, 2019). Along with this, its management also
concern on competitors’ price rates, effect of substitute products, income distribution,
population, expectations of company’s stakeholders and shareholders etc., to develop
policies for maintaining and increasing profitability of business.
1.2 Examination of Supply Law for determining impact of factors on movement and shift in
supply curve of retailing goods
Considering the Demand law, which depicts relationship of price and demand of demanded
goods as inverse proportion, it has been analysed that concept of supply law is completely
different (Bilińska-Reformat and et. al., 2019). It states that supply or availability of any good, is
directly somehow related with price of same, i.e. if a product is demanded at high rate then there
will be an effective supply at marketplace. In other words, if volume of quantity of a supplied
product decreases then it ultimately increases price rates of it also. Therefore, in both aspects,
supply of goods highly depends on price, where suppliers always seek to increase in same, to
gain high profitability. But in context with retailing sectors, where firms within same fields,
generally offers homogenous products, so, there are number of factors present, that effect on
inventories or supplied goods at stores, in both positive and negative manner (Aiginger and
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Rodrik, 2020). An examination of some of the factors with respect to Dunelm Soft Furnishings
Limited, is done in following manner –
As per this figure, it has been interpreted that when price of products increases then
retailing firms like Dunelm Ltd., concern on increasing supplied quantity of same. So, it moves
supply curve in same direction as demanded ones (Rahman and Thelen, 2019). While, if keeping
the price constants, changes in other factors like increase in cost of production, high labour
wages, taxations and more, shifts supply curve either in right or left side, as explained below –
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 Resource price: It is one of the main concerned factor, where changes in price of
resources like raw materials, wage rates and more, affects production cost. So, high
manufacturing, distributing or supplying cost, will increase price of products also (Stank
and et. al., 2019). Under such conditions, if still demand of such items increases then
supply rate of same also increases, otherwise reduces the same. So, changes in shift of
supply curve can be examined in following way –
 Technique of production: This factor also fluctuates supplied quantity of a product,
where usage of latest technology and expert technician helps in producing and supplying
items in sufficient quantity at marketplace (Eriksson, Norrman and Kembro, 2019). Also,
demand of such products that are manufactured with high techniques raises continuously,
so, it will shift supply curve generally from left to right as shown below –
Therefore, management of Dunelm Ltd., always concerned on upgrading its
technology to enhance quality of its products, so that demand and supply of same can be
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increased for maintaining level of inventories. It also helps in meeting customers’
demand of time by supplying the commodities on time.
 Price expectations: This is another main factor that highly impact on supplied volume of
goods at market. With expectation of increase price of some goods in upcoming period,
lead to increase demand of same in current period of marketplace (Narayanan, Sahin and
Robinson, 2019). So, it will increase supplied quantity which directly help companies
like Dunelm Ltd., to enhance its sales and profitability ratio. Similarly, expectation of
decrease price in future, create surplus of products in stores, which increases inventory
levels and raise cost of production also.
Thus, it has observed from all these discussions that for managing inventories at stores
and prevent it from surplus and shortage of goods, management of Dunelm Ltd. highly
emphasis on the factors which affect volume of same (Li and Jiang, 2019).
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TASK 2
Evaluation of how concept of emerging theories and models has changed from twentieth century
to twenty-first within modern business practices
With modernisation of organisations, way of operating business, strategic thinking to
develop business practices, etc. are highly changed from twentieth century to present (Bilińska-
Reformat and et. al., 2019). Today, economists to measure monetary condition of marketplace,
use emerging concepts of contemporary theories despite of traditional ones. It includes nudge
theory, behavioural theory and more, which are used in present 21st century. While during 90s,
companies and experts who measure economic conditions at local and national level, use theories
like Keynesian, Fisherian, Friedmanite etc. (Coe, Kelly and Yeung, 2019). Before comparing the
difference of these theories of contemporary and traditional ones, a brief explanation of some of
them has been given beneath –
Concept and Types of Traditional Theory –
Traditional economic theory system is mainly based on customs, history as well as time-
honoured beliefs, that helps in shaping the goods and services which a country produces to meet
demand of its domestic and international market (Fontaine, Martin and Mejean, 2020). It also
emphasis on rules and way of product distribution, for measuring economic state of a nation. For
this purpose, economists in 90s and 20th century, use following main theories –
Keynesian theory – As per this traditional theory, economists view normal economic
expansion or contraction by sufficiency/insufficiency of aggregate demand and supply of
products in terms of total spending of a country (Dreyer and et. al., 2019). For this purpose,
concern is mainly given on evaluating consumers’ spending, company’s investment and
government spending on market. This would help in taking major steps of enhancing monetary
condition of market.
The Fisherian theory – This theory views contraction in economic condition due to
excessive debt used for producing goods, which may impact on GDP of a country (Li and Jiang,
2019). Despite of slumps of typical business cycle, this traditional theory focuses on identifying
symptoms of excessive indebtedness such as weakness within aggregate demand; fall in velocity
or supplied quantity of domestic products; slow in money growth rate; sustained under or less
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performance of labour markets; decrease in levels of confidence; and decline in household
formation and demographic factors etc.
Concept and Types of Modern or Complementary Economic Theory –
Economic growth of a country as per complementary economic theory can be defined in
terms of long-term rise in supply capacity; diverse economic goods for population; growing
capacity on the basis of advanced technology; ideological adjustments within supply and
demands etc. (Eriksson, Norrman and Kembro, 2019). Thus, as per concept of complementary
economic theory, sustained rise in domestic supply of goods is being only result of economic
growth. For example – Under or less developing countries are able to meet basic needs of their
local market, but for producing goods, they depend on developed nations usually, for purchasing
raw materials, resource and more. So, this might increase cost of production and ultimately
increases price of goods (Narayanan, Sahin and Robinson, 2019). This would reduce GDP and
growth rate of such nations. Therefore, to sustain growth and economic state of country, modern
economist emphasis on conventional measures of domestic goods and services, as well as its
components, demographic population, labour force and so on.
Behavioural Economics – As per this theory, for increasing GDP and measuring the
economic conditions, economists focus on evaluating the people’s preferences, their demands
and taste mainly (Rahman and Thelen, 2019). By analysing their purchasing behaviour, domestic
companies focus on producing goods and services as per their demand. This would help in
changing buying behaviour of customers and influencing them to spend more on consuming
domestic goods, instead of international ones.
Nudge theory – This complementary theory like behavioural theory, helps in identifying
ways to positively reinforce the decision-making process of individuals and companies, for
increasing GDP of country (Stank and et. al., 2019). It helps economists in developing strategies
for prevention of market failure, save government high spending rates, encouragement of
desirable actions etc.
Thus, after analysing concepts of both traditional and complementary theories of economy,
it has been analysed that in today’s 21st century, thinking and way of increasing GDP has highly
changed (Aiginger and Rodrik, 2020). Complementary theories possess important characteristic
like pervading role of Government; spend more on society development; fill gap between private
and public enterprise and more, for developing economic state of a country. On contrast,
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traditional theories are only focused on increasing profitability of domestic companies,
increasing consumer spending and company’s investment for enhancing growth rate of national
economy.
CONCLUSION
It has been concluded from all over concept of complementary economic theory, that in
modern world, government, public and private authorities mainly concern on development of
society and infrastructure. As this would directly help in increasing consumer spending rate on
domestic goods or services and accordingly, in enhancing GDP of nation as well. Therefore,
companies concern on each and every factor as per law of demand and supply to fulfil and meet
expectations of consumers, for enhancing sales. Along with this, Government also put trade
restrictions on international firms, so that export of foreign goods can be reduced with increase in
trading of domestic ones, for developing economic state of country.
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REFERENCES
Books and Journals
Bilińska-Reformat, K. and et. al., 2019. Sustainable development concept and creation of
innovative business models by retail chains. International Journal of Retail &
Distribution Management.
Coe, N. M., Kelly, P. F. and Yeung, H. W., 2019. Economic geography: a contemporary
introduction. John Wiley & Sons.
Fontaine, F., Martin, J. and Mejean, I., 2020. Price discrimination within and across EMU
markets: Evidence from French exporters. Journal of International Economics,
p.103300.
Dreyer, H. C. and et. al., 2019. A ranking method for prioritising retail store food waste based on
monetary and environmental impacts. Journal of cleaner production. 210. pp.505-517.
Li, B. and Jiang, Y., 2019. Impacts of returns policy under supplier encroachment with risk-
averse retailer. Journal of Retailing and Consumer Services. 47. pp.104-115.
Narayanan, A., Sahin, F. and Robinson, E. P., 2019. Demand and order‐fulfillment planning: The
impact of point‐of‐sale data, retailer orders and distribution center orders on forecast
accuracy. Journal of Operations Management. 65(5). pp.468-486.
Eriksson, E., Norrman, A. and Kembro, J., 2019. Contextual adaptation of omni-channel grocery
retailers’ online fulfilment centres. International Journal of Retail & Distribution
Management.
Stank, T. and et. al., 2019. Toward a Digitally Dominant Paradigm for twenty-first century
supply chain scholarship. International Journal of Physical Distribution & Logistics
Management.
Rahman, K. S. and Thelen, K., 2019. The rise of the platform business model and the
transformation of twenty-first-century capitalism. Politics & Society. 47(2). pp.177-
204.
Aiginger, K. and Rodrik, D., 2020. Rebirth of industrial policy and an agenda for the twenty-first
century. Journal of Industry, Competition and Trade, pp.1-19.
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