Economic Analysis of FamilyMart: Demand and Supply

This report provides a comprehensive economic analysis, focusing on the principles of demand and supply within the context of FamilyMart, a Japanese convenience store chain. The report begins by defining and illustrating the law of demand, explaining how changes in price affect consumer beh...Read More

Contemporary
Economic Analysis

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................4
TASK..........................................................................................................................................................4
CONCLUSION.............................................................................................................................................12
REFERENCE...............................................................................................................................................13

INTRODUCTION
Economics is the subject that consists mainly the production, dispersion and the
consumptions of the different goods and services. It is an explanation of the how individual,
organizations, government and the countries takes the decision in term of distribution of the
resources . It on the primary basis focuses on a concept that states that consumer act rationally
and it achieve achievable level of the consumption or the advantages that can be taken from the
an activity in a impactful way. Economics can be divided into two types , Micro-economics: Its
an important point in the behavior of an individual entity and the one who produces in the
economy. It thus tries to examine the reason that follows the changes in the prices of the demand
of a particular commodity a juncture of time. Macro-economics: This part of the economy
handles with the whole economies on the territorial, national and an international level. It deals
with a collection of the economic data to shape an economy. The aim of this report is to
highlight evaluation of the two major important of element of the economy. Thus Demand and
the supply in respect to the working of the FamilyMart. The company is based on Japan and is
the second largest convenience store in the chain (Ahsan, 2020). This report contains the changes
that has been seen by the company in terms of sales is the major concern of the newly appointed
sales manager, Jack Dobb and thus a detailed analysation in respect to the influences will be the
focus point of the report. The changes that happen because of the environmental factors will be
discuss. With that the modern with the traditional theories making impact on the value of
FamilyMart will be explained.
TASK
Elucidation of the Law of Demand along with its key determiners.
Law of demand- It states that the quantity that is used by the individual customer changes
inversely with the price of that particular commodity. Overall , the higher the price of that good,
the lower the quantity of that particular good will be demanded (Lahane, Kant and Shankar,
2020). This happens because of diminishing marginal consumption, operating in the mechanism
which states that the consumption of the first unit of an economic commodity that is use by the

consumer, is to anticipate basic needs and later they make effective use of the extra unit of the
commodity to serve the unimportant one. Now as the value of the consumer the further unit less
and less and at last they pay less thereafter. We now get a demand curve by combining all the
units of a good that a consumer is willing to purchase at given prices. The curve is always slops
towards the downward. Each point on the curve indicates the different quantity that is demanded
at the given cost. As the price increase from P2 to P1, the quantity that demanded reduces to Q2
ton Q1. Similarly the consumer demand increases with the decrement in the price of the
commodity.
Illustration 1: Demand Curve
It can be shift or move along with the demand curve (Clibborn and Wright, 2018). These two
concept elaborate with the help of example.

MOVEMENT ALONG WITH THE DEMAD CURVE
The demand curve is changes with the the prices of a commodity due to contraction and
expansion of the does not shift the demand of the product. The changes in the prices of the
commodity does not shift the motion of the curve. The above illustration clearly shows the
demand curve . Contraction of price can be happened due to price of the commodity is relatively
higher. As it shown that price falls from 10 to 7 then the curve vary from 55 to 75, main reason
to shift the customer from one good to another. Also, increase in the prices of the relative
commodity i.e from 10 to 12 , decrease can be shown i.e from 55 to 40 in the demand curve.
Illustration 2
SHIFT IN THE DEMAND CURVE:
The shift of movement of the curve take place when the demand shifts from left or to the right.
It happens due to change in factors such as taste and preferences of the customer , income, etc.
Preferences of the buyer also affects the capacity to increase or decrease the prices of other
substitute goods in the market (Wang, Fang, and Law, 2018). The change of curve from point A
to B which can be examined in illustration 3, leads to changes in graph due to increase in the
quantity as demanded by ultimate user of the product from 80 to 115. This generally happens due
to various reason that are mentioned below:

Illustration 3
Factor determines the changes in demand Curve: The demand of a commodity is usually
varies due to various factors.There are several factors that defines market trends in the market
that differ time to time. The most important factors that can be determined includes:
 Price: There is negative relationship between the price and its relative demand in the
market. It means higher the rate of product, less world be the demand and vice versa. It
happens due to rational consumer who does not afford the product which is high and shift to
substitute of that product.
 Taste and Preferences: It is the most important factor that plays important in economic
points of view (Masuda, 2020). The demand and price of the product is directly linked to
the taste and expectation of the commodity plays major role in determining the changes in
curve. This factor changes with the time and effect the brand value of the product and help
to survive in the competitive market.
 Consumer’s Income: It is another factor that defines the capacity of the customer to buy
any commodity. The curve changes with the income of an individual. It means higher the
income, more will be the expenditure and vice versa. Therefore, the spending capacity of
the customer will not be taken into account at the time of recession.
 Availability of Substitutes: The availability of substitutes shift the customer from one
product to another and change the demand curve. It happens due to cheap rate of one product

shift focus towards substitute of that commodity i.e Petrol and diesel are substitute of each
other . Increase of prices of petrol will shift the demand of the product form petrol to diesel.
Concept of Supply and its related factors in the economy
Law of Supply: There is positive relation between the price and supply of the product. It
contains the quantities of the product that are supply in the market. The curve of the supply is
upward slop different from demand curve, which means higher the price, greater will be the
quantity supplied to the producer (Xue, 2019). The producer is responsible to supply in bulk
when there is chance to increase in the price of the goods because it the best opportunity for them
to add unit that are sold in the market. Law of supply shows the upward sloping line whereas
law of demand is downwards curve which indicates the diminishing marginal utility. Law of
supply also shift with the change in the prices of the product. There are various reason that
affects the change in supply curve are defined thereunder:
Factors affecting changes in the supply curve are:
 Production Cost: Production cost includes cost of labour, climatic condition, crop
cultivation increase due to factors like transportation cost, rising taxes etc. Increase the
production cost. It means increase in production cost, the supply will fall in order t save
money.
 Labour and Material: This factor is most important element that are necessary to carried
out business activities which includes labour, raw material, physical asset, plant and
machinery etc. , helps to increase the profitability and efficiency. No business can run
without this factor as it is considered as the most important elements that influence the
customer behaviour.
 Technology: It is another most important factor that ease the production method. It helps to
advance the production of commodity resulted in increase in supply of the product. This
helps to innovate new ideas and production technique to attract the ultimate consumers.
 Taxes and regulation: The tax policy help to regulate the business activities (Munaro,
Tavares, and Bragança, 2020). Tax policy may affect the demand and supply of the

commodity. It means changes in taxation policy of the government may fluctuate the market
curve of demand and supply.
The break even pint of the demand and supply is called as equilibrium point. The point where
equilibrium price (P) and equilibrium quantity shifts the market curve due to various factors that
affects the demand and supply chain of the market. Increase in product price below P, the
demand will automatically rises and in case of supply, the demand has reverse relation between
the product and quantity of the product (Mahpour, 2018). However, the price will rise towards
the equilibrium point of intersection and increase profitability. Therefore, in case of supply, the
price and supply has direct relation with each other. In this way, the market demand continues to
operate in the market economy and reduce the burden of excess demand an excess of supply of
the goods and services. The market forces affects the economy and avoid the situation of
excessive demand and supply of the product.
Illustration 4: Equilibrium point
Association of the 20th and 21st century’s economic theories with today’s business concern
The current economic indicates various theoretical approach that are important to decide
economic change in the world. The management and accounting sector plays role in participating
actively towards the achievement of product demand in the market.. In context to FamilyMart ,
an well established product service brand in the United Kingdom that emphazsies on covering

large market share to meet the demand of the product. It increase the overall performance of the
business . In relation to emergence of new business, various theories are evolved in the 20th and
21st century are defines thereunder:
TRADITIONAL ECOMIC THEORIES
 Necessity theory: The concept was first propounded by the Carl Mengar and Leon Walrus.
The concept of this theory deals with various aspect of demand and supply ,elements that
ensure smooth functioning of good and services in the market.With the help of this theory,
an organization can provide various resources in the economy. In context to FamilyMart ,
the income of the consumer affects the law of demand to determine the availability of
resources. The consumer choose the commodity according to the latest trend and expectation
influence the meet the demand of such product.
 Keynesian Theory: It provides the policies related to business operation that promotes
wages and prices of the goods to increase workforce and employment of workers. It aims to
improve the efficiency of the product (Fan and Hao, 2020). It helps to increase the
transparency in generating profits and attract the consumers to make revenue to succeed in
the business. In relation to FamilyMart , it aims to increase the purchasing capacity of the
consumer are depending on the income of the rational consumers and their job profile .
CONTEMPORARY ECONOMICS
Behavioural Theory: This theory was first proposed by the Richard Thaler. He defines the
effective mechanism that is necessary to deal with the psychology along with economical
phenomena that helps to outlines the individual behaviour in the present economy. The
FamilyMart use the effective tool to promote the workers and employees to build strong relation
among themselves. The unpredictable pandemic helps to deal with the major implication of it.
This theory helps to understand the economic behaviour to attract the final user of the product.
Nudge Theory: It is considered as the economic concept that are used to enforce the this theory
to understand the behaviour of rational consumer to influence them in the decision making
process. FamilyMart use this theory to provide the effective mechanism to the consumer to
choose the particular brand to meet its demand over the product (Khan, 2019). During this

unimaginable situation of pandemic helps the businesses to apply this theory to influence the
individual tendency to use financial resources to ensure transparency in the economic system
through better flow of cash in the market.
CONCLUSION
From this above report, it has been concluded that the law of demand and supply are
considered as most important tool of the economy.These two important element directly affects
the prices of the product , income of the individual , taste, expectation , quality of the product,
Season changes the future prospect of the economy. The market is place where the exchange of
good and services has been taken place. The demand has negative relationship between the price
and demand is relation to any product whereas law of supply shows direct relation between price
and supply of the product and its relative price in the market. Economy provides various factors
that affects the supply and demand of the goods and services. There are many factors that
influence the market share in the economy. There are certain economic theories that helps the
company to use the following theories to improve the consumer behaviour and attract them to
create brand value in the market. It helps the economy in its development and growth .

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