Economics Assignment: UK Retail Market Demand and Supply Analysis

This economics assignment analyzes the demand and supply dynamics affecting the UK-based retail organization, Arcadia Group. The report examines factors influencing shifts in both the supply and demand curves, including changes in consumer preferences, resource availability, natural disasters, and the impact of digitalization. It explores how Arcadia Group can adapt to environmental changes, such as focusing on product quality and utilizing technology for efficient resource management and customer engagement. The assignment provides recommendations for the organization to optimize its strategies, including predicting sales, managing inventory, and conducting in-depth analysis of influencing factors. The report concludes by emphasizing the importance of understanding customer demand in manufacturing processes and adapting to the market structure to attract customers and maximize profitability.

RUNNING HEAD: ECONOMICS ASSIGNMENT
ECONOMICS ASSIGNMENT

ECONOMICS ASSIGNMENT
2
Table of contents
Introduction......................................................................................................................................3
Discuss changes that are likely to shift supply curve of the organization.......................................3
Discuss changes that are likely to shift demand curve of the organization.....................................5
A brief recommendation on how the organization can adapt itself to environmental changes
faced.................................................................................................................................................7
Conclusion.......................................................................................................................................8
Reference List................................................................................................................................10

ECONOMICS ASSIGNMENT
3
Introduction
Importance of fluctuations in demand and supply has been focussed on in order for the sole
purpose of understanding the way prevalent economic environment can affect business related
decisions of various organisations present within the market structure. For the purpose of
highlighting the way changes in economic environment might tend to affect the demand and
supply curve of UK based retail organisation namely Arcadia Group has been provided acute
focus. In addition, a brief recommendation based on the way Arcadia Group can adapt itself to
the kind of changes faced has also been discussed. The recommendations are provided for the
sole purpose of helping the organisation concerned continue to attain its profit maximising
motive by adapting the changes.
Discuss changes that are likely to shift supply curve of the organization
Arcadia Group has remained committed to improving sustainability of its various clothing
products across lifecycle (Arcadiagroup.co.uk, 2017). For the sole purpose of achieving this, it
has aimed to reduce water and carbon content at time of manufacturing clothing products.
Change in preference level on part of customers targeted: In recent times, the people of UK are
observed to demand for good quality products or services. This might be mainly owing to the
fact that the people are found to become greatly conscious about their health condition. Thereby,
it automatically became a key concern on part of the business organisation concerned to
appropriately select the kind of fibre to be used that can not only help enhance the quality of
cloth manufactured but can also help reduce environmental footprint associated with clothing
(Arcadiagroup.co.uk, 2017). This is also very likely to extend life cycle of clothes manufactured.
Adequate focus of Arcadia Group on this fact, can, in a way, help it get access to quiet a high
level of market price as a result guided by the fact that people of UK are found to choose quality
over prevalent price level (Wilhite et al. 2014). The shift in supply curve of Arcadia Group as a
result of this specified factor can be illustrated by the figure below:

ECONOMICS ASSIGNMENT
4
Figure 1: Decrease in supply curve level of Arcadia Group as a result of focus on clothing
quality
(Source: Livingeconomics.org, 2017)
From the figure above, it can be stated that a prime focus of Arcadia Group has resulted in
decrease in quality of clothes manufactured by it from OQ to OQ2. As opined by Fernandez-
Feijoo et al. (2014), this is mainly owing to the sole fact that focus on quality made the retail
based organisation concerned incur greater amount of cost in buying good quality fabrics in
order to the improved demand level on part of its targeted customers. Although, this resulted in
leftward shift of the supply curve of Arcadia Group from S to S2 as a result of presence of lesser
quality of raw materials but in near future this is likely to help the organisation concerned meet
the expected needs of its customers in a better way as a result of increased level of revenue
earned that could possibly be earned by the organisation. Such increased in profit margin would
mainly be guided by the fact that an attempt on part of Arcadia Group to continue manufacture
of good quality clothing items even at the cost of high price would enable the organisation get
access to market price as per its desire (Bassett et al. 2014). However, the act of charging a
market price level higher than that prevalent within the market price (a change in price level
from P to P2) is unlikely to hamper the demand level of its targeted customers. This would
enable the business organisation concerned enhance the aggregate level of revenue earned by it
with and thereby help it shift its demand curve rightwards. This is very likely to take place as a
result of efficient utilisation of financial resources in manufacturing activities.
Need for utilising the limited level of resources available within the economy of UK: The fact
that the aggregate amount of resources available in the economy of UK is likely to affect the
supply level of the retail based produced manufactured by Arcadia Group. As mentioned by Wu

ECONOMICS ASSIGNMENT
5
et al. (2014), this made Arcadia Group adopt suitable technologies at time of undertaking all its
manufacturing process that helped it obtain the optimum amount out of the resources incurred by
the organisation concerned. This attempt on part of the organisation can be analysed with help of
the figure provided below:
Figure 2: Increase in Supply as a result of efficient utilisation of resources
(Source: Livingeconomics.org, 2017)
From the above figure, it can be seen that adoption of technology helped Arcadia Group enhance
its overall productivity level as a result of optimum utilisation of all its available resources. The
supply curve of Arcadia Group is found to get shifted from S to S1 as a result which helped it
meet the needs or demands of its targeted customers in a better way and thereby earn a reputed
position within retail industry of UK.
Discuss changes that are likely to shift demand curve of the organization
Arcadia Group is found to undertake adequate initiative to meet demand level of its customers to
the fullest extent possible.
Occurrence of natural disasters in UK: The fact that the economy of UK faces winter storms
almost every year tends to affect the demand level on part of the targeted customers of Arcadia
Group (Arcadiagroup.co.uk, 2017). This makes Arcadia Group plan its manufacture of clothing
products accordingly. This is mainly guided by the fact that people show a tendency to save
financial resources at times when the economy is likely to face such storms and whatever
demand gets raised is found to be mainly for woollen garments (Burke, 2017). This makes the
organisation concerned devote a greater amount of its available resources in production of some

ECONOMICS ASSIGNMENT
6
other products associated with retail and at the same time manufacture small amount of woollen
garments to meet the prevalent needs of its customers (Farahani et al. 2014). The demand curve
of Arcadia Group in such a situation can be depicted with help of the figure below:
Figure 3: Decrease in demand for clothing as result of expectation of natural disasters in
the economy
(Source: Livingeconomics.org, 2017)
The above figure illustrates the fact that the motive on part of the customers targeted by Arcadia
Group to save enough financial resources to sustain themselves at times of facing natural
disasters like winter storms is found to be powerful enough to affect the manufacture pattern of
the business organisation concerned related to clothing. This result in decrease the quantity of
clothes demanded from Q to Q2. Such leftward shift of the demand curve is also very likely to
decrease the price level of such products from P to P2 as a result of initiative on part of the
organisation to sell all its clothing products left out as inventory (Brown, 2014). This, as a result,
can help it get access to adequate financial resources that can help it manufacture various other
retail based products during such off-season.
Increased level of digitalisation: Arcadia Group has been found to display all the retail based
products especially clothing items on its official website in a well-designed manner. It is also
found to take adequate initiative to look after the kind of products usually searched in various
social media websites by the customers targeted by it. As cited by Sherwood et al. (2015), this
analysis helped Arcadia Group display products manufactured by it in accordance to that in those
specific sites randomly visited by its targeted customers. Such increased level of digitalisation, in
a way, helped the business organisation earn profit to a far greater extent as a result of its ability
to share information of the products manufactured by it in an eye-catching manner at the right

ECONOMICS ASSIGNMENT
7
place and on the right time (Hirschey, 2016). This also contributed to providing greater level of
convenience related to shopping to its customers which showed a tendency to enhance its profit
level. This can be illustrated by the figure below:
Figure 4: Effect of digitalisation on demand level
(Source: Livingeconomics.org, 2017)
With reference to the figure provided above, it can be stated that increased level of digitalisation
enabled providing greater degree of convenience to customers to get hold of products desired by
them at just a single click. This contributed to enhancement of demand level from D to D1 on
part of the customers targeted. In opinion of Hayes (2014)), this increment in demand level
encouraged the business organisation concerned manufactured greater amount of retail based
products for the sole purpose of maintaining its existence within the retail industry of UK and at
the same time keep all its customers intact. This increased level of supply from S to S1 on part of
Arcadia Group helped it meet the increased needs or demands of its targeted customers in a more
efficient manner.
A brief recommendation on how the organization can adapt itself to
environmental changes faced
The discussion conducted in this study provides a clear reflection of demand and supply shift due
to changes in external environment. The factors influencing these changes can further be
categorised as economic, social, and environmental. In dealing with such shifts in demand and
supply the primary suggestion can be identifying the nature of influencing factors. This helps
conducting an in-depth analysis for better understanding of their features and their implication on

ECONOMICS ASSIGNMENT
8
business. Once the implications of such factors are clear to an entity, it becomes easier for them
to develop profit-optimisation strategies accordingly. Precisely, identifying socio-economic
factors pulling demand of an organisation downward can help those developing strategies for
eliminating, or at least minimising their impacts. On another hand, recognising possibilities of
demand increment in advance can facilitate pricing strategies of firm. Along with enhancing
present revenue of an organisation, it can derive comparative advantage to the firm in long run.
Based on the demand-supply analysis of Arcadia Group, it can be suggested that the
organisations might consider enhancing their focus on predicting sales. In this relation, they need
to collect time series data on demand and supply of their products. This can help the
management identify the factors causing shifts in demand and supply. At the same time, this can
contribute to development of strategies in accordance with identification from collected data.
Another suggestion for the chosen organisation can be developing advanced strategies for
managing inventory. In case of natural disasters, demand for retail sector products rise
remarkably post disaster. However, insufficient stock can restrict firms from utilising the benefits
of this increase in demand. Emphasising more on estimating demand in times of natural
calamities and developing inventory strategies accordingly can help the organization derive
higher amount of revenue.
Conclusion
It can concluded that demand level prevalent on part of the customers is found to play a major
role in case of planning the manufacturing process required to be undertaken on part of the
business organisation concerned. From the assignment, it could be seen that change in
preferences on part of the people of UK tends to affect the supply curve of Arcadia to a great
extent. This is mainly owing to the fact that the unwillingness on part of the organisation
concerned to waster the valuable resources possessed by it makes it undertake the initiative to
undertake all its manufacturing process taking into consideration the demand structure prevalent
within the market structure. This strategy on part of the organisation concerned is found to be
capable enough in helping it attract customers by delivering its manufactured products at right
time and to the right customers. In addition, concern of customers to meet all their needs at times
of arousal of certain abnormal situation within the economy is found to affect the demand

ECONOMICS ASSIGNMENT
9
structure to a great extent. At such situations, the people of the economy are found to develop a
habit to save as much financial resources as possible that tend to hamper the usual revenue
generation process of Arcadia Group. This, thereby, is found to shift the focus of Arcadia Group
from manufacture of clothing products to other retail based commodities manufactured by it in
larger amount.

ECONOMICS ASSIGNMENT
10
Reference List
Books
Burke, W. W. (2017). Organization change: Theory and practice. US: Sage Publications.
Hayes, J. (2014). The theory and practice of change management. UK: Palgrave Macmillan.
Hirschey, M. (2016). Managerial economics. US: Cengage Learning.
Journals
Bassett, W. F., Chosak, M. B., Driscoll, J. C., & Zakrajšek, E. (2014). Changes in bank lending
standards and the macroeconomy. Journal of Monetary Economics, 62, 23-40.
Brown, K. (2014). Global environmental change I: A social turn for resilience?. Progress in
Human Geography, 38(1), 107-117.
Farahani, R. Z., Rezapour, S., Drezner, T., & Fallah, S. (2014). Competitive supply chain
network design: An overview of classifications, models, solution techniques and
applications. Omega, 45, 92-118.
Fernandez-Feijoo, B., Romero, S., & Ruiz, S. (2014). Commitment to corporate social
responsibility measured through global reporting initiative reporting: Factors affecting
the behavior of companies. Journal of Cleaner Production, 81, 244-254.
Schmidt, J. H., Weidema, B. P., & Brandão, M. (2015). A framework for modelling indirect land
use changes in life cycle assessment. Journal of Cleaner Production, 99, 230-238.
Sherwood, S. C., Bony, S., Boucher, O., Bretherton, C., Forster, P. M., Gregory, J. M., &
Stevens, B. (2015). Adjustments in the forcing-feedback framework for understanding
climate change. Bulletin of the American Meteorological Society, 96(2), 217-228.
Wilhite, D. A., Sivakumar, M. V., & Pulwarty, R. (2014). Managing drought risk in a changing
climate: The role of national drought policy. Weather and Climate Extremes, 3, 4-13.
Wu, L., Chuang, C. H., & Hsu, C. H. (2014). Information sharing and collaborative behaviors in
enabling supply chain performance: A social exchange perspective. International Journal
of Production Economics, 148, 122-132.
Websites
Arcadiagroup.co.uk (2017). Arcadia. Retrieved from https://www.arcadiagroup.co.uk/ [Accessed
on 12-11-2017]

ECONOMICS ASSIGNMENT
11
Livingeconomics.org (2017). Living Economics. Retrieved from http://livingeconomics.org/
[Accessed on 15-11-2017]