Impact of Inputs and Competition on UK Manufacturing (2010-2019)

This report analyzes production decisions in the UK manufacturing sector between 2010 and 2019, focusing on the impact of input costs, including raw materials and labor, on supply. It examines the relationship between price and quantity supplied, considering factors like labor charges, capital, entrepreneurship, and raw materials. The report also explores the concept of perfect competition and its influence on the supply of goods and services within the UK manufacturing industry, highlighting both short-run and long-run production decision-making. Examples, such as IKEA, are used to illustrate how pricing and market dynamics affect supply and profitability in a competitive environment.

Production decisions in UK
manufacturing between 2010
to 2019

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Why inputs and costs impact the supply of goods and services in terms of production
decisions......................................................................................................................................3
Explain the perfect competition market and how it impact the supply of goods and services by
applying in any UK based industry.............................................................................................6
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics is studies which define the social science directed at the satisfaction of human
needs and wants making the best use of scare resources and also having alternative use of the
goods in the market. It is all about study of scarcity and the choices of the consumer in the large
market. The suppliers are the one who manufacture the goods and services and sell in the market
so they have to be updates with the current trends for meeting the needs of the potential
customer(McKenzie, 2021). This report will will analyse the impact of input that includes the
raw material and labour in the production decisions of the UK economy and the manufacturers. It
will be based on the particular example in order to understand the production decisions in the
large market place. Furthermore, It will analyse the role of perfect competitors in short and long
run and also defines the effect of supply of certain commodities in the manufacturing industry.
TASK
Why inputs and costs impact the supply of goods and services in terms of production decisions.
Supply: It is the main concept in the economics which define the amount of goods which
has to be sell by the manufacturer or the supplier in the large market in order to generate higher
profits and revenue. It is related to the increase in the prices of the goods leads to increase the
overall supply of the commodities as the manufacturer will sell their product at higher prices
only. This shows the positive relationship in the prices and the quantity supplied in the large
market. The major consideration to the goods is given and all the production decision is being
taken with the proper analysis of factor of production as increase in the prices of inputs which
includes raw material, labour, land and entrepreneurship tends to rise the overall cost of the
goods to be sold further.
Law of supply say that there is positive relationship in the prices and the quantity supplies
in the large market as the prices increase, supplier will sell more quantity of their goods and
services as it shows the changing behaviour of the producer in respect to change in the prices that
is shown in the graph.

As pert the above graph, it can be said that there is positive relationship in the prices and
the supply of the given goods by which the supply curve is upward sloping, when the prices of
the product was at p3 then the supply of the goods was at q3 and when the price become p2 then
the supply of the commodity rise to q2 as well. This shows the acceleration in the supply of the
goods in the market.
Inputs: These are the goods that are further categories in the four category and includes capital,
land, labour and entrepreneurship. This also helps in the creating goods and services that can be
analysed by the GDP and the national income of the UK.
 Land: These are the resources which can be used by the firm in order to build their
infrastructure but when taking the consideration of the UK economy, It is the wider
concept which also defines the sub part and includes oil, sea, rivers, solar energy that
comes under renewable and non-renewable sources of energy (Grażyna, 2020).
 Labour: It includes the manpower that are contributing their metal and physical skill of
the individual. These are the aspects which includes the age, population, attitude and the
working of the individual in their given job role. This is basically measured by the results
got from the employees.

 Capital: It is the funds and the about which is being used by the business in order
manufacture the products and services in the large market and includes the equipments,
commercial buildings, factory cost and machinery.
Costs:It is the amount which is being incurred on the production of any item to be sold in the
market and includes, raw material, overhead and manufacturing expenses. This leads to have the
direct impact on the profitability and the sale of the goods in the target market.
Production Decisions: It is the certain decisions that is being taken by the entrepreneur in order
to benefit the firm by meeting the satisfaction level of the customer.
Impact on the production Decisions:
 Labour charges: It is the certain decision which is being taken by analysing the
capabilities of the employees in their given job role. The working and the capabilities of
the workers can be increase over the passage of time which could to decrease the overall
cos of production within the organisation. When the firm is offering low cost goods then
it leads to enhance the living standards in the society and increase in the wages of the
employees will make them more dedicated towards their given job role. For example,
increase in the prices of the company impact the GDP of the UK economy in the year of
2010 which results in huge recession and the shortage of the goods.
 Capital: This is the factor which main impact the production decision of the company as
it is the basic by which any forms can start their production in order to offer the goods
and services in the large market with the aim of generating higher profits. In this, delay in
the decision making or the ineffective coordination among the employees impact the
overall profitably and the production of the industry.
 Entrepreneurship: It includes the willingness and the opportunities of the individual in
order to get the particular position in an organisation. In the year of 2019, change in the
government which leads to have distortion within the UK and wrong formation of
alliances were formed against the government which majorly decrease the overall
economy in UK(Sprengeler and et. al.,2020).
 Raw materials: these are the certain input which have to be allotted on time by which
the manufacturing firms can easily rendered the product and services on time in the large
market. For instance, UK is the most suffered market in the year of 2020 due to the huge
impact of COVID-19, unavailability of raw material beings down the exports of the

nation by which they have to face huge looses. It has been seen that the company is most
effected company as they are facing huge loses in the market.
 Identifying trends: It is the general consideration of the market which is leading to have
the current trends of the market which also enhance the decision-making authority by
which they will able to supply the goods and services with in the set time frame. It also
improves the overall opportunities in order to enhance the economic condition of UK.
 Quantity of production: When the firms is not producing the sufficient quantity in the
market with the consideration of meeting the human needs and wants for the same.
Inappropriate decisions related to the supply of goods and services in the market tends to
reduce the overall supply of the goods as per the demand of the target market. Fr
example, high demand in the UK market and the manufacturers are not able to meet the
supply of the given goods which results in the looses for the firms as well down fall in the
GDP of the nation.
Explain the perfect competition market and how it impact the supply of goods and services by
applying in any UK based industry.
Perfect competition is refers to the market structure in which large number of buyer and
seller is taking place as there is no barrier in the entry and the exit of the firms. They are offering
homogeneous products against the effective comparison of market structuring. It is the formal
description in which the competitors are at their highest possibility level. It is majorly based
upon the customer existence and the prices are being set as per the market current rate.
Supply curve in the Perfect Competition:
A perfect competition market is being followed by the firm in marginal cost graph which
is being lying in the minimum of the mean in changing pricing approach. It includes the total
and marginal revenue that is being used in order to increase the overall income. The basic
terminologies that is being used for the concept of profit-maximise condition is the total revenue
ad the marginal revenue(Husni, 2020). These are having the two major concept which are
helpful in the areas are given as follows:
 Short-run Manufacturing Decision-making:
It is the time duration in which one factor is fixed and the other is variable in nature which
producing nay quantity of product and services. There are three aspects in the short-way decision
that includes the costing, revenue and the shutdown process. This supply curve shows the

marginal costing curve line in or above the closing point in competitive market that is showing
the economic level of the manufacturing sector.
It is shown in the above graph that supply curve in perfect competitors within the short-
term and it is showing the line that stays above or at the closing point so this is the profit
generating point in which the company is having higher profits. When the curve line is below the
specific point so this is not in the range as per their goods products and nor relevant.
 Long-run Production Decision-making: It is defined as the time period in which all the
factors related to the costing and manufacturing department is variable in nature. In this,
calculating of supply takes place and it is the series of present market short-run curve and
also having the connection with the certain point of invariant return in the market of
limited time. It is having three productivity cycle that are given as follows:
1. Increasing return to scale.
2. Constant scaling-return.
3. Decreasing returns to scaling.

The above diagram shows the adverse effect in the manufacturing sector due to the short-
term profits which is being generated and having supernormal profit margins. This is having
least proficiency in the long run production with in the UK economy.
Manufacturing industry of UK:
The business enterprises who are involved in offering the goods and services are in very
diverse range which is having certain product range and includes FMCG, technological aspects
etc. which is contributing to the economic value of the country and leading to expand their
business in the new location with the aim of generating higher profits (Di Vaio and et. al., 2020).
As per the report, It can be said that manufacturing industry is the third largest sector in UK
economy.
Impact of the perfect competition market in supply:
 Prices: It is the type of market in which the price of the product is the main consideration
of the target market as no on have the power to change the prices of the goods in the large
market. So manufacturing sectors have to meet their certain expenses so that they can
meet the profits and the revenue of the firm as well. For instance, IKEA is the UK based
manufacturing firm which is dealing in assemble furniture so the seller can sell their
products till the prices of the goods increases or exceeds the cost of the particular goods

in the market. In this case, the buyer will buy the product as they are meeting their
satisfaction level in the market. This is the point when the supplier is meeting to their
clearing point when the demand of the goods is equal to the supply in the large market
palace.
 Number of sellers: There are large number of supplier who are operating their business
in UK market. T has been seen that there are numb ours of manufacturer and when taking
the consideration of perfect competition there is no barrier in the entry and the exist of the
firms in the market. So this become difficult for the firm to understand the exact quantity
to the produced in the market which ultimately effect the UK economy. It is the main
approach of the market to have the unique product so that they can sustain in the
competitive market in order to generate the higher level of revenue and profitability.
 Competition: There are large number of competitors who are rapidly increase in the UK
market. Buyer and seller are the one who influence the competition level within the
economy. It is necessary for the firms to offer the goods at lower prices and high in
quality which can effect the supply in the large market. By this, other firms also reduce
the prices f the firms in the large market due to which they are meeting the competitive
advantage in the market(Vogel, 2021). This is having direct impact in the economic
condition of UK s the buyer and the seller is operating in long-run market. This also leads
to have the low-down in the manufacturing due to the demotivation among the
employees.
 Maximize profit: It is related to the high production cost which is being incurred by the
firm which reflect the overall supply of the goods and leads to have change in the
profitability of the company at the same time. Firms can reduce their prices as they are
able to have more profits in manufacturing sector.
CONCLUSION
It is concluded from the above report that manufactures are the backbone of the economy
which is contributing the higher level of income and profits to them. Supply can be influenced by
the certain factors that includes capital, land labour etc. as these are the essence for any industry
and having direct impact in the profitability and the revenue within the manufacturing industry.
Production decisions is majorly effected due to the unavailability of raw material and the certain
cost which is being indulged in manufacturing industry. Furthermore, the perfect competition

market in the one which is offering the homogeneous products and the rivals firms is increasing
their prices due to having uniqueness in that. This also leads to have the major consideration for
controlling the certain pricing structure of the market.

REFERENCES
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