"Analyse the problems of seasonality in supply and demand and ability to devise strategies to cope with the problem."
UNIT6 CORPORATE STRATEGY
Q: “Analyse the problems of seasonality in supply and demand and ability to devise strategies to cope with the problem.”
Demand is the amount of a product that consumers are willing and able to purchase as any given price. Supply is the ability for firm to provide for these demands of goods for the people. Seasonality means the changes in the season i.e. summer and winter. Some goods are said to be seasonal in that the demand for those goods tend to go up in particular seasons such as the demand for warm clothes during winter and the demand for drinks during summer tend to be high only during these seasons.
Demand and supply are linked together because an effect in demand will have a direct effect on the supply and an increase in supply will affect demand, the reason for this is the change it has on the market price.
Not all goods are affected by seasonal change only good that are made for specific season are affected by seasons. As mentioned above the demand for Jackets and warm clothes by summer will be very little or none at all. The problem that this causes is that the supply also has to be reduced. So much that these days when the market is very hard to be competing in seasonal goods are completely taken of the production line up to the time when the demand of the good rises again. This has actually been a strategy to cope with the change in seasons. By changing supply to match each season companies have managed to improve business and change about stock though each season. But this is when the market moves right into the season. But before the season actually comes in, if we were to take the example of winter before we actually come to the end of summer around September the wrong clothes will come into shops and the summer clothes will not come out straight away but the price for these goods will fall. In the same way as we were to approach summer just about this time of the year and then the price of worm clothes will start to fall. This is another strategy that most firms use to get rid of their last stock because next year the clothes will become out of fashion. A price decrease is made to sell the very last of the stock and so enabling them to slowly bring in more clothes for the season coming in. When these good enter the beginning to the season then the price of the goods will be much more expensive. Because these goods tend to be price elastic at this time the demand is high because people trying to get into the correct clothes so they can charge a higher price to get a higher profit. As the demand rises the supply will also have to rise. Most companies these days work very closely to the manufacturers if they don’t manufacture themselves. In this way they can control the supply not to increase too much otherwise the cost of the items will fall. By keeping the supply under control to a certain good level then can carry on with that high price.
