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(Source: lecture note 2, slide14)
Tesco and McDonalds are two examples of two retail companies which have been affected by demand and supply forces in their operations. Changes in demand and supply are mostly caused by price change, income and technological advancement (Noble, 2017). Factors affecting demand and supply in these two companies are explained below:
Increased consumer income- when consumer incomes increase, customers tend to have high purchasing power thus enabling them to buy basic goods (lecture note 2, slide12). For instance, when an employee's salary is increased from $200 to $ 400, they will have more funds to purchase products in bulk (Stern, 2017). As a result, Tesco Company will sell more groceries to people due to high demand. High demand will increase equilibrium prices for goods in the market.
Customer future expectations-Due to fluctuations in the stock market, consumers may speculate decrease in price in future. This will make them to hold on to buy when prices are low and thus reducing demand in the market (lecture note 2, slide12). As result, Macdonald Company will incur high holding and storage cost due to low sales margin. On another hand, when suppliers anticipate a decrease in price