Determinants of Demand- BUSINESS ECONOMICS(BBA/MBA)

 

Determinants of Demand

There are many determinants of demand, but the top five determinants of demand are as follows:

1) Product cost: Demand of the product changes as per the change in the price of the commodity. People deciding to buy a product remain constant only if all the factors related to it remain unchanged.

2) Taste and preferences of consumers: The demand for a commodity/product depends on taste and preferences of consumers. If consumer develops taste or preference over a commodity, they will buy the product irrespective of its high price.

3) The income of the consumers: When the income increases, the number of goods demanded also increases. Likewise, if the income decreases, the demand also decreases.

4) Costs of related goods and services: For a complimentary product, an increase in the cost of one commodity will decrease the demand for a complimentary product. Example: An increase in the rate of bread will decrease the demand for butter.  Similarly, an increase in the rate of one commodity will generate the demand for a substitute product to increase.

 4) Consumer expectation: High expectation of income or expectation in the increase/decrease  in price of a good also leads to an increase/decrease in demand.

5) Growth of population: Another important factor that affects the market demand. Increase in the population, naturally demands more goods.

6)  Tax rate: This also affects the demand, like high tax rate means low demand for goods and vice versa

7) Weather conditions: The demand for certain products purely depends on climatic and weather conditions. Eg: High demand for Soft drinks in summer, high demand for jackets, & woolen clothes in winter.

8) Availability of Credit: Availability cheap credit would increase the demand for durable goods , etc

9) Circulation of Money: Expansion and contraction of quantity of money will affect the demand

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BCG MATRIX-EXPLAINED-BUSINESS STUDIES-BBA-MBA

Boston consultancy group growth share Matrix commonly known as BCG Matrix is a famous portfolio analysis technique developed by Boston consultancy group and it was developed for managing portfolio of different business units. The BCG Matrix shows a relationship between products that are generating cash and products that are eating cash.

The BCG Matrix shows various business units on a graph of market growth v/s market share relative to competitors. Resources are allocated to business units according to where they are situated on the graph.

BCG Matrix

(A) Cash cows – It is a business unit with large market share in a mature and slow growing industry.

Cash cow require little investment and generate cash that can be used to invest in other business

units. These a generally large and mature business units reaping the benefits of experience and

customer loyalty.

(B) Star – Stars are business unit that has a large market share in a fast growing industry. It may generate

cash but due to rapid growing market it requires investment to maintain its needs. It is a high growth –

high market share business unit. These business units are generally in the growth stage of its product

life cycle and not self sufficient in terms of its financial needs.

 

C) Question mark? – These are also called the problem child. It is a business unit which has a small market share in a high growth market. Such a business unit requires huge investment to grow market share but whether it will be a star or not is unknown.

(D) Dogs – These are business units with a small market share in a mature industry .A dog may not

require substantial cash but it ties up capital that could be invested elsewhere. Such a business unit

must be liquidated unless it has some special strategic purpose or prospects to gain market share in

the future.

The BCG matrix provides a framework for allocating resources among different business units and

allow one to compare many business units at a glance.

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Criticism of the BCG Matirx

♦ It is criticised that it does not reflect the true nature of the business. The BCG Matrix considers only

two dimensions High and Low for measurement and while a business may enjoy a high, medium or

low market share/growth rate.

♦ It assumes that high market share always leads to high profits which is not be true. High Costs are

involved in business units with large market share which may lead to normal profits.

♦ There are many parameters to measure profitability other than growth rate and market share. The

BCG Matrix ignores all other indicators of profitability.

♦ The model does not clearly define the markets.

♦ Long term profitability of a business depends upon a variety of factors which may not be related to market share or growth.

Principles of Managerial Economics-BUSINESS STUDIES

 Principles of Managerial Economics

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Economic principles that managers should keep in mind are:

The incremental principle:

The decision is sound if it increases revenue more than increases cost or if it reduces cost more than reduces revenue.

The principle of time perspective:

A decision should consider both the short-run and long-run effects on revenue and cost, giving appropriate weight to the most relevant time period in each decision.

The opportunity cost principle:

Decision-making involves careful measurement of the sacrifices required by the various alternatives.

The discounting principle:

If a decision affects cost and revenue at future dates, it is necessary to discount these costs and revenue to present values before a valid comparison of alternatives is possible.

UGC NET- TOURISM AND ADMINISTRATION- IMPORTANT QUESTIONS

 SOME IMPORTANT QUESTIONS FOR UGC NET (TOURISM & ADMINISTRATION)

1. MANAGERIAL GRID OF LEADERSHIP WAS DEVELOPED BY –

It's also known as the Managerial Grid, or Leadership Grid, and was developed in the early 1960s by management theorists ROBERT BLAKE AND JANE MOUTON. (1964)

2. Pro-poor tourism (PPT) is defined as tourism that generates net benefits for the poor. Benefits may be economic, but they may also be social, environmental or cultural. Pro-poor tourism is not a specific product or sector of tourism, but an approach to the industry.

3. WHAT IS DEMONSTRATION EFFECT-?

ITS THE  ATTITUDE OF COPYING TOURIST BEHAIOUR

4.  THE Hall OF Fame award for Contribution to Tourism and Hospitality from IATO in 2017 is – J K MOHANTY

5. NATIONAL COUNCIL FOR HOTEL MANAGEMENT AND CATERING TECHNOLOGY (NCHM&CT)_WAS ESTABLISHED IN - 1982 (NOIDA UP)

6. DECCAN ODYSSEY TRAINS- PLACES COVERED  ROUTE- MUMBAI, AJANTA,  AURANGABAD,  PUNE, GOA,  SINDHUDHURG, RATNAGIRI

7. CORAL REEFS IN INDIA ARE SITUATED IN  (FORMED WITH CALCIUM CARBONATE)

Ans: 

Gulf of mannar (TN)

Andaman & Nicobar island

Lakshadeep Islands

Related : Great Barrier reef is located in ---------------------------

8. BUTLER’S TOURISM AREA LIFE CYCLE (1980) – SEQUENCE OF STEPS ARE:

Ans: Exploration, involvement, development, consolidation, Stagnation, Decline/Rejuvaton

9. SOME IATA CODES OF INDIAN CITIES 

IXB-BAGDOGRA

IXC-CHANDIGARH

IXD-ALLAHABAD

IXE-MANGALORE

IXG-BELGAUM

IXI-LILABARI OR NORTH LAKHIMPUR AIR PORT ASSAM

IXJ-JAMMU

IXK-JUNAGARH(KESHOGOD)

IXL-LEH (KUSHOK BAKULA RIMPOOCHE AIR PORT)

IXM-MADURAI

IXN-KHOWAI

IXP-PATHANKOT

IXQ-KAMALAPUR  (TRIPURA)

IXR- RANCHI  (BARSA MUNDA AIRPORT )

IXS-SILCHAR (ASSAM) OR (KUMBHIGRAM)

IXT-PASSIGHAT (ARUNACHAL PRADESH)

IXU-AURANGABAD

IXV-AIONG AIRPORT (ARUNACHAL PRADESH)

IXW-JAMESHEDPUR

IXY-KANDLA

IXZ-PORT BLAIR (VIR SAVARKAR AIRPORT)

10. WHEN DID GOVT OF INDIA LAUNCHED E VISA SERVICES?

ANS: 2014

DABUR LAUNCHES VEDIC GREEN TEA

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Dabur Vedic Green Tea Detox Kahwa priced at Rs. 275 for 25 Tea Bags, It has been launched on leading e-ommerce platform Amazon India with 24% off. The product will be rolled out soon in other sales channels also.

DOPPLEGANGER BRAND IMAGE

A doppelgänger brand image or DBI is collection of disparaging images and stories about a brand that are circulated in popular culture by a loosely organized network of consumers, anti-brand activists, bloggers, and opinion leaders.

The major motivation for creating a Doppelganger Brand Image is based on the perception that a brand is being inauthentic by claiming to be something that is not or disguising its true nature.

Some of the examples of DBI’s include Pepsi-Colas fat guy and the popular website, PeopleofWalmart.com. There are incidents where DBI affect familiar brands like Starbucks, Apple, and McDonald’s. This DBI even ignores the technological innovations of the parent company. For example, Botox Cosmetic’s, a self enhancement drug helps to remove unwanted facial wrinkles on the face. But negative stories about the drug are well circulated among consumers that it is deadly poison, leads to frozen faces and addiction. Later, the company has come out with a campaign which neutralized the negative brands meaning and gained wider acceptance among consumers. 

Theory X and Theory Y

Theory X and Theory Y of motivation was developed by Douglas McGregor at the MIT Sloan School of Management in the 1960s. He avoided descriptive labels and simply called the Theory X and Theory Y. He did not imply that workers would be one type or the other. Rather, he saw the two theories as two extremes - with a whole spectrum of possible behaviors in between.

Theory X: ('Authoritarian management' style)

Assumptions of Theory X:

Most people dislike work and will avoid it to the extent possible, therefore 

They must be continually coerced, controlled, and threatened with punishment to get the work done, and that They have little or no ambition, prefer to avoid responsibility, and choose security above everything else. 

The management implications for Theory X workers are that, to achieve organizational objectives, rewards of varying kinds are likely to be the most popular motivator.

Theory Y: ('Participative management' style)

Theory-Y believers create trust based firms with empowered employees.

Assumptions of Theory Y:

Physical and mental effort are natural and most people find work to be a source of satisfaction 

They generally, on their own motivation, exercise self-control, self-direction, creativity, and ingenuity in pursuit of individual and collective goals, They either seek responsibility or learn to accept it willingly, and that Their full potentials not tapped in most organizations. These assumptions serve as powerful behavioral models reflected in the way an organization is structured. 

The challenge for management with Theory Y workers is to create a working environment where workers can show and develop their creativity.

Comparing Theory X and Theory Y

Motivation

Theory X assumes that people dislike work; they want to avoid it and do not want to take responsibility. Theory Y assumes that people are self-motivated, and thrive on responsibility.

Management Style and Control

In a Theory X organization, management is authoritarian, and centralized control is retained, whilst in Theory Y, the management style is participative: Management involves employees in decision making, but retains power to implement decisions.

Work Organization

Theory X employees tend to have specialized and often repetitive work. In Theory Y, the work tends to be organized around wider areas of skill or knowledge; Employees are also encouraged to develop expertise and make suggestions and improvements.

Rewards and Appraisals

Theory X organizations work on a ‘carrot and stick’ basis, and performance appraisal is part of the overall mechanisms of control and remuneration. In Theory Y organizations, appraisal is also regular and important, but is usually a separate mechanism from organizational controls. Theory Y organizations also give employees frequent opportunities for promotion.

Application 

Although Theory X management style is widely accepted as inferior to others, it has its place in large scale production operation and unskilled production-line work. Many of the principles of Theory Y are widely adopted by types of organization that value and encourage participation. Theory Y-style management is suited to knowledge work and professional services. Professional service organizations naturally evolve Theory Y-type practices by the nature of their work; Even highly structure knowledge work, such as call center operations, can benefits from Theory Y principles to encourage knowledge sharing and continuous improvement.