Examples
Common Example for Law of Demand
• Electronics: More people buy gadgets, like smartphones, when they go on sale.
• Clothing: Demand for clothing often rises during seasonal sales or discounts.
• Food and Beverages: When prices of popular snacks drop, consumers buy more.
What is demand?
The quantity of a product consumers are willing to buy increases as prices decrease, making the product more affordable.
What is supply?
The quantity businesses are willing to sell increases as prices rise, allowing for greater profit.
What is Organizational Structures?
It’s how a company organizes its employees and teams, showing who reports to whom and how tasks are divided. This helps a business run smoothly and makes responsibilities clear.
Common examples for Organizational Structures
Hierarchy structure
Flat structure
Matrix structure
Divisional structure
Netword structure
What is demand in economics?
Demand is the amount of a product or service that consumers are willing and able to buy at different prices over a specific period of time.
What is supply in economics?
Supply is the amount of a product or service that producers are willing and able to sell at different prices over a certain period of time.
What’s the benefit of a divisional structure?
It splits a company into smaller parts by region or product type, allowing each division to operate independently. Unilever, for example, has divisions based on product lines and locations.
Common Examples of Law of Supply
Agricultural Products: Farmers are more likely to grow certain crops, like wheat or corn, when prices are high.
• Electronics: Manufacturers produce more of popular devices, like smartphones or laptops, when prices rise due to high demand
• Oil and Gas: Higher fuel prices often lead to increased drilling and production.
What factors influence demand?
Factors like consumer income, preferences, the price of related goods (substitutes or complements), and the overall economic environment can affect demand. For example, if people’s incomes rise, they may demand more goods.
Can a business increase supply if there’s higher demand and how?
Yes, if there’s high demand and producers can sell at higher prices, businesses may increase supply to take advantage of the opportunity to earn more profit.
Can a company use a mix of structures and why?
Yes, some companies use a hybrid approach, combining elements of different structures to fit their needs. For example, they might use a hierarchical structure overall but form cross-functional teams for special projects.
Real Life Example for Organizational Structures
1. Hierarchical Structure - McDonald’s: Clear levels of management ensure consistent operations across global franchises.
2. Flat Structure - Buffer: Few management layers allow employees direct access to leaders, promoting collaboration and fast decision-making.
3. Matrix Structure - Starbucks: Dual reporting (e.g., to functional and regional managers) balances brand consistency with local flexibility.
4. Divisional Structure - Unilever: Divisions by region and product allow Unilever to tailor strategies to specific markets.
5. Network Structure - Nike: Nike outsources manufacturing and focuses on design and marketing, forming a network of partners for production.
6. Team-Based Structure - Spotify: Small, autonomous teams (squads) work collaboratively to boost agility and innovation.
Why do people buy less when prices rise?
People buy less because as prices go up, the good or service becomes less affordable, so consumers either buy less or look for alternatives.
How does the price affect supply?
When prices are high, producers are more willing to supply more of a product because they can make more profit. When prices are low, they may reduce supply.
How do companies decide on their organizational structure?
Companies choose based on size, goals, and industry needs. A small tech startup might prefer a flat structure for flexibility, while a large corporation might need a hierarchical or divisional structure for organization.
Real Life Example for Supply and Demand
Gasoline Prices
Housing Markets
Seasonal Prices
Electronics
Holiday flights
How does price affect demand?
Generally, when the price of a good or service falls, demand increases because consumers find it more affordable. When the price rises, demand tends to decrease because it becomes more expensive.
What factors can affect supply?
Factors like production costs, technology, government policies, and the availability of resources can affect supply. For example, if the cost of raw materials goes up, the supply of the product may decrease
Why do companies need different organizational structures?
Different structures work better for different types of businesses. For example, a big company like McDonald’s needs clear layers to manage its many locations, while a tech startup might prefer flexibility and fewer management levels.