I’m studying for my Economics class and don’t understand how to answer this. Can you help me study?

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1. The number of services offered on-demand has grown significantly. The on-demand service model is expected to change the way businesses serve customers in almost every industry. On-demand services aim to allow customers to consume a service immediately when experiencing a need, anywhere and anytime. This is in sharp contrast with, for example, scheduled services such as public transport ( Dinga, 2018). For example, the interest in the on-demand concept first gained momentum in IT services, specifically cloud computing and Software-as-a-Service applications, where it has reached a level of maturity. Today, on-demand services extend beyond the IT domain to include mobility, parcel collection and delivery and labor, workforce provision. This growth in on-demand services is driven by technological developments; and changing customer requirements. New customer expectations of immediacy oblige businesses to adopt on-demand models.

Reference:

Dinga, E. (2018). A comment on ‘comment on the law of supply and demand’. The Journal of Philosophical Economics, 11(2), 81-94. Retrieved from https://search.proquest.com

2. Importance of Supply and Demand for Managers

In management to understand the mechanics of supply and demand is vital. Supply refers to the goods and services available to consumers. On the other hand, supply refers to the desire and willingness of consumers to acquire goods or services. Companies need both to have the correct amount of supplies to meet the consumer needs in the proper time, quality, flexible that allows making profits. The shortage of supplies affects a business due that clients are lost and also have a surplus of supply also causes hold costs (Alali, Elder, & Zhou, 2019). Managers should be able to maintain operations balanced in supplies according to the demand that is constantly changing depending on external factors such as seasons, purchase power, changes in taste and fashion, among others.

Supply and demand are important for managers to make correct decisions when setting prices, to prepare inventory and forecast, and to create a marketing strategy. On the first-place managers should be able to set prices properly. For managers, it is important to master the skill of price setting. Regardless of what industry it is an art to successfully assign prices that remain profits and creates advantages over competitors (Hinterhuber & Liozu, 2012). In the second place, for managers supply and demand is important to prepare inventories and also forecast for the future. To create a sales strategy, analyze the market, and avoid costs in terms of the surplus of inventory is a priority for any company. Understanding how many units of a product order or how many employees are needed to cover the demand is key to also forecast sales for the future. On the third place, it helps to create a better marketing strategy. Understanding consumer behavior based on demand and supply is important due that helps managers to design better strategies for current and futures situations (D’Amico, Fan, & Kitsul, 2018). Flexibility is important as businesses are constantly changing and newer and better strategies are needed to survive the changes in demand avoiding products and services to become pricey when they are already obsolete or not popular anymore.

Zoom’s Supply and Demand: COVID 19 Pandemic

The first semester of 2020 was greatly impacted in America due to Corona Virus Pandemic. For many companies, the lockdown has been harmful in extreme ways leading them to sign bankruptcy in a couple of months. For others, the pandemic has given them the perfect scenario to impulse their business positioning them as winners in the middle of chaos. A winner company during COVID 19 has been ZOOM. As home office increased in due to social distancing and sanitary extreme measures, the zoom has become part of daily life not only for business purposes but we can start to see even social events through the platform. By the usage of video conferencing, online meetings and group messaging is a tool that helps people to get connected through harsh times. Zoom Founder and CEO, Eric Yuan affirmed that Zoom’s second quarter has been extremely successful and the numbers speak for themselves. To have an idea, Yuan reported “Zoom’s GAAP income from operations during the quarter was $23.4 million. When you compare this to the fiscal year Q1 2020, that’s up from $1.6 million. The company’s adjusted non-GAAP income from operations for the first quarter totaled $54.6 million, up from $8.2 million during Q1 (fiscal year) 2020.” (Cited in BEAUFORD, 2020). Zoom also reported that the company’s net cash totaled $259.0 million for the quarter. Compare this to $22.2 million during fiscal year Quarter 1 2020. Zoom is also forecasting that for the fiscal year 2021, revenue could reach between $495.0 million and $500.0 million (BEAUFORD, 2020). CNN reported that even though Zoom had privacy problems, the company is already working to fix them. Also, that home office could become permanent for many companies increasing the demand for platforms such as zoom. Communication tools such as Zoom have a big opportunity during this crisis as they keep reinventing themselves and helping businesses and the public connected with easy and flexible tools. They are winners for this 2020.

References

Alali, F., Elder, R., & Zhou, J. (2019). An Analysis of Big 4 Pricing and Firm Size: The Differential Impact of Demand and Supply Shocks on Large and Small Clients. Journal of Accounting, Auditing & Finance, 34(2), 204–230. https://doi.org/10.1177/0148558X17704555

BEAUFORD, M. (2020, June 05). COVID-19’s Transformed Zoom into a Powerhouse. Retrieved July 16, 2020, from https://www.uctoday.com/collaboration/video-confer…

D’Amico, S., Fan, R., & Kitsul, Y. (2018). The Scarcity Value of Treasury Collateral: Repo-Market Effects of Security-Specific Supply and Demand Factors. Journal of Financial & Quantitative Analysis, 53(5), 2103–2129. https://doi.org/10.1017/S0022109018000790

Hinterhuber, A., & Liozu, S. (2012). Is it time to rethink your pricing strategy. MIT Sloan management review, 53(4), 69-77.

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