Walmart store is an American corporation that operates several chains of grocery stores, discount department stores, and hypermarkets. The company was founded in 1962 by Sam Walton and is located in Bentonville, Arkansas. It runs approximately 11,000 stores in more than 26 countries under more than 60 banners. Moreover, the organization offers diverse products and services which range from financial services, wireless services, pharmacy, photo services and retail goods such as electronic and agricultural foods (Marcilla, 2014).
Walmart is the world largest company regarding revenue as it generates almost $500 billion per annum. It is also the world largest private employer with close to 2.4 million employees. Moreover, Walmart store is the largest grocery retailers in the US, and its best-selling product is bananas. Bananas are the most popular fruit in the US and Walmart sells approximately 1 billion pounds of it per year (Hayden et al., 2002). Its low price, as well as health benefits and convenience, fully suit Walmarts shoppers. The product is in the grocery sector which is a huge segment in retail boasting huge sales just behind general merchandise.
Supply, Demand, and Market Equilibrium
Price Elasticity of Demand and Supply
Bananas are the best-selling commodity in Walmart stores. The fruit has high demand in the market and is the cheapest food in the grocery store. However, bananas have several substitutes in the market such as oranges, watermelon and apple fruits (Hayden et al., 2002). Any major change in the price of bananas leads to significant change in its demand. However, consuming the power of customers can be a determining factor since bananas can have inelastic demand for high-income earners. On the other hand, the supply of bananas is likely to be affected by price changes since the rise in the price leads to weak demand and possible surplus in the market. This forces the producers to supply less into the market.
Non-Price Factors That Impact Demand
Tastes and Preferences
Consumer tastes and preference plays a key role in the demand for a product. Customers rate ripe lock bananas higher than conventional bananas. Other customers may prefer bright yellow peel due to its appearance, freshness, and taste (Marcilla, 2014). Other influencing factors include texture and its flavor.
Expectations of Future Price
The future expectation of a price of a product is determined by its expected price in future. Consumers will buy more bananas if they expect the future price to rise. Likewise, if they project the price will stall future, the current demand will reduce significantly.
Non-Impact Factors That Impact Supply
Innovation of Technology
Technological innovation increases the production of bananas in the farms. This means that suppliers can produce more bananas in the market exceeding its demand. Growth in supply consequently leads to falling in the price of bananas thus leading to increased demand in the market.
Amount of Producers in the Market
The number of bananas producers is also crucial in its supply in the market. In the case of many producers, the number of bananas will increase significantly leading to surplus which reduces its price. On the other hand, few producers in the market supply fewer bananas into the market which is less than its demand. This causes a deficit in the market which results to increase in price.
The market equilibrium of bananas is achieved where the demand by the consumers equals the quantity supplied by the Walmart stores. Walmart has competitive advantage over its competitors due to their effective strategies for balancing demand and supply of products and services (Hayden et al., 2002). However, technological innovations are likely to affect the demand and supply of bananas and overall impact its equilibrium. Tissue culture technology in bananas is the kind of technology that has been introduced in the firm. The production of bananas is expected to rise and subsequently impacting on its demand.
Possible Effects of Changes in Demand and Supply on the Market Equilibrium
The demand and supply shifts result in an immediate impact on equilibrium. Due to the innovation, the company will supply more bananas in the market thus moving the supply shift to the right. A lower price point will be created making the product easily affordable thus shifting equilibrium price downwards.
A downward shift of equilibrium price leads to increase in demand of bananas in the market. As the demand increases, more products will be consumed than what is supplied thus in the long run the prices tend to rise. The upward shift of demand subsequently leads to shifting of equilibrium price downwards.
Decisions Related To Supply And Demand
Controlling Production Costs
I will monitor the shifts in supply by influencing production costs in banana production. Minimizing the costs of labor and capital will reduce variable costs and maintain fixed costs. Moreover, controlling these costs prevents rise and fall of prices of products that can negatively impact the demand for bananas in the market.
Improving the Quality of Bananas
The shifts in demand of bananas in the market are associated with its quality. The tastes and preference of the customers are determined by the quality of the bananas thus a more quality type of bananas will prevent unexpected changes in its demand in future.
Hayden, P., Lee, S., McMahon, K., & Pereira, M. (2002). Wal-Mart: Staying on Top of the Fortune 500. Corporate Strategy and Public Affairs Lecture, the Graduate School of Political Management, George Washington University, Washington DC.
Marcilla, L. B. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals.
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