Anaylysis of business enviornment Assignment Example | Topics and Well Written Essays - 2000 words

Anaylysis of business enviornment - Assignment Example Some of the available techniques of promotion include using the print media and other media such as radio and TV. This is likely to catch the attention of many potential buyers. This will tend to increase demand of cars. The price of a car Affordability of cars will most certainly increase their demand. However, if the prices are not friendly, demand of cars will be less. This is the prime reason why a company that sells cars should fix the prices skilfully so as not to affect the sales (Frank, 2006, p. 57). Financing options A population found in a country where access to loans is easier will find it easier to buy a car than those who cannot access a loan. Banks and other financial institutions give loans to people who are employed or are doing businesses with returns that can pay off the loan. The income of the buyer Those buyers that earn a lot are able to buy more than one car. Those who earn little are not even able to afford a car. This is the reason why it is important to star t up a car selling business in places where people have good income. In such a place, demand will certainly be higher. New offerings With the introduction of a new model in the market, the demand of this car is usually higher. People tend to buy new models due to changes in the make. They may love the new colour, shape and speed of the new car and as such, they will be influenced to buy. Tastes and preferences If the customers change their taste and preference towards a particular type of car, its demand will most certainly go down. However, if the tastes and preferences of the consumer are in line with the available type of cars, then this will make demand higher. Economic conditions The most influential economic conditions include inflation and balance of payments. When there is inflation, the prices of goods and services tend to go high. In this case, consumers will pay higher for basic commodities than was the case initially. In this case, therefore, consumers’ ability to purchase is strained. They are not able to buy luxuries such as cars, hence their demand goes down. On the contrary, if the prevailing economic conditions are favourable, people will have money to spend, hence the demand for luxuries such as cars will be higher (Bade and Parkin, 2001, p. 43). 2. What product or service might have a highly positive cross elasticity of demand with the market for cars? Describe its impact on the market for cars. Cross elasticity of demand measures the effect of the demand of one good because of the change in the price of another good. The elasticity is measured because of the change in price of one good and how this will affect another commodity demand. The two goods are either compliments or substitutes. When the cross elasticity of demand is positive, it shows that the goods are substitutes. When it is negative, the two products are complements. In the market for cars, motorcycles are the products with a highly positive cross elasticity of demand. O ther substitutes are the public transport such as busses and trains. Many people are opting to buy motorcycles in place for cars due to the effective nature of motorcycles as compared to cars. Customers in a situation where substitutes have such a positive cross elasticity of demand, opt for the product with the highest advantage. In the market of cars, the main reason why people are moving to