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Four Disruptive Forces: Movements and Shifts in Demand and Supply Curves

CASE FLYER, MANAGERIAL ECONOMICS
ET Cases, 5 pages
AUTHOR(S) : Syed Abdul Samad and Dr. Nagendra V. Chowdary

Case Preview

Four Disruptive Forces: Movements and Shifts in Demand and Supply Curves

 

Expected Learning Outcomes

• The concepts of movements and shifts in demand and supply curves
• The market implications of the four disruptive forces in global economy by 2030 and the impact through demand and supply curves

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I. The Age of Urbanization

1. What is the difference between movements along the curves and shifts of the curve? Illustrate with appropriate examples.
2. With increased number of countries becoming more urbanized, as highlighted in the base article, how would the demand and supply curves change in the following:

  • a. The demand for housing
  • b. The demand for and supply of public transportation
  • c. The demand for and supply of water
  • d. The demand for and supply of improved healthcare facilities
  • e. The demand for security

 

3. ..............

II. Accelerating Technological Changes

1. The base article states that there would be ubiquitous presence of internet by 2025. How do you think would the demand for and supply of the following behave in such scenario?

a. Wearable technologies
b. Personal Digital Assistants (mobiles, tablets, laptops, etc.)
c. Personal meetings

2. With increased automation of knowledge work by 2025, as mentioned in the base article, how would the demand for and supply of human resources change?
3. ..................

III. Challenges of an Aging World

1. The graph given in the base article highlights that the proportion of aging population is increasing, especially in advanced economies. What would be the demand for and supply of Senior Care Products (goods manufactured for elderly people)?

2. With aging populations increasing, what would be the demand for and supply of the following:

a. Nurses
b. Healthcare
c. Customized and preferred funeral services
d. Old-age homes

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Teaching Note Preview

Four Disruptive Forces: Movements and Shifts in Demand and Supply Curves

 

Synopsis

The base article, which is based on McKinsey’s No Ordinary Disruption, outlines the four disruptive forces – the age of urbanization, accelerating technological changes, challenges of an aging world, and greater global connections – and points out a major shift in the world economy by 2030. However, the four disruptive forces also present enormous business opportunities and challenges, influencing the demand and supply curves of variety of goods, commodities and services. The changes in the demand and supply would thus lead to ‘shifts in’ or ‘movements along’ the curves. This case flyer introduces the participants/students to the concepts of Movements and Shifts in Demand and Supply curves.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The participants should be asked to read the following chapter to help them connect the concepts discussed in the case flyer.

  • • Paul A Samuelson, et al., “Basic Elements of Supply and Demand”, Economics, 19th Edition (Special Indian Edition), McGraw Hill Education (India) Private Limited, 2014 – To understand the notions of supply and demand and their operation in competitive markets


Case Positioning and Setting

The case flyer can be used in MBA or Executive MBA or Executive Development Programs, for the following modules/topics:

  • • Movements and Shifts in Demand and Supply Curves – To understand the concept and connotation of movements along and shifts of the demand and supply curves

 

Expected Learning Outcomes

  • • The concepts of movements and shifts in demand and supply curves
  • • The market implications of the four disruptive forces in global economy by 2030 and the impact through demand and supply curves

Preamble to the Case flyer Analysis and Suggested Orchestration

While the accompanying article presents four disruptive forces, based on McKinsey’s No Ordinary Disruption, the case flyer elaborates on the possible effects of those disruptive forces on various goods, commodities and services. In an attempt to illustrate how ‘movements along’ and ‘shifts of’ demand and supply curves happen, the orchestration was carried out as per the sections given in the case flyer.

Case Analysis and Discussion

I. The Age of Urbanization

1. What is the difference between movements along the curves and shifts of the curve? Illustrate with appropriate examples.

The difference between a movement along the curve and a shift in the curve is that the former is caused by a change in price while the latter is not (reasons other than price). The movement along the demand curve means that there will be a change in the quantity demanded with a change in price. However, the shift of the demand curve represents a change in demand, which means that a different quantity will be demanded at a given price [Exhibit (TN)-I]. An outward/rightward shift would represent an increase in demand and an inward/leftward shift of the curve would mean a decrease in demand for the product or service.

For instance, let us say that the price of a movie DVD is ₹100. But after few days the price of the DVD drops to ₹50. As a result of this drop in price more people will buy the DVD, all other things remaining constant. This results in the movement along the curve. Considering the same example, let us assume that the hero of the movie committed a crime in real life, which affected his popularity and therefore lesser sales of the DVD. Here the price was constant at ₹100, but there was an inward shift in demand............

Exhibits

Exhibit (TN)-I: Movements and Shifts in Demand Curve

Exhibit (TN)-II: Movements and Shifts in Supply Curve

Exhibit (TN)-III: Impact of Urbanization

Exhibit (TN)-IV: Impact of Emerging Economies Becoming Major Forces

Exhibit (TN)-V: Impact of Reduced Poverty

Exhibit (TN)-VI: Impact of Increased Consumer Spending

Exhibit (TN)-VII: Impact of Increased Savings

Exhibit (TN)-VIII: Impact of Increased Consumer Spending

Exhibit (TN)-IX: Impact of Accelerated Technological Changes

Exhibit (TN)-X: Impact of Increase in Aging Population on Senior Care Products

Exhibit (TN)-XI: Impact of Aging Population

Exhibit (TN)-XII: Impact of Increasing Life Expectancy

Exhibit (TN)-XIII: Impact of Increasing Older Workforce

Exhibit (TN)-XIV: Impact of Increased Global Connections

Exhibit (TN)-XV: Impact of Increased Tourism

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Abstract


This case flyer is meant for understanding the concepts of Movements and Shifts in Demand and Supply curves. In the base article1, the four disruptive forces outlined, based on the book No Ordinary Disruption2 by the directors of the McKinsey Global Institute, point a major shift in the world economy by 2030. While the four disruptive forces - the age of urbanization, accelerating technological changes, challenges of an aging world, and greater global connections - may seem over simplified, they offer enormous business opportunities and challenges. While the business opportunities would influence the demand and supply curves of variety of goods, commodities and services, an endeavor has to be made to look through whether some of these seismic changes would end up 'shifting' or 'moving along' the curves. How to interpret the influence of these four disruptive forces to translate the same into demand and supply related actionable items?



Pedagogical Objectives

  • To understand the concepts of movements and shifts in demand and supply curves
  • To analyze the market implications of the four disruptive forces that are expected to bring in seismic changes in the global economy by 2030 and discuss the impact through demand and supply curves

Case Positioning and Setting

The case flyer can be used in MBA or Executive MBA or Executive Development Programs, for the following modules/topics:

  • Movements and Shifts in Demand and Supply Curves - To understand the concept and connotation of movements along and shifts of the demand and supply curves


1  "Four Disruptive Forces", The Economic Times, June 6th 2015, page 7
2  Richard Dobbs, et al., No Ordinary Disruption: The Four Global Forces Breaking All the Trends, ISBN-10: 1610395794 (ISBN-13: 978-1610395793), Public Affairs, July 29th 2015



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- Case Flyer
- Analysis
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