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
