The Presence of Supply and Demand

The presence of supply and demand theory can easily be studied and interpreted in every industry throughout the business world. Very often supply and demand are more easily understood in particular industries than it is in others. In the following pages I discuss the supply and demand for insurance, solutions based on insurance and how insurance affects the supply and demand for all industries in the business world. Before proceeding with some descriptions and scenarios we need to discuss supply and demand as it relates to all industries.

The recession has many companies struggling to stay afloat as the demand for many products has drastically declined. While very few companies have gone unaffected by the recession car manufactures have been hit harder then most. With plants all over the country shutting down just so the company can get by, but even with all the layoffs and closed plants it was just not enough for some. GM was one such company being driven to declare bankruptcy GM was then restructured with help from the government and given the chance to try again. Now GM must find ways to increase demand for their cars and beat out the competition.

What is demand and why is it important? Demand is how much a product or service is desired by consumers. (Economics Basics) Demand is important because with out demand companies would not be able to exist because they would have no customers. Because the demand for a company's product is so important being able to manage that demand becomes an important part of business planning. When managing demand a company ultimately wants to be able to set a price that will attract the highest amount of customers while still being able to make a profit. The company also wants to make sure that demand does not exceed the supply and that it is not less then the supply. Making sure the company can keep up with supply and maintaining the demand for that supply can be a difficult task.

Keeping up a demand for its vehicles is going to be critical as GM continues to restructure them selves and get back to being the automotive titan they have been seen as in the past. One way that auto makers keep up demand is with returning customers loyal to the brand. This brand loyalty is critical as it guaranties you future sales however brand loyalty has been on the decline. A graph from the New York Times shoes that brand loyalty has been on a dramatic decline for some time now.

[pic]( VLASIC, BILL)

With brand loyalty being so important GM like many manufacturers often offers incentives for returning customers to purchase another GM vehicle. Often these incentives will include a thousand dollars or more off the perchance of a new vehicle for returning customers ( Alphen, Tony Van. ). Other methods are used to keep up with existing customers such as newsletters, and customer satisfaction phone calls. GM is working hard to keep up their customer loyalty to maintain demand.

In order to create consumer loyalty and generate interest in the company GM is being driven to develop new and exciting cars. The demand for some of these vehicles is exceeding what GM is currently able to supply. One example of this is with the new Chevrolet Camaro. An article by USA Today says "General Motors says it's struggling to meet demand for its new 2010 Chevrolet Camaro, with some buyers paying $500 to $2,500 more than the sticker price" (O'Donnell, Jayne) While the Camaro will not single handedly save GM it is proof that GM can produce a vehicle in which the supply can