Question

GLOBAL MACROTRENDS AND THEIR IMPACT ON SUPPLY CHAIN MANAGEMENT

Ch. 11 Mitigating Demand-Driven Imbalance

Can a firm work with a government to shape demand?

Answer 1

Demand of a product depends on various factors such as needs of customers, value proposition, Price of product, Economic conditions, Political Situations, trade wars, imports, number of competitors, Brand image of the company, etc. All these factors combine to form the final demand of the product. Although it is exceptional to some products such as Fuels, Luxury goods etc.

Working with government is a way to shape the demand in various ways. There are many products which are needed by the customers and are beneficial to the environment as well as traditional approaches however, the demand is too low as compared to the need of the customers due to the high prices incurred in producing the product. Examples - Water Submersible Pumps, Automatic Irrigation Facilities, Community portals on Internet, Essential softwares to students etc.

The government provides subsidies on products so that people can buy them at lower prices on fulfilling the criteria. Example - Providing free MS Office softwares to Undergraduate and Postgraduate students for skill development.

This enables a company to shape the demand in a way which they try to achieve.

Also, the marketing done through government channels allows the companies to build trust among the customers and they can design the demand in a moderate manner.