FORD MOTOR COMPANY 1
As a companyoperating in a highly competitive industry, there is a need to laygreater emphasis o the nature of operations as well as ways throughwhich changes in various sectors of the activities can affect thesupply and demand of . Based on the analysis of theautomobile industry, the capacity of global production of small carshas exceeded the number of trucks and other heavy vehicles since theturn of the century (, 2014).
However, theautomobile sector has been one of the beneficiaries of economic boom.With increased standards of living and lower operational costs by themanufacturers, affordability of vehicles has been increased.Moreover, through the integration of technology in the manufacturing,the supply of products to the automobile industry has been madesustainable. According to the company’s Annual Report 2014, themajor brands namely Ford and Lincoln sold more than 6,323,000vehicles at wholesale prices across the globe (,2014). This is an indication of the high demand and correspondingsupply for the company’s products.
Price elasticityof demand is an economic concept that analyzes the responsiveness toprices. It, therefore, determines the relationship between changes inprices and the quantity of demand of commodities. The companyacknowledges that its pricing is affected by a series of factorsincluding the costs of components of the raw materials in addition tothe costs of warranty claims by the customers. The company facescompetition from various producers including Honda Motor Company,Suzuki Motor Corporations, and General Motors (,2014). However, the customers are not responsive to such changes dueto brand loyalty. Therefore, price changes in the automobile industryare inelastic as massive price changes do not culminate insubstantive changes in the demand for the commodities.
. (2014). Annual Report, 2014. Retrieved from:http://corporate.ford.com/annual-reports/annual-report-2014/files/201_Ford_Annual_Report_sm.pdf