Comparison Of British Gas And Edf Energy Economics Essay

By August 29, 2017 Economics

In modern-day universe detonation of population has become the major concern of all. Different organisation and Governments of universes taking state are taking necessary stairss to command the rapid population growing. But on the other manus concern entities are using the fact to increase net income in their concern by presenting new merchandises. As a consequence some companies are acquiring benefitted and some are confronting immense loss. The ground behind that state of affairs is simple, Demand and Supply. In a modern market state of affairs without understanding the demand and supply mechanics non a individual concern company can foretell the hereafter of their approaching merchandises. For a concern director to understand the mechanism of demand and supply and updated market state of affairs is really of import. Changing in demand and supply in market ever influences the fiscal public presentation of any concern company where some alterations may be good for a peculiar company and the same alterations can be bad for another company. To exemplify the state of affairs I want to pull attending on four companies which are British Gas, EDF Energy, Aktel Telecom and Grameen phone where British Gas and Grameen phone have been helped and EDF Energy and Aktel Telecom have been hurt financially as a consequence of altering in demand and supply in the market they are viing.

British Gas and EDF Energy:

British Gas and EDF Energy both are trading as electricity supplier in UK for a long period of clip. Over the last two old ages both of this company have faced challenges to accomplish fiscal advancement in the same market and has been affected by the alterations in demand and supply because of the fluctuation of the unit monetary value of electricity.

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British Gas has achieved 98 % rise in net income in first half of this twelvemonth compared with old twelvemonth. They have reduces their duty by some 17 % over the twelvemonth and added 400,000 new clients under their service.

Changes in demand and supply in the market helps BG to obtain the fiscal betterment.

As we know if the monetary value of the chief merchandise lessening, the measure demand for the peculiar merchandise goes up. Monetary value of peculiar merchandises determines its measure demand as it is a factor of demand. As BG was supplying the cheapest rate for electricity the demand for it goes up every bit many people left their old supplier and switch to BG.

On the other manus the providers stating that monetary value of natural energy is same and it is hard for them to provide electricity at this lower monetary value. As a consequence the measure supply for BG goes down as we know if the monetary value of merchandise goes down the measure supply for the peculiar merchandise besides goes down harmonizing to the jurisprudence of supply.

This market state of affairs can be illustrates by demand and supply curve which is given below

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qd2 & A ; gt ; qs2

From the diagram we can clearly see that there is an surplus of demand in the market for BG electricity as measure demand is grater than measure supply and BG have to see a deficit of electricity.

The above state of affairs happens in the short tally. If we consider the long tally analysis they will equilibrate up with the transition of clip. As BG is viing with other electricity supplying company such as Tocopherol ON Energy, Basic Power, Good Energy people will travel to others suppliers because of the deficit as BG will neglect to carry through the demand and their service will be disrupted.

As a consequence factor of demand population will goes down for BG and the demand for the electricity besides goes down. On the other manus, figure of manufacturer addition in the market supply of electricity besides goes up as figure of manufacturers influence the supply.

So in the long run the market state of affairs for BG goes back to its equilibrium by doing a left displacement in demand curve and a right displacement in supply curve which is shown below by diagram

Degree centigrades: UsersarifPicturesLONG RUN.jpg

EDF Energy is another company supplying electricity in UK and trading in the same market with British Gas. In the first half of 2009 the net income of this company was & A ; Acirc ; & A ; lb ; 3123 million and in the first half of 2010 the net income is & A ; Acirc ; & A ; lb ; 1659 million which lessening dramatically by 46.9 % . It is clearly shown that EDF Energy has faced immense loss because of the market state of affairs. During the cold winter last twelvemonth EDF endorsers were sing rise in their electricity measures with terrible service break. At the same clip GB cut off their monetary value of electricity and people moved to them in order to salvage money and to acquire a good service.

As GB electricity was moving like a utility merchandise of EDF Energy with lessening in their monetary value degree, demand for the replacement merchandise goes up harmonizing to the jurisprudence of demand.

We can exemplify this state of affairs with a diagram where we can see that as consequence of the lessening in monetary value of utility merchandise the demand of EDF Energy goes down. So there is a left displacement in demand curve and supply besides goes down.

Degree centigrades: UsersarifPicturesLONG RUN.jpg

Now if we consider the long tally state of affairs the scenario can be changed. Technology is a cardinal factor of demand and it determines the demand of a peculiar merchandise in a market. By utilizing new advanced engineering EDF Energy can better their service and cut down their cost of production and can offer lower monetary value construction to their client and besides can re accomplish their lost market as people can reconnect with them once more.

Introducing of new engineering ever helps a merchandise to increase its supply in the market every bit good as demand. Diagram for this state of affairs would be look like below.

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As per the diagram above we can see that the supply curve shifted right S1 to S2 bespeaking a new monetary value and measure P2 and Q2 which means it accomplish its equilibrium place where demand and provide balance each other.

Aktel Telecom and Grameen Phone:

Aktel Telecom is the first telecommunication service supplier company in Bangladesh. It started working in 1997. Since so it was the lone company supplying telecommunication installations in the state. It captured the whole market and maintain making concern one sided for a certain period of clip. It has generated a immense sum of operating net income at the beginning phase. The market state of affairs was really favorable for them unless another company named Grameen Phone established. The market state of affairs bit by bit changed for Aktel as it got a difficult competition from Grameen Phone as it introduces new thoughts and utilizing modern engineering they create a high capacity web system all over the state. Aktel started confronting new jobs and challenges all of a sudden and they were non ready for it with advanced thoughts.

As a consequence people were going interested in GP as it was running extended activities such as publicities, advertizements, moneymaking bundles and relatively inexpensive call rate with ISD installation when Aktel showed a weak public presentation in those several sectors. In penchant of GP, endorsers of Aktel started traveling towards GP seting them in a black status and demand for Aktel decreased with yearss frontward.

Now here the factor influence the demand of Aktel is penchant which in favor of GP and against of Aktel. Harmonizing to the jurisprudence of demand if people prefer a peculiar merchandise than others, the demand for that merchandise addition and the demand of the merchandise which is against penchant goes down. A diagram has drawn below to exemplify the state of affairs.

Degree centigrades: UsersarifPicturesLONG RUN.jpg

From the diagram we can see that the demand curve D1 shifted left to D2 acquiring the monetary value and measure down and diminish in supply curve which means because of decrease in demand the monetary value goes down every bit good as supply goes down as we know providers ever want to provide at a higher monetary value.

As portion of long tally effects, late Aktel has changed to Robi to recover their lost topographic point in the market. Robi is reconstituting its system by improved engineering with the purpose of supplying first-class client satisfaction and service every bit good as the largest societal networking.

As Robi has come up with new technological installations, it will assist them to increase the supply in the market as engineering is a factor of supply. To depict the state of affairs a diagram is the better option which has given below.

Degree centigrades: UsersarifPicturesLONG RUN.jpg

The diagram shows us a right displacement in the supply curve S1 to S2 and the monetary value decreased from P1 to P2. As a consequence of monetary value goes down the demand goes up which is besides shown in the diagarm and therefore opposite forces equilibrate up and the market comes to an equilibrium place.

In instance of Grameen Phone, technological promotion helped them to go the prima telecommunication service supplier company in Bangladesh with a entire 23 million endorsers. They introduce the GSM engineering for the first clip in the state. Over the last two old ages they reported 1700 Crore and 127 Crore of gross revenues gross in the first quarters with a growing of 8 % . It has covered the 44 % of the nomadic market and doing net net income at an increasing mode twelvemonth to twelvemonth. It is the first cyberspace and nomadic broadband supplier in Bangladesh and its web screen about 87 % of the whole state. GP introduce pre paid bundles and acquire a immense response as people are more interested in utilizing pre paid than station paid. By running a technologically strong administration GP is now in top of all other company.

Technology is the factor which helps GP to accomplish fiscal success. They increase the supply of their merchandises and besides to distribute their web across the state which similar to the jurisprudence of supply. The diagram screening inside informations about it given below.

Degree centigrades: UsersarifPicturesLONG RUN.jpg

The diagram above shows us a right displacement in the supply curve S1 to S2 and the monetary value decreased from P1 to P2. As a consequence of monetary value goes down the demand goes up which is besides shown in the diagarm. As a consequence of increasing demand people are more intend to purchase GP merchandises and GP is bring forthing more net income and roll uping great fiscal stableness comparison to the other company trading in the similar fortunes.

Despite of holding a strong clasp in the telecommunication market, the impressive public presentation of GP can halter in a long tally state of affairs. There is a possible factor which can harm its public presentation by worsening in the demand degree, monetary value of nomadic telephone. GP every bit good as other companies are merchandising based on the approval of nomadic telephone. Without any uncertainty mobile telephone is the inevitable complement of GP and if there is any flactuating in the monetary value of Mobile, it straight affect the market of demand. There is a possibility of monetary value rise for mobilephone as the new authorities can modify the revenue enhancement system. So the demand for GP may be goes down because of addition in monetary value of Mobile as it is a complement prodict of GP.

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From the diagram we can see that the demand curve D1 shifted left to D2 acquiring the monetary value and measure down and diminish in supply curve which means because of high monetary value of complement mobile phone demand of GP goes down every bit good as supply goes down as we know providers ever want to provide at a higher monetary value. As a consequence the market comes once more in an equilibrium where demand and supply lucifers.

To sum up the analysis discussed above we can state that the mechanism of demand and supply is a really indispensable factor for every concern organisation. It doesn & A ; acirc ; ˆ™t affair where of all time the company is located as in our treatment we have states from both first universe and 3rd universe and demand and supply mechanics work same in the both states. In corporate universe for concern directors to understand the mechanism of demand and supply is inevitable as in order to make current market research it is the basic factor what they will come across and have to do important concern determination sing both the short tally and the long tally for the fiscal advancement of their single concern entity.

Wordss: 2016

Mentions:

BBC Business News,2010. British gas sees net incomes lift 98 % in first half of twelvemonth. [ on-line ] Available at & A ; lt ; hypertext transfer protocol: //www.bbc.co.uk/news/business-10784905 & A ; gt ; [ Accessed 16 August 2010 ]

EDF Energy Press Release,2010 [ online ] Available at & A ; lt ; hypertext transfer protocol: //www.edfenergy.com/media-centre/press-news/news-documents/EDF_Group_half_year_results_2010.pdf & A ; gt ; [ Accessed 16 August 2010 ]

Grameen Phone, [ online ] Available at & A ; lt ; hypertext transfer protocol: //www.grameenphone.com/index.php? id=64 & A ; gt ; [ Accessed 17 August 2010 ]

Grameen Phone, [ online ] Available at & A ; lt ; hypertext transfer protocol: //www.grameenphone.com/index.php? id=550 & A ; gt ; [ Accessed 17 August 2010 ]

Wikipedia, The Free Encyclopedia, 2010. Robi [ online ] Available at & A ; lt ; hypertext transfer protocol: //en.wikipedia.org/wiki/Robi & A ; gt ; [ Accessed [ Accessed 18 August 2010 ]

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