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Demand Supply Equilibrium in Toyota Company

29 Jul 2016Economics Essays

This case will be exactly opposite of what it was in the short run. Now the supply would be more while the demand for the Toyota cars would be decreased. There would be a surplus of Toyota cars in the market as the supply would be more than what the consumers would demand. This might even affect the prices of the cars and they may go down as well.

The competition can play around with the shattered image of Toyota. It can take away the market from the company by promoting their cars more. In fact, it could be seen in the long run that Toyota may have already lost a lot of its market share as people in the short run have already opted for other options. This means that Toyota has already started to lose its market share while in the future it would be deteriorated more giving an advantage to the competitors.

By bringing back its cars into the market Toyota would again enter the fight of oligopolies but this time with a lesser market share. The market share would remain the same and there would be no impact on the market share in the long run.

Toyota is currently facing a huge trouble due to the gigantic recall decision it has taken. It did not only cost it in monetary terms but have also got various intangible losses to the company. Other than losing the sales percentage the company has also lost its market share to its competitors and above all is facing a bad image crisis. The brand perception of the company have reduced a lot and have caused the company to face various questions regarding its quality standards which have been a pride factor for Toyota.

This would not only have an impact on the demand for the cars in the short run but will also leave its imprints for the long run too. Since people tend to remember these things the company would have to pay for it heavily. The demand may be the same immediate after the recall but will definitely reduce as the days pass. The company will have a reduced demand and less supply in the short run which will give an opportunity to the competitors.

The long run impact would be that the demand would remain less as people would have attached a lot of negative response with Toyota and thus would not want to buy it. This time, the supply would be more causing probably a decrease in its prices. 

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