Tata Motors - Assignment Example

To respond to the market needs, automotive manufacturers have expanded their range of products through extensive research and development (Ireland, Hokisson & Hitt, 2011). According to the law of demand, when all factors are held constant a good that is highly priced will attract less demand. As such, sales are fewer when the products are highly priced. The automotive market has exploited this law of demand to its advantage (Harrison, 1993). The industry has in the recent past increased capacity to develop and produce affordable cars.

Brands such as Tata Motors have invested in research and development to identify ways of cutting costs. Reduction in costs leads to the production of affordable cars and as such creating demand. A, B and C denote points on the demand curve. The points reflect the correlation between the quantities (Q) required and the particular price (P) associated with the demand. From this it clear that highly priced automotive products have over the years experienced lesser demand. The law of supply demonstrates what quantities of automotive items are to be sold at individual prices.

According to this law, a higher price leads to higher supply of automotive products. Tata Motors, like other players in the auto industry, responded to this law by producing more units when the prices are higher so as to increase revenues. Unlike to demand relationship, relationship of supply has a component of time. As such, many players of the automotive have reviewed how their ordering processes are done. Many industry players are allowing for invoicing twice a month as compared to initial practices of invoicing once a month.

The follow graph is an illustration of this law: In the automotive industry, equilibrium of demand and supply has been in existence in the recent years. Growth of industry is attributable to the fact that the provision of the automotive matches with the