This is the main part of your assignment. It is based on your analysis of a case study and interpretation of trends in data about economic indicators.

Question 2 is based on a case study. Start by reading the case scenario (Increasing demand and supply problems: the bicycle market is under great pressure) provided below.

Then write your answer to this question.

Question 3 is not based on a case study. It evaluates your knowledge and understanding of key economic indicators and the ability to judge the economic performance of a country by observing trends in the data.

Question 1

Based on the information contained in the case study and using concepts from B100 Block 5, Reading 40, analyse the factors that have the potential to affect the supply of bicycles.

(Use approximately four words for this question)

Question 2

Discuss the importance of understanding GDP growth, inflation, and unemployment as indicators of a country's economic performance. Then evaluate the data provided below [Table 1 - Economic Indicators] on these key economic indicators and discuss which of the two countries (United Kingdom and Sweden) shows better economic performance and why.

(Use approximately four words for this question)

	United Kingdom	Sweden
Years	GDP growth	Rate of inflation	Rate of unemployment	GDP growth rate	Rate of Inflation	Rate of unemployment
2011	1.46	3.86	8.04	3.20	2.96	7.80
2012	1.47	2.57	7.88	-0.59	0.89	7.98
2013	1.89	2.29	7.52	1.19	-0.04	8.05
2014	2.99	1.45	6.11	2.66	-0.18	7.95
2015	2.62	0.37	5.30	4.49	-0.05	7.43
2016	2.26	1.01	4.81	2.07	0.98	6.99
2017	2.13	2.56	4.33	2.57	1.79	6.72
2018	1.65	2.29	4.00	1.95	1.95	6.36
2019	1.67	1.74	3.74	1.99	1.78	6.83

Source: World Development Indicators | DataBank (worldbank.org)

guidance for Questions 1 and 2

Question 1

This question asks you to apply the concept of supply, using Reading 40, Block 5, and analyse the factors that can impact the supply of bicycles as mentioned in the case scenario.

To start with, read the case Increasing demand and supply problems: the bicycle market is under great pressure. Using information from the case, identify and analyse the factors that have the potential to influence the size of the supply of bicycles.

You need to make sure that you provide references where appropriate. So, for example, if your understanding of supply and the factors impacting it comes from the B100 readings (as it should), then you need to provide a reference to the relevant reading. Include an in-text citation in your answer and then provide a full reference at the end of the TMA.

Question 2

This question asks you to discuss the importance of understanding GDP growth, inflation, and unemployment as indicators of a country's economic performance. It then asks you to evaluate data on these economic indicators for the UK and Sweden.

Reading 38 of Block 5 has introduced you to key economic indicators. Use your knowledge and understanding from this reading to discuss how these indicators are used to understand and evaluate the economic performance of a country.

You are also provided data on key economic indicators in Table 1. Observe the patterns/ trends in the data and evaluate and compare which of the two countries has been in better economic condition. You are not required to draw graphs of the data. However, for your ease of analysis if you like to add a graph to your answer that is fine, but it will not be given any additional marks.

You need to make sure that you provide references where appropriate. So, for example, if your understanding of economic indicators comes from the B100 readings (as it should), then you need to provide a reference to the relevant reading. Include an in-text citation in your answer and then provide a full reference at the end of the TMA.

Case study

Increasing demand and supply problems: the bicycle market is under great pressure

Post-lock down: supply problems in the bicycle market

2020 was the year of the explosion in sales of both conventional and electrically assisted bicycles. The various confinements and the opportunity that two-wheelers represent to maintain a certain social distance while promoting decarbonised mobility have pushed many users to change their transport habits.With clear results: the bicycle market in Europe jumped by 40% in 2020, +50% on the ebike category, with electric bicycles accounting for 20% of the market (Conebi).

However, in response to this rapid and widespread popularity, the year 2021 is characterised by a striking fact: shop shelves are being sold out. More and more users are finding it impossible to get a bike quickly. The reason:major stock shortages, particularly of spare parts, which can take up to 6 or even 15 months to receive a new bike.

A sector both positively and negatively affected by the covid-19 crisis

Gears, brake levers, cranksets, forks... most bicycle components are affected by stock shortages. After numerous supply problems in the automotive industry, the bicycle industry has been less affected but is not completely unaffected. The Gazelle factory in the Netherlands has announced a lower capacity production due to a lack of components. Claus Fleischer, CEO of Bosch ebike Systems, said "I can't promise anything for the next 12 to 18 months. Everything can change very quickly." The classic muscle bike segment would be the most affected compared to e-bikes or other categories.

The reasons are actually quite simple and are mainly explained by thestrong dependence of assemblers and distributors on production plants located in Asia.

The closure of the borders, caused by the Covid-19 crisis, has considerably slowed down the shipment of components from this part of the world, which is responsible for almost 95% of the spare parts needed to assemble the bikes.

In addition, the bicycle industry is experiencing asharp rise in the price of its components: +30% on average for standard spare parts, sometimes more for the more technical ones. In the same vein, the prices of supply containers are increasing.

Bicycle industry under pressure: a significant gap between supply and demand

Another problem is that since the end of the first confinements in the spring of 2020, demand has far outstripped supply, to the point where Asian factories can no longer cope, even at full capacity. They are therefore obliged to prioritise certain orders, often in favour of the largest in terms of volume, the latter generally coming from American distributors. In Europe, the waiting times for receiving spare parts for Electric Convenience Vehicles (ECVs)are therefore continually increasing.

In order to compensate for the losses caused by the accumulated delays as well as the increase in component prices, some French distributors have already decided to increase the price of their bikes. Users have only two choices: to wait or to switch to a different model from their initial choice.

At the Velco level, we are not currently experiencing any slowdown or blockage in our production ofIoT to be integrated on electric bikes, we hope that the trend will quickly reverse for all affected players in the sector.

An opportunity for relocation and "Made in Europe" dynamic

Looking at the situation, there are opportunities in the European bicycle market. 4 out of 5 ebikes sold in Europe were also manufactured in Europe and UK, where the norm was to import from China. According to Conebi, the bicycle market in Europe represents over 850,000 jobs. The relocation of an entire sector is underway so that it no longer depends on Asian suppliers, as shown by the exponential development of the bicycle valley in Portugal.

References

Velco (2021), 'Increasing demand and supply problems: the bicycle market is under great pressure', 28 September. Available at: https://velco.tech/en/supply-problems-bicycle-market/ (Accessed: 1 March 2022)