Microeconomics Analysis.edited

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1 Microeconomics Analysis Student’s Name Institutional Affiliation Professor’s Name Course Date

2 Microeconomics Analysis The firm I have selected for microeconomics analysis is Apple Company. History and the firm products On April 1, 1976, two college dropouts, Steve Jobs and Steve Wozniak, established Apple Computer, Inc. to transform people's attitudes toward computers. The aim of Jobs and Wozniak was to develop small-sized computers that individuals would be able to put in their houses or workstations. In 1977, before adding the display, keyboard, and enclosure, the AppleI was marketed with none of these attributes by Jobs and Wozniak (Kim et al., 2021). At first, this apparatus was made by a guy called Jobs directly in his garage. Wozniak retired from Apple Computer in 1983 as he became increasingly disinterested in the everyday running of the organization. Then, as in Apple's case, Jobs appointed PepsiCo's John Sculley president. During the better part of the 1980s, Apple continued with positive growth and posted record earnings in 1990 (Kim et al., 2021). This was primarily because of his existing contract with a tiny firm named Adobe that created the PDF file format. The joint venture of these two firms brought about an increase in desktop publishing. The company produces tablets, smartphones, wearable devices, computers, and a number of online services for Apple users. The following product categories are available from the company: Apple offers iMac, iPad, Accessories, Wearables, and Home. The following operating systems are compatible with it: watchOS, tvOS, macOS, iOS, and iPadOS. In addition to cloud services, digital content, advertising, AppleCare, and financial services are offered (Danko et al., 2019). It runs several websites, including the App Store, where users may look up and download apps and other digital material, including games, podcasts, movies, music, and books. Factors that affect Demand and Supply for the products

3 Demand Demand is mainly determined by the tastes and preferences of the consumer. The firm knows the characteristics that will make Apple phones more appealing to consumers. Each new iPhone model in the lineup offers some improvement over the preceding model (Danko et al., 2019). Most of these advances are related to security, speed, battery life, storage capacity, and camera quality. The phone's model is the second factor influencing the demand for the iPhone. Numerous iPhone series are available on the market, as was previously noted. However, the necessity differs according to the model. Products that were released later are in higher demand than those that were released sooner. Thirdly, changes in the price of comparable products affect the desire for the iPhone. Samsung phones are the primary competitor of iPhones, as was previously mentioned. The cost of Samsung phones affects how much the market wants to buy iPhones. For instance, the iPhone 11 Pro and the Samsung Galaxy M30s compete directly (Danko et al., 2019). If the price is reduced, there will be less demand for the iPhone 11 Pro and more. Supply The cost of related commodities will significantly impact the supply of iPhone items. There are fewer Samsung Galaxy M30s available on the market due to higher sales. Because of their low sales, there is a decrease in the number of iPhones available. The second factor is government-made policy. Since Apple Inc. is a global company, iPhones can be purchased anywhere. However, different countries have different tax rules. Many iPhones are available in the nations with the lowest excise duties. On the other hand, countries with high import duties have lower supply.

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4 The third factor is the income level of the customers. iPhones are associated with riches because of their high price and limited availability. The industrialized countries with the greatest supply of iPhones are the US, China, Spain, and the UK (Dolata, 2017). This is because it is likely that many phones will be bought. However, there is a low supply in Africa and other poor countries since many people need help to afford it. Identify the price elasticity of the demand for the product. One factor influencing the price elasticity of demand is the existence of close substitutes. The more options a product offers, the more elastic its demand will be. For example, many almost identical laptops on the market are similar to the Apple MacBook, such as Dell, Acer, and HP. Furthermore, there are other close substitutes for the Apple iPhone, such as cellphones made by Xiaomi, Samsung, Oppo, and Huawei (Dolata, 2017). Several options are available to consumers when purchasing a laptop or mobile phone. Consumers can easily migrate to other products, meaning that demand for Apple products is elastic and highly responsive to price fluctuations. Companies also need to determine whether the product is a luxury or a necessity to calculate the price elasticity of demand. Compared to needs, which usually have few competitors and an inelastic demand, luxury goods typically have a more significant number of options and a more elastic demand. A laptop is essential for office workers and students who need a personal device to work from home or study, especially during this MCO period (Dolata, 2017). Consequently, there is no elastic demand for laptops. Nevertheless, the MacBook is not regarded as necessary because several close substitutes exist, such as Dell, HP, and Lenovo laptops. Customers are willing to switch from MacBooks to other computers because they are price-

5 sensitive. However, Apple products are considered luxury goods since they are usually more expensive than other electronic manufacturers. Besides your pricing decision, what are your suggested non-pricing strategies? Apple Care offers a warranty and proper services to repair the purchased devices. By offering a warranty, Apple can provide a simple and easy process to customers who have purchased an Apple product to get the company's attention quickly. Some purchased products need to be fixed. To solve the problem, proper service from a company should be offered by repairing or replacing a new one for free. Apple should take advantage of this process by providing warranty services to their products to increase their sales (Tian et al., 2019). However, many critics say Apple's warranty services might damage the company's reputation. This is true; it could create an excellent effect and have a good image worldwide. Many consumers think that no one goes to a company for quality products but only for their warranty and services. Suppose any product that is bought from Apple company will be broken. In that case, new models will quickly improvise and replace it. Also, some people are going for repair services after they have bought the product so that they can save the modes. To save their money, they might return to purchasing the products again. Market Structure Apple Inc. is acknowledged for its monopolistic competition, even if it continues to preserve an oligopoly market structure in the rivalry among smartphone manufacturers. Conflict between monopolies in which several suppliers provide unique products. Samsung and Apple, living together, have created thriving innovation settings. Their rivalry pushes them to keep developing, and their collaboration makes technical advancements possible for all of us. Their collaboration extends beyond handheld gadgets (Podolny & Hansen, 2020). Samsung overtook

6 Apple as the top smartphone rival in Q12023 due to the popularity of both its mid-tier A Series and its freshly announced S23 series. Apple had the lowest YoY shipment decline out of the top five brands. Its Q1 share of 21% was, therefore, the highest it had ever been. Apple Inc. is a prime illustration of market strength in the smartphone industry. Apple has the power to influence the total smartphone market price even though it cannot fully control the market due to the large market share and devoted customer base of its iPhone product. Apple also provides an independent repair provider program where companies may apply to offer an out-of- warranty repair service for Mac and iPhone (Podolny & Hansen, 2020). Qualified companies are permitted to purchase original Apple spare parts to repair some out-of-warranty iPhones or Macs. Merger Activity Apple Inc. is well known for being a vertical integration expert. The company creates the distinctive A-series CPUs that power its iPhones and iPads. Apple Inc. has been pursuing vertical integration for a long time. Its software is installed on the devices and computer systems that Apple makes and assembles utilizing hardware and components that the company also produces. Backward vertical integration has been a remarkably effective strategy for Apple, hastening the creation of its new products and technology (Podolny & Hansen, 2020). Apple's success can be attributed to its vertically integrated corporate architecture. All of Apple's hardware, software, and services are developed in-house. This connection gives Apple total control over the production process, allowing it to make high-quality, aesthetically beautiful, and user-friendly gadgets. Market Concentration Their market concentration in the general computer and tablet market is very high. Apple has a dominant market share in the tablet market, nearly 70 percent. This is due to the success of

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7 popular models like the iPad and iPhone. Apple is projected to move into new markets by focusing on new needs like education and healthcare technology. Apple's products are relatively more expensive than those of other competitors. Therefore, they are in a monopolistic competition with other computer manufacturers like HP, Dell, Acer, etc (Van De Vliert, 2021). Apple's goal is to separate itself from its competitors by making it so that its consumers feel that their devices are superior to those of others. Another way that Apple will do this is through advertisements on TV and radio, etc., to help boost its image. Strategies for Apple to tap into different segments of the same industry and increase revenue and profit through economies of scope. To grow, Apple must pursue business development, and trading has associated transaction expenses. By internalizing various transaction costs through the diversification approach, Apple Inc. can increase its operational profit and competitiveness in the market. A diverse manufacturer provides customers with various innovative products, features, or services in a new market. By accessing a larger audience, businesses can look into new sales channels and potentially increase their earnings and return on investment. When a product reaches a market share higher than antitrust laws allow, Apple will stop the product's development and expansion (Van De Vliert, 2021). For this reason, Apple has often changed the direction of its growth and expansion to expand into unrestricted economic sectors. References Danko, T. P., Vyazovikova, A. S., Kiselev, V. M., Rauskiene, O., Klimenko, O. I., Semenova, G. N., & Sekerin, V. D. (2019). Impact of intangible assets on competitive positions of the

8 Apple company. Journal of Advanced Research in Law and Economics, 10(6 (44)), 1850- 1860. https://www.ceeol.com/search/article-detail?id=910498 Dolata, U. (2017). Apple, Amazon, Google, Facebook, Microsoft: market concentration- competition-innovation strategies (No. 2017-01). SOI Discussion Paper. https://www.econstor.eu/handle/10419/152249 Kim, J., Jeong, B., Kim, D., Kim, J., Jeong, B., & Kim, D. (2021). Who Drives Innovation? Apple. Patent Analytics: Transforming IP Strategy into Intelligence, 139-148. https://link.springer.com/chapter/10.1007/978-981-16-2930-3_11 Podolny, J. M., & Hansen, M. T. (2020). How Apple is organized for innovation. Harvard Business Review, 98(6), 86-95. https://empowerment.ee/wp- content/uploads/2021/03/How-Apple-Is-Organized-for-Innovation.pdf Tian, X., Yang, L., Huang, Y., & Fang, Y. (2022, January). Research on Supply Chain Shortage of Electronic Technology Companies under the Pandemic Situation: A Case Study of Apple Inc. and Xiaomi Inc. In Proceedings of the 2022 13th International Conference on E-Education, E-Business, E-Management, and E-Learning (pp. 605–610). https://dl.acm.org/doi/abs/10.1145/3514262.3514330 Van De Vliert, D. (2021). Apple iPhone: a market case study. MacEwan University Student eJournal, 5(1). https://journals.macewan.ca/muse/article/view/2010

Microeconomics Analysis.edited

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