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Micro Economic Concepts and Models in Apple Inc.

University: Regent College London

  • Unit No: 4
  • Level: Post Graduate/University
  • Pages: 13 / Words 3319
  • Paper Type: Assignment
  • Course Code: MGT5179
  • Downloads: 221
Question :

This assessment will cover the following questions:

  • Apple is the biggest mobile phone company offering various categories of products. What elements impact the internal environment of Apple?
  • Analyze the economic environment of Apple.
  • Explain the benefits associated with the cross-country trading of Apple.
  • Examine the increasing impact of the European Union on Apple business.
Answer :
Organization Selected : Apple Inc.

INTRODUCTION

The contemporary business environment is broadly competitive and enhanced with such pressures known as modern marketing that can go through producing a good product, pricing that attractively and creating it approachable (Albescu, 2015). The business environment fluctuates that change as per the different situation and is influenced by the different factors that categorised into internal as well as external factors. The contemporary business environment mainly focused on the different factors that impact in a direct manner like sudden changes in the context of demand and supply, the taste of customers, and staff involvement. There are different features that show impact on the different factors like rival firms, suppliers, customers and other internal as well as external factors. In order to better understand the report require to select a company which is Apple Inc. known as an international American company and famous in the automobile sector. To analyze, the report requires to understand the different topics like demand and supply curve, price elasticity, inner elements evaluation and conducting PESTLE analysis in the relation of a selected organisation. Along with conducting an external audit where required to conduct a SWOT analysis to analyze the strength, weaknesses and other elements of the organisation.

MAIN BODY

Overview of the company

Apple Inc. is world famous leading company in Auto Mobile sector that producing different types of gadgets and mobiles that based on the advanced technology and computer software. The headquarter of the organisation situated in Cupertino, California which designs, build up and selling consumers electronics and other online services. The company was founded in 1 April, 1976 about 43 years ago and was founded by Steve Jobs, Steve Wozniak and Ronald Wayne. As per the report 2009, the company have locations about 500 plus retails stores. There are working about 123000 full time staff members and operated 504 stores in 24 countries.

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Business Environment and Micro Economic concepts and models

Current time, business environment important concept for any organisation which is linked with an internal as well as external activities. These activities based on the different people like customers, supplies, distributors, investors and others. Due to changes cultural activities, trends, strategic planning impact on the market and create competition (ARIKAN and ENGİNOĞLU, 2016). As a result it impact on the organisational procedure in direct manner.

Demand: It is an economic term where consumer's willingly desire and ability to buy a products and services and pay price for these products. If all the factors keep constant and increase the price of goods so it will decease the quantity demanded and vice versa. The customer demand of the product according to its requirement and income level. There is main bond between quantity demand and price which is shown demand curve in negative manner. Through marketer supports analysis the price of goods at the market place.

As per the above graph it is analysed that when goods purchase by people according to price which is known as demand curve. From the graph it is understanding that price and goods have adverse relation. When price of the product increase that time decrease the demand of goods and price decrease so demand increase (Baporikar, 2015).

Supply: The meaning of supply the particular quantities which is willingly seller wants to sell at various price. Supply is important concept of economic where define the total amount of specific commodities and services is available for consumers. The supply can be related with the different amount of product at particular price and the amount produced through commodity price shift. Additionally, value and amount consist of a good relationship where increase prices impact on supply in positive manner. Similarly, in case of decrease price so supply of goods are decrease so there is curve become in positive manner.

As per the above diagram it is analysed that when price of the goods is on 60 so supply of the goods is 1600. When increase the price of product from 60 to 80 that time increase supply of products from 1600 to 2000 so it shows positive relation in between demand as well as supply.

Elasticity: In the economics, elasticity refers to the degree the individuals, consumers or the producers change their demand in comparison of price or the income changes. In other words, to asses the change in consumer demand as a result of a change in goods and service price.When a product elasticity greater than 1 so that time demand impact on the price and when lower than 1, then elasticity might so it can not impact on the price (Belyaeva, 2018).

Cross Elasticity: It is a concept that measures the changes in the quantity demanded of one good when the price for the another good changes. It is also called as a cross price elasticity. The cross elasticity of demand for substitute goods is always positive because in such condition demand for one good increase when the price of the substitute good increase. For example, if the price of coffee increases then consumer will switch to less expensive product such as tea and other beverages. In order to compute cross elasticity for this apply the particular formula which is underneath:

….....Cross Price Elasticity of Demand = (Q1X – Q0X) / (Q1X + Q0X) ÷ (P1Y – P0Y) / (P1Y + P0Y)

 

Price Elasticity: Price elasticity of demand is a measure of the change in the quantity demanded or purchased of product in comparison of its price change. For some of the product, their price do not change with the difference of demand, they are called as inelastic in nature (Blahová, Pálka and Zelený, 2014) (Blahová, Palka and Haghirian, 2017) (Boone and et.al., 2019). On the other hand, there are certain goods that their demand changes with the price of its substitute goods they are called as elastic in nature. To calculate it apply the particular formula such as:

 ….....Price Elasticity of Demand = % change in quantity / % change in price

 

Income Elasticity: Income elasticity refers to the changes made in the goods demanded with the change in the income of the consumers, keeping all other things constant. It show that which goods are necessity or a luxury items for the consumer. Under this head, goods are divided into two categorise one is inferior good and other is normal goods (Botha, Kourie and Snyman, 2014) . To calculate income elasticity apply the particular formula which is mention below:

….....Income Elasticity = % Change in the demanded quantity / % Change in Income

 

Oligopoly: It is defined as a market framework with the small numbers of firms that put hold of others from having significant influence. The cell phone industry is part of oligopoly where consist of large firms that are competing with each others to manufacturer by 70 to 80% of the out put. In this market consist of small numbers of sellers that become oligopolistic. Such as, Apple company part of oligopoly market where sell out products in different and unique manner which is not provided by any other company. Additionally, it is also part of the monopoly market where selling out the personal computers and other personal gadgets (Chibba, 2015).

Internal audit: The internal audit conduct all the inner activities and provide results about the condition of business. It helps to analysis the efficiency of staff members and involvement in the particular task. The manager of Apple conduct audit that helps to make better policies to develop positive atmosphere after analysis actual position. There are discussed different points in detailed manner such as:

Productivity: In organisation, a operation manager can liable for the control and arrange entire production activities where focus on different aspects. The company mainly concentrate on the diverse operation, different standards, size of the products etc. Additionally organisation can implement the tool of benchmarking which define that require minimum expected result. Through this tool measuring the productivity of several division then compare with same industry organisation to know their methodology regarding to products and services (De Vita and Case, 2016). It is effective productive activity phase in the context of Apple such as:

  • Revenue for every foot2(such as Apple Store)
  • Production of goods per unit time (Productivity of supply chain management)
  • Milestone per time (Productivity of employees at the time of developing product).
  • Business Strategy diagrams

In every organisation the management analysis the macro and micro environment and know actual position of the business. After that prepare effective strategy that helps to improve all the business activities and performance in positive manner. In the context of Apple require to apply effective marketing strategies such as BCG matrix, marketing mix, online trading and E-commerce. Mainly through E-commerce utilise by the company to attach huge customers and prove services easily. The manager of the company focus on the effective software where able to keep all the information on top as compare with other relative organisation (DesJardins and McCall, 2014). The manager of Apple company develop customise website where provide information according to their competitors analysis basis. The company follow B2B e-commerce where direct contact with the customers and sell out their products. To sell out products consist of laptops, iphones and other gadgets.

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PESTLE Analysis

It is a external analysis is set framework which is utilised by the different organisation in order to examine and observe the macro environmental factors that show impact on the organisational efficiency ( Rosenbach, 2018). There are conducting PESTLE analysis of Apple Inc. in order to analysis the performance such as:

Political: In this factor consist of stable politics, market lobbying, political activities, bureaucracy etc. Apple wants to achieve their key objectives like increase profitability and it will focus on the all political aspects as per the present situation. Through political lobbying continue raise up expenditure in Apple from past years that impact as $6.62 million in 2017. So for this require to follow all the related laws that help in effective performance (Grant, 2016).

Economical: These factors show impact in direct manner where consist of exchange rate, currency rate, economic cycle and inflation rate. In the context of auto mobile industry, Apple famous as leading company that face different hazards mainly related to income generation, IT product distributor that influence by the labour wages. Due to raise cost of the labour in chine would focus on the Apple that manufacturer more products. Recently changes in the global market impact on the Apple in negative manner.

Social: The particular factor related with the social activities where consist of all the social and cultural aspect that increase as per the brand image. In the context of Apple, it get success in effective manner and threat until offer inexpensive or simple to use devices as per the market demand. Different countries such as India as well as china buy products in bulk from Apple in continuous manner. So it is impact on the brand value as well as profitability of the business.

Technological: There is consisting of all the technical factors that impact on the business performance. In the context of the Apple technology plays important role because it is mainly dealing in to different software with special features that provides in mobile and other gadgets. Due to various technological innovation become reason of the strength like batter back up, camera quality that make each more effective.

Legal: It is connected with the legal laws and regulations which is important to follow due to conduct different business activities. If company do not follow all the rules and regulations so spoil market image and face penalty where government engage in the functioning and operations. The manager of Apple follow all the telecommunication principle in order to attain supports from the new industry (Ivolga, 2014).

Environmental: In this factors consist of different variables that based on the risk in the context of Auto mobile sector. There are consisting of different environmental regulations and laws that require to follow by mobile company to get success and growth in effective manner. In case of ignore this factor face litigation that impact on brand image. Apple imports several Chinese products from China where air emissions become as critical problem. It can impact on the Apple business as compare with other company regarding top manufacturing cost and consist of making procedure as per new legislation.

External Audit

SWOT Analysis: It is a internal analysis that evaluate all the internal factors that impact on the organisation in direct manner. There are conducting SWOT analysis to analysis those effective factors of Apple such as:

Strength (Internal)

Weakness (Internal)

· Apple is one of the leading organisation in Auto mobile sector and successful brand which have good position in the market as compare of rivals (Jurina, Vrecko and Barilovic, 2014).

· Apple company can follow premium price policy that helps to generate high profitability margin.

· Furthermore, a Stanford approach regarding to competition and develop effective marketing strategy to make effort to adopt advanced technology.

· The main weakness of Apple to have constrained supply chain in order to follow effective approaches. Such as particular dealers play wisely so company face slower supply of goods and raise up ware hose cost.

· Due to high selling of the mobile phones and other products deduct the value of the brand that become reason of weakness.

· There is company required to focus on the end market sector because follow the premium pricing strategy. Hence lower and middle class people can not afford their products.

Opportunity (Weaknesses)

Threat (Weaknesses)

· Apple have opportunity to improve distribution system and make it our strength. From the disadvantage company learn many things.

· Company can use advanced technology for software that use to attract people (Schaltegger and Burritt, 2017).

· They are applying effective marketing approach to reach more customer and introduce with Apple products and services.

· The Apple corporation face strong competition in auto mobile sector that become main issue. Such as Samsung, Lenevo etc.

· Due to raise labour cost impact on the firm productivity as well as profitability and earn limited profit margin.

· The company face the problem of imitation challenge that occur due to available different varieties at the local as well as private companies.

You can also check: Management Assignment Help

Limitation of Micro Economics

The micro economics can help an individual to achieve knowledge about the behaviour of organisation and specific individual in relation of creating important decision. The whole process consist of proper distribution of existing resources that supports in better connection among the business entity and individual. There are discussed some limitation of micro economical factors are mentioned below:

Lower price of goods: In the current competition, businesses are greedy to stay at the top of their rates, so other companies will profit. To order to ensure that consumers are always committed to Apple's brand, there should be constant price increases according to consumer specifications (Moncrief, Marshall and Rudd, 2015). They are also needed to change the brand according to customer requirements to reduce the usage of replacement goods that are readily available at various prices on the industry. It is all sufficient make effective outcomes that use to measure drawbacks of micro environment.

Breach of contract: Different organisations wants to work at international level so for this required to contract with the local company at specific place. In the context of Apple breach any agreement then conduct legal activities with particular fee that show impact on profit margin.

Ignorance of governance rule: Government of every organisation develop effective laws regarding to different industry which is necessary to follow by all the organisation to conduct their business activities in particular sector. Hence, any negligence of government laws would make work panic and increase different issues like close down of business, bear to pay too much plenty etc (Raziq and Maulabakhsh, 2015).

Potential Benefits for the Company:

  • Apple have good brand image in the market and they have many loyal customer who always prefer Apple products because of different and unique features and updated software.
  • With different marketing strategies influence to people to purchase their products and provide attractive gift vouchers.
  • To intensify sales company prepare strategy as per the target customer by deducting price as per the particular specific economic point that cover all the cost and maintain minimum profit margin (Namada, 2018).

RECOMMENDATION

  • In the context of Apple, there should apply effective, aggressive and rapid innovation.
  • Due to increase sales of Apple products set price strategy as per the middle and lower people accordingly.
  • New creation in product will reduce cost that unfavourable and influence for revenues.
  • Through string distribution system, coordinated with all retailers in order to cover large customers.

CONCLUSION

At the end of the report it is concluded that different principle of demand and supply is effective element of the economic concept that supports to understood a business. Different terms of economic like elasticity can impact on the customer demand and firm productivity in order to analysis all the factors that justified through diagram. To conduct internal audit required to analysis all the effective business strategy as well as productivity to meet with the desired objectives. Through PESTLE analysis identify all the positive and negative impact regarding to company efficiency. After application of SWOT analysis identify all the favourable element of business and prepare all the effective plans to reduce threats.

Related Sample: Global Business Environment in the Context of Tesco

REFERENCES

  • Albescu, O. M., 2015. Business ethics. The relevance of value-creating teachings in the contemporary business environment. Knowledge Horizons. Economics. 7(4). p.75.
  • ARIKAN, C. L. and ENGİNOĞLU, D., 2016. A contemporary Approach to Strategic leadership. International Journal of Information Technology and Business Management, pp.1-4.
  • Baporikar, N. ed., 2015. Handbook of research on entrepreneurship in the contemporary knowledge-based global economy. IGI Global.
  • Belyaeva, Z., 2018. Business Environment Challenges and Trends for Contemporary SMEs in Europe. In The Sustainable Marketing Concept in European SMEs: Insights from the Food & Drink Industry (pp. 13-28). Emerald Publishing Limited.
  • Blahová, M., Pálka, P. and Zelený, M., 2014. Contemporary trends in Japanese business environment: A review of existing empirical evidence. Human Systems Management. 33(3). pp.57-70.
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