Apple Inc. Analysis
The market structure
Apple Inc. is a multinational company based in the United States of America. This firm is one of the leading technology corporations that specialize in the sale of electronic gadgets: cell phones, tablet, and laptop. Even though other stakeholders have specialized in the sale of electronic devices, the organization has unique products. In that account, the firm operates in the monopolistic market structure: there are many sellers and buyers; consumers can identify the products though brand name and differentiation.
The market share
The table below shows the market share for the technology market
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Source 🙁 Don, 2019 fortuno.com. Retrieved fromhttp://fortune.com/2019/02/21/apple-iphone-sales-2018/).
Apple Inc. has a market share of 18% when comparing the total number of units of the electronic gadgets that were sold in the year 2018. However, the market share is too little comparing with the total number of sales that were made in 2018. In addition the market share declined from the previous year which had a market share of 1p percentage.
The Competitors
The company being a multinational organization, the primary competitors are the international firms: Samsung, Huawei, xiomi, and Nokia corporations. The firm’s competitors have been increasing the market share over the year, and shortly, they may reduce the Apple Inc. market. Xiomi is an example of one of the companies that have significantly reduced the demand for the firm in Europe. Moreover, Samsung has tremendously reduced the market share in Asia and Africa.
The Barriers to Entry
The technology sector is one of the most competitive market segment because there are a lot of consumers as well as sellers. However, for a new firm to enter the market they are faced with barriers: the large economy scales advantages of an existing company, high cost of customer switching to new electronics or technology, some customers are also loyal to a specific brand in the current market. All these factors make the entry to the market to be cumbersome though the market structure is monopolistic. Consequently, the threat to for new firm earning the market is low because of the high production cost and capital required to start the business.
The Impact of the Low Entry Probability to the Market
The chances of the fewer firm entering the new market mean the business will thrive for the existing firms that are in the market. Therefore, Apple Inc. future sales might increase since the probability of market having new entrant is low. The firm should maintain the quality of services and products; it’s market share will continue to increase or, remain constant.
The economic outlook
Source: (Fed report, 2019).federal reserve. Retrieved from https://www.federalreserve.gov/monetarypolicy/2019-02-mpr-part3.htm
The Business Cycle
The business cycle involves the rise and the fall of the economic growth in a specific period. The first face is expansion, which has reasonable gross domestic product rate, natural commercial rate, inflation is at 2%. Consequently, the current business cycle of Apple Inc. is an expansion cycle: first, the GDP rate is at 3%, the inflation rate is at 2%. In that account, the firm should utilize stable economic growth and increase its sales since the economy is at the boom season. The buyers anticipate future incomes and tend to buy a lot during the boom season. Therefore, firm sales will increase during the period.
The Federal Reserve fund rate is at 2.5 %, which is desirable since the banks can be able to increase the cash flows and support the business. The prime rate at 5.5% is favorable to the consumer who wants to borrow from the bank. In that account, there is more money in the economy, and therefore the purchasing power of the borrowers have been increased, the firm should anticipate the increase for sales in the United States since its economy is viable.
The sales revenues
The table below shows the sales revenues from the year 2016, 2017 and 2018 and the last two quarters of the fiscal year.
Source: (Apple, 2017). Apple financial report, 2019. Retrieved from https://www.apple.com/newsroom/pdfs/Q2%20FY19%20Consolidated%20Financial%20Statements.pdf
The table above shows the demand for the Apple product has been increasing consistently from the year 2016 to 2018. There was a slight decline of 5% in the second of the finical year due to its pricing methods. The starting price of the commodity in the year 2019 for most apple Inc. product has hiked with twenty percent.hiking of the prices may have caused the decrease of demand of the commodity hence the fall of sales revenue in 2019.
Conclusion
The primary issues affecting the company is the pricing of its products and the ability of the user to use the apple Inc. product. The first strategy that the organization regarding the issues of pricing is to lower the prices of the product to a customer friendly price to counter the competitors such as xiomi who are selling the similar products in a lower value. Most of the Apple gadgets are complex, and many users in the developing country cannot be able to use the product in that regard, the firm strategy number two will be to start promotional and education programs regarding the products.
When the firm implements these two issues, the firm will be able to edge its competitors such as Samsung and Nokia Huawei and ensures its sustainability in the future. The market share of the firm is almost a fifth of all the global technology market which means when the Apple Inc. lower the prices and educates the buyers on the values, and the features of its devices such as the new tablet they launched the company market share will increase rapidly
. The business cycle is an expansion, considering the government monetary policies of the Fed fund rate and the employment rate. Also, the inflation rate is at equilibrium, and buyers are willing to buy in this expansionary season. If the company review its pricing and promotional activities, the firm will be able to grow and increase its prospect of sustainability.
References
Don, 2019, fortuno.com. Retrieved fromhttp://fortune.com/2019/02/21/apple-iphone-sales-2018/)
Fed report, 2019. Federal Reserve. Retrieved from https://www.federalreserve.gov/monetarypolicy/2019-02-mpr-part3.htm