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The mission of Apple is that Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings. The corporation has been able to translate its mission into practical objective for the corporation through increased innovation enabling the company to produce products that fit well into the consumer needs. For instance, the manufacture of ipad is a significant move in achieving the company's mission (Apple, 2005).
The external stakeholders are people who are not directly related to the company but are affected by the company in one way or another. The external stakeholders of the Apple, Inc include the company's customers who purchase the products of the company and the company's supplier that supply the raw materials and products that the company uses to manufacture its computers. The suppliers are very essential in ensuring that the company continues its production. Other external stakeholders are the creditors and shareholders of the company. These provide the company with capital for purchase of raw materials and expansion. All these parties are important to the company.
Fair trade is the relationship between the customers, the company and the suppliers that is established based on equity in the exchange of goods and services. The creation of equity is created through a transparent, free and fair trade that ensures that there is accountability for the treatment of all participants in the supply chain. Apple, Inc observes faire trade because it is accountable for the fair treatment of its participants in the supply chain.
A market economy is an economic system in which the exchange of goods, services and information takes place in a freely. Sellers are able to enter and exit the market easily, and buyers have access to complete information about the product offerings, including price. The law of supply and demand governs market economies, and the market itself determines the price of goods and services (Frank & Bernake, 2004). Businesses can decide which goods to produce and in what quantity, and consumers and businesses can decide what they want to purchase and at what price. The main characteristics of a market economy are its flexibility, decentralized and bottom-up nature. Consumers convey information to producers through prices paid in market transactions. This process of determining what is produced and purchased as the cumulative effect of many decision makers across the economy has been called the "invisible hand" of market forces. (Smith) Because consumer taste, preferences, and demographics are changing, a market economy is also ever changing (evolving) making it a faster and more reactive type of economic system than those with centralized planning.
A recession is an economic cycle that is characterized by negative economic growth. It can be caused by various factors. The 2008 economic crisis was caused by a burst in the real market bubble that was caused by rising market prices. Due to lack of confidentiality, credit risks arose in financial institutions leading to credit crunch, hence the economic crisis. The crisis that began in the U.S spread to other countries in the world. The reaction of the U.S government was first to increase the credit in financial institutions so that they can begin lending once more. This is an expansionary monetary policy by the government to increase credit to the public in order to increase the level of economic activities. After the government bailed out those insolvent organizations, it turned on the tightening of regulations regarding lending money by financial institutions. The role of Credit rating companies were reviewed so that they become very comprehensive and thorough in their duties to avoid the repeat of the crisis. This is evident that eh government can help during economic crisis to resuscitate the economy.
Apple's products are trendy and stylish. After Jobs returned in 1997, Apple retained designer Jonathan Ive to differentiate their computers from the typical beige box. Ive's design of the iMac included clear colorful cases that distinguished Apple computers. (Huzefa, Deepti, & Harmanjeet, 2009) Apple's iPod (with the trademark white ear buds and simple track wheel) commands a 15%-20% premium over other MP3 players. Apple and Pixar limit the number of computer products and movies that they sell. Product differentiation with focused quality and style also extend to the Jobs Pixar - "Pixar's executives focus on making sure there are no 'B teams,' that every movie gets the best efforts of Pixar's brainy staff of animators, storytellers, and technologists." (Burrows, Grover, and Green).
Apple positions its Macintosh computers as higher quality and higher price. HP, Dell, and other PC manufacturers are pricing many systems under the $1,000 threshold. "Apple is struggling to meet demand for its new MacBook Pro laptop despite a $1,900 price tag that is nearly twice that of garden-variety rivals" (Apple, 2005).
Apple has only recently entered the low-end (below $500) consumer market with the Mac Mini. Although the Mac Mini is a base model with few features, it comes encased in a very small and distinctive package. Apple portrays this computer as "Small is Beautiful". (Apple) Likewise, the iPod Shuffle was Apple's first entry into the lower-end ($100 range) of flash- memory-based portable music players. The differentiation of Apple's new products has served the corporation very well as the company's competitive advantage. These are accompanied by the best technology that is unveiled through innovation and research and development.
Economic environment: The U.S. economy has shown some improvement and there are signs of full recovery looming the outlook is not certain currently. The uncertainty leaves consumers weary of big-ticket purchases like computers. The premium pricing of Apple leaves the firm at a disadvantage to less expensive competing products. However, when consumers directly feel the improving economy and spending increases Apple will be well positioned to better its performance. Consumers seeking to 'treat' themselves following the economic upturn may be attracted to Apple's premium portables, viewing them as luxury goods. Apple, known for its quality, dependable machines, and excellent customer service may also be seen as presenting a better value than the competitors with fewer frills present at lesser prices.
Demographic Environment: the American middle class has experienced increasing costs across many indicators including, healthcare costs and the CPI Over the past several years with wages remaining relatively constant. Apple's high prices may send potential customers into the hands of competitors when they are unable to justify Apple's high price tags. Counter-intuitively Apple's perceived value has directly benefited them during the economic downturn since they continued to experience growth while other competitors suffered (Farrell, 2009).
In the technological Environment, there is a possibility that ordinary personal computers will become less relevant through increased device convergence. The laptops of Apple's will be less important in daily use of its customers as their multi-function devices meet most of their needs. The corporation currently stands out as a leader in innovation and portable technology. They are conveniently positioned to become a market leader in convergence devices by iterating on their current portable devices and mobile devices like the iPod Touch and iPhone and the ipad. Additionally, there is an increasing concern to innovate due to reduced life cycles of products that could result in missed opportunities due to market entry times and losses on obsolete inventory. Apple uses lean manufacturing to combat the threat of inventory obsolescence (Apple Inc. 2005).
The Chinese economy is growing. This creates another important opportunity for apple to market its products. As the economy becomes more developed, increased wages nationwide will increase the costs of production for Apple and its OEM partners. The increase in quality of life and disposable income to Chinese citizens will provide a larger customer base for Apple to tap into (Huzefa, Deepti, & Harmanjeet, 2009).
The market structure in this computer industry is that of perfect competition. In this market structure, there is perfect allocation of economic resources according to individual interests. The market has many competitors that are insensitive to the actions of any single agent. Consumers, both sets of actions being taken at a price system, which cannot be manipulated, by any single agent, producer or consumer, formalize self-interest as the maximization of profits over production sets by producers and the maximization of preferences over budget sets. Firms in perfect competition are price takers. One price exists for all firms while the demand curve is a horizontal line (Khan, 2007).
Economic profit is usually maximized by firms in perfect competition t the point where MR=MC. In the above diagram, the shaded region shows the economic profit for a perfect competitor.
International trade is the trade that occurs between two or more countries. Regional trade is the trade that occurs between or among members of a given regional block. Regional trade can be termed as international trade because it happens between different countries outside national boundaries. However, it is different form international trade since it only occurs between members of a regional block.
An important advantage of regional trading blocks is that members obtain preferred access to the markets of other members. This may not produce optimal outcomes in the long term. It depends on the overall impact of the arrangements and other concurrent trade policies. Trade agreements set rules for regulating trade and trade-related activity as well as incorporating commitments to remove trade barriers. The record has shown that members of trade agreements can also secure agreements in free trade areas for rules that confer advantages upon their trading partners and reduce trade restrictions that could not otherwise be secured from multilateral trade agreements. Therefore, international trade and regional trade enhance good relation ships among countries as well as enabling countries obtaining products that they do not produce.
Regional trading blocks increase the complexity of the international trading system and can raise transaction costs for business. For example, complicated rules of origin are required to prevent third country product entering via the other party. With different rules negotiated under different agreements, enforcement of these rules and compliance with them by business can be a complicated task. Business also has to take into account the different dispute settlement mechanisms as well as different standards regimes and other harmonization arrangements.
The negotiation of regional trading agreements is resource intensive and there can be an 'opportunity cost' in devoting resources to bilateral or regional, as opposed to multilateral. The NAFTA agreement, for example, was over one thousand pages long and required the establishment of more than two dozen committees and working groups.
Cross-cultural encounters are today more frequent with increased trade, migration, media coverage and travel hence the need to accommodate intercultural and ethnic diversity (Osman-gani & Joo-Senq, 2002). Due to this, communication and technology have greatly improved with time and countries are no longer independent but interdependent (Francesco & Gold, 1998) meaning that companies must operate in the globalization era. The most challenging element in the market place is culture (Czinkota & Ronkainen, 1998). As Harris & Moran (1996) argue socialization for business people must be in their culture, business culture and corporate culture. Involvement of a firm in foreign culture is what shows the firm's degree of adaptability on foreign cultural elements (Czinkota & Ronkainen, 1998). Cultural diversity remains to be an important factor in the modern world market liberalization and mergers across the border. Globalization is a reality and intercultural communication is more of a norm than an exception. As Gulbro and Herbig (1996) pointed out, three things are necessary for a company to succeed in a foreign market:
The attitudes of people differs as far as time, work, change, family, social mobility and religion are related to culture. A society that is so much focused on work has a culture that surrounds work and investing in such a country is worth. On the other hand, a society that values leisure time will have little time for work. Many societies are religions. Some religious aspects are of importance as far as culture is concerned. Different religions have different religious practices. These practices are internalized by the religious faithful of the religion. The religious practices that they practice form societal norms that affect the consumption of goods and services. In addition, the way people view family and social mobility will automatically form their culture because it will influence the way they behave and do business (Yip, Loewe, & Yoshimo, 1988). Other cultural aspects are language, environment, government regulatory policies and the media.
Given the external environment and socio-cultural and technological trends and Apple's unique strengths including the firm's resources and capabilities, including unmatched industrial design teams, talented device engineers, patents and innovation dealing with user interface and usability a logical next step for Apple is to develop a market defining convergence device, likely a tablet. The firm should leverage its close OEM partnerships and internal knack for design and usability to develop an innovative device that fits into Apple's unique system of seamlessly integrated devices and applications to bridge the gap between consumers' personal computers and their mobile phones.
Regional and international trade is important for countries due to the products that countries benefit from. However, for effective productivity and international trade, economic conditions must be good, lack of good economic conditions can lead to economic recessions that might require more efforts of government to bring back the investor confidence ad the economic growth.