Apple Economics

Apple Economics

Introduction

This global company profile examines Apple Inc, the world's second largest company by market capitalisation and its development as a major retailer. Apple is one of the world's most prominent retailers, but its success is underpinned by its innovation as a manufacturer. Operating 343 stores and one of the highest traffic websites worldwide, this profile focuses on the next steps for Apple as a retailer. The paper focuses on the economics of the Apple Inc (Eicher, Mutti, 2009).

Discussion

Apple is committed to providing its customers with an unparalleled user experience through superior ease-of-use, seamless integration, and innovative product lines. The Company also views constant research and development a key component to its competitiveness looking forward. Proof of this can be seen in Apple's financial statements as a 33.7% increase in R&D expenditures was reported during fiscal year 2010. Intent focus is also placed on the discovery and delivery of digital content and applications through iTunes.

During the last decade, the whole music industry has been affected by the global financial crisis, which also affected the consumer spending in the field of music industry. Nevertheless, the global economy is now showing signs of improvement and this improvement in the economic conditions is bound to increase the consumer spending in the field of music industry. The global uncertainty might affect the exchange rates and may cause them to fluctuate, and there is a possibility of change in international trade rules. This change will certainly affect Apple, because Apple purchases a large amount of raw material from the foreign suppliers (Miller, 2009).

Market Size and Growth

During the five years to 2011, fierce competition has made computer manufacturing and innovative electronic gadgets an increasingly commoditized business. Revenue for the US Computer Manufacturing and innovative electronic gadgets industry is estimated to decline at an average annual rate of 2.5% over the period. At the same time, industry value-added has fallen by 0.9% annually, reflecting shrinking profit margins. In 2011, industry revenue is expected to decline by 4.8% to $40.7 billion as import penetration ramps up and domestic manufacturers benefit little from favorable exchange rates.

Despite declining revenue, domestic demand for computers has increased during the past five years as an increasing proportion of Americans owns computers. Indeed, PC penetration (the share of US households with at least one computer) has increased from 67.3% in 2006 to 75.4% in 2011. Because of the growing number of web-bound consumers, ...