Assignment details attached

ASSIGNMENT 2: MICRO CASE STUDY
Table of Contents
Introduction    3
Key Micro Economy Elements Favouring Apple    3
Understanding Micro Principles and Negative Impact on Apple    3
Understanding of Basic Economic Theories and their Application to Apple    5
Issues and Claims about Apple which need to improve    6
Economic Policies of the Government and their Effects on Apple    8
Recommendations for Improving the Prevailing Situation of Apple    10
Conclusion    10
References    12
Introduction
Apple is an American multinational company, the company entered smartphone market in the year 2007. Apple started with the basic launch of 4GB and 8GB iPhones. After this, the company has revolutionised the smartphone market totally. The company has completely changed the concept of satisfying the customers. Since then, Apple with its innovative techniques and application of economic principles; grabbing high market share. This paper is a critical analysis of the Apple’s iPhone microeconomics perspectives.
The company tracks down the demand and supply of the iPhones in smartphone market and explains the rationale behind the huge and quick price cuts. This paper divided into five parts. It demonstrated the understanding of micro principle and the negative impact on Apple. It develops understanding of elementary economies theories and the application to Apple.
Key Micro Economy Elements Favouring Apple
Understanding Micro Principles and Negative Impact on Apple
Microeconomics is the branch of the economics that deals with the individual behaviour and company when making decisions given scare resources. The overall objective of the microeconomics is to understand the behaviour of individual unit. This unit can be consumer, business or company to predict the success in future. As mentioned by Goodwin et al (2019), the principle of microeconomic is use by many organisations to make decisions regarding various factors such as demand and supply, types of goods and services and adoption of feasible price strategy.
After examining the price factor as a micro economic in the case of Apple, the company has increased its price of its smartphones many times as compared to its competitors. As indicated by Bas, Mayer and Thoenig (2017), in micro economies, other things being constant, the product having high demand and short supply generally sold at the higher prices in the market. Vice versa, this is not a case of Apple’s iPhone. In 2007, the company decreased its price of many versions of the iPhone as a pricing strategy. As Apple was just introduced in market, we could assume that the price cuts were a smart tactic to increase the sales and the demand of the product. However, unfortunately the price cuts did not prove to be an effective strategy for all companies and for all kind of product.
Another factor such as timing and the price cuts are another important factor, which Apple required to consider. They are a crucial part of the managerial decision, which Apple fails to take. Another micro economies principle is the elasticity of the demand. According to this principle, the demand of the product defined as an elastic and inelastic on the base of the nature of the product (Kienzler & Kowalkowski, 2017). Since there is previously some of the confusion regarding, whether iPhones are luxury or the necessary product, iPhone struggled in the initial years to make its customer base and path was not same as other smartphones.
The product was definitely not the first kind in the smartphone industry but it was advanced as compared to other smartphones. After the original iPhone produced, Apple began adapting phones with better technology. This is because as Apple still have elastic demand and high price. iPhone steadily become top leader next to the Samsung. Most of the consumers are not aware of how product life cycle works. Many business and even Apple sees consumers as a person whose material, passion and interests forecasted. The company made the fact so palpable with price drop, the evolution of the iPod is a nice way but it did not make difference of $ 200 (The European View, 2019).
The company does not understand the economic principle and has to bear the consequences. Another big component of the micro economies is supply part, Apple struggled keeping up the demand for iPhones in 2007. The company has to face the negative aspect as it faced high demand but insufficient supply. Apple iPhone 3G has to face some of the serious supply issues when it launched. According to the micro economic law of demand and supply, price determine on that level where the demand of the goods interacts with the quantity supplied in the market. Apple did not follow this principle in case of its 3GS product, which is why company has to face the insufficient supply (The European View, 2019).
On the top, government intervention also affected the Apple’s sales, when the company released iPhone 5. The government appeared and it intervenes with many factors like price of the product. The Obama administration has ordered that a proposed ban on the sale and import of certain Apple products be scrapped. The order represents government intervention in a bitter patent row between the iPhone maker and rival Samsung. As an outcome of this, Apple has to deal with decrease in sales. Government imposed taxed on Apple like sales tax, on the payments. It is a payment company has to pay to the governing body for the sale of the goods. The whole government intervention increased the price of Apple due to taxes and consumer has to bear it.
Fan and Yang (2020) have described that Apple plays in the oligopoly market; there is no price independency in it. The oligopoly market is a result of various forms of collusions, which reduces the competition and lead high cost to the consumer. For example in case of Apple, if Samsung (being rival company) brings down the prices, Apple should also bring down. However, it seems that Apple does not follow the rules of the oligopoly market. It is the main reason why the consumer leaves Apple product and switch to another lost cost smart phones. This makes low sales of the Apple iPhones and even low market capitalisation.
Understanding of Basic Economic Theories and their Application to Apple
The branch where there is a link between the business and the economics is called business economics. Many business managers use this to solve the business problem and find the solution. Business manager apply economics laws, understands elementary theories and principle to solve various business problems such as demand forecasting, the extent of output to be produced and the price of the output. The branch of business economics is an application of economic analysis to many business problems. It provides a link between economic theory and the decision sciences in the analysis of...