Is Apple an Oligopoly? U.S. and China’s Economic Dance

Apple’s Global Strategy: The Intersection of American Design and Chinese Manufacturing

Abstract When it comes to Apple products, it is a big success around the United States and in most countries, to be exact. This paper introduces the emerging success of Apple products and how it has impacted the United States economically. There are several advantages regarding the existence of Apple Products, leading to one of the biggest successes of creating employment opportunities not only in the United States but worldwide.

This leads to why Apple chose to expand with China, one of the largest and most successful market economies in the world. All of Apple’s products state that they are designed in California, where their headquarters is, but each Apple product is assembled in China, where it is cheaper, creating a trade balance between the two countries- the United States and China. This paper will touch on many topics, including why Apple chose China, the central bank and economy of China, the competition of Apple, and why they are always two steps ahead, leading into why Apple uses the strategies that they do. Keywords: Apple, China, United States, Expand, Trade Balance, Economy Research Analysis- Apple and China Apple is one of the top products that are purchased by consumers in all parts of the world. There is no question as to why Apple is so successful in today’s society, but this Company is currently on the rise and holds a dominant position within the industry.

Once Microsoft came to light and won the P.C. wars, Apple went in a new direction regarding their products and their strategy to market globally. Apple is successful because they like to stay ahead of its competitors while making sure that their products remain user-friendly for all ages. Although Apple has geniuses who understand the retail industry, design, and software, it is imperative to know what strategy to use when expanding these products to different countries such as China. Apple is a worldwide company that not only produces iPhones, but MacBooks, iPads, iPods, computer software, and other electronics. These are the commonly known products of Apple (Levy, 2017). Around August 2010, Approximately 301 retail supplies in 10 nations were operated by Apple. In August 2010, there were nearly 301 retailers nationwide that were operated by Apple. Apple Inc. can be incorporated with two market structures known as oligopoly and monopolistic competition. Oligopoly is defined by a small number of sellers of a specific product group, and typically the business firm involved is affected by their competitors and should be considerate of decisions that are made (McConnell et al., 2014).

Apple’s Strategic Expansion: Navigating Oligopolies, Embracing China, and Capitalizing on Global Opportunities

When it comes to companies in the oligopoly market, it is competitive and costly, but they typically hold their position. The IOS software owned by Apple holds a position of the operating systems within this market. Monopolistic competition is typically defined by a large number of those who sell and produce a variety of products (McConnell et al., 2014). When reading in the textbook, the monopolistic competition market does not necessarily have competitors but includes those of branded computers such as Apple’s MacBook/ IMac desktop. Competition Apple has expanded its products to China for a variety of reasons. As technology continues to become bigger and better around the world, Apple has expanded into these global markets, reaching extremely high levels of revenue and profit. Apple’s main strategy for success is remaining on top of the trends in technology to not only meet the needs of customer’s demands but to have a competitive advantage. Apple utilizes its resources to the maximum ability, such as foreign outsourcing as well as importing, exporting, direct investment, and even foreign licensing. Foreign outsourcing and importing work well to Apple’s advantage and China’s because this allows for the product at hand to be sold for a cheaper cost. Although, some would argue that Apple products are expensive regardless of any tactics they may use. China is Apple’s biggest focus when it comes to foreign expansion; their products are even made in China. One would assume that not is the labor cheaper in China, but China is strong economically and even has one of the largest populations. This leads me to believe that China also has the biggest market economy overall. According to Gerwirtz (2010), “Apple products that are produced in China by a company named Foxconn, worth $61 billion. Foxconn is perceived to be the largest maker of electronics.” Apple Incorporation offers a range of products as well as services worldwide. Apple has grown to be a significantly huge company and faces extreme competition among various industries.

Competitive Landscape and Barriers: Apple’s Dominance in Electronics and its Intricate Supply Chain Dynamics

They literally range from your watch (accessory), laptop/ desktop, and phone to the types of payment plans that are offered on your devices and other Apple products. According to Jurevicius (2016), Apple Inc. has been facing competition from Dell, Lenovo, Acer, and Hewlett-Packard. When it comes to mobile competition, it is no secret that Samsung is Apple’s biggest competitor. As a recent cell phone associate, there was a lawsuit against the two companies, and rumor has it that Samsung retaliated by paying Apple in coins because Samsung lost the suit. Apple also faces competition from Google, but its biggest competitor will always be Samsung. Barriers There are several barriers when it comes to electronics and other devices in this industry. The very toughest barriers to entry are high capital requirements in purchasing the manufacturing plants, hiring the amount of capital for the raw materials as well as hiring labor. In addition, there are also barriers, such as high research and development costs, because Apple Inc. has invested a lot of money in research, training, product development, and much more which indicates that the Company has large sums of money. So to compete with Apple Inc., the new competitors have to exceed this level of spending so as to compete in the future. This will, in return, deter the new competitors from joining the market. Another barrier to entry is the ability of mass production to reach affordable value for the customers. Distribution could be a major barrier to the new entrants, especially because the industry lots have less space and there are many existing electronic device production companies. Apple Supply Chain Apple works hard to produce those involved within the supply chain. Apple’s suppliers also work hard to meet the goals that Apple has set in place. Since Apple works very closely with China, the Company has released statistics for supply chain improvement.

Supply Chain Excellence and the Role of Apple in China’s Flourishing Market Economy

As of 2016, the number of high-performing supplier sites increased by a total of 59 percent, and their lowest-performing supplier sites decreased by a total of 31 percent (Apple et al., 2017). Overall, Apple improved their working hours compliance by nearly 100% in China. When making these popular Apple products in another country, Apple should always keep in mind that the suppliers should be held to a higher standard and will one day independently know all labor and protection rights as well as continue to keep their environment safe during their daily operation. Graph from Supply Chain Opz China Economy and Market Structure China is considered a market-based economy and one of the largest ones at that. They are considered a market economy because of their rapid economic growth over the years. There are many companies that have helped the GDP of China, one of them being Apple, which ranked as one of the most successful companies worldwide. Aside from Apple, China’s economy continues to help those who have struggled to land a job. China provides many opportunities to work and has helped many families or individuals that are in poverty. Apple has done the same thing and has created many jobs in China at its various sites. As previously mentioned, China also has one of the largest populations, and it continues to grow. As the population grows, this continues to develop the economy. China has also faced challenges in its economic growth as well. They must always adjust their policies to sustain a decent growth rate. Apple chose to expand to China for several reasons in order to ensure success within the Company. Labor costs are low when it comes to the Apple factories in China.

Apple’s Dominance: Analyzing Market Share, Competitive Strength, and Revenue Growth

When Apple creates its products, there are no custom-made products; each product that is assembled is made the exact same way, which contributes to why Apple has its products made in China. Competitive Analysis Apple Inc. is relatively the only Company making a commendable profit from the sale of smartphones alone compared to its competitors. Due to the barriers to entry in the Apple market and by looking at the state of profits, smartphone companies make in every corner, it seems almost virtually impossible to invest in its competitors as much as Apple has. Apple Inc. remains the highest percentage of the market share. For instance, Apple has been the leader for quite some time, even against Samsung, as everyone knows it is Apple’s biggest competitor. According to the results of Apple Inc., 2015, it is clear that the Company makes good use of its strength so as to maximize the rate of profit as well as outshine its competitors. IPhone sales increased a total of 52% and generated $155.041 Billion in revenue Jurevicius (2016). From Apple SWOT Analysis Trends Over the past three years, Apple Inc. has been a very successful company. They have created products that so many individuals worldwide love, and Apple has created nearly 50,000 American jobs. It has been creating products that many people love, and also the Company has directly created and supported nearly 600,000 jobs for people (Guglielmo, 2014). Apple Inc. is maturing and is believed to only grow bigger and better. This is because the market for Apple Inc. products is already saturated. According to Investopedia (2017), it is estimated that Apple Inc. is 0.5% of the U.S. gross domestic product (GDP) and 0.15% of the Global gross domestic product. As of 9/4/16, Apple has earned a total revenue of $215,639,000 and a total operating income or loss of $84,263,000 (Yahoo Finance, 2017). However, it is possible to conclude that Apple Inc. is more into the device creation business but not job creation. Most consumer companies that are sales forecasts are using the products. When it comes to price, the competition for Apple products is now more intense, for lack of better words. To compete with the competitors, Apple makes finer differentiations in their products, promotional practices (marketing/advertising) as well as customer services. According to AAPL (2017, par. 1), “net sales consist primarily of revenue from the sale of hardware……

China’s Economic Dynamics: Apple’s Influence and the Role of the Central Bank

Apple recognizes revenue when persuasive evidence of an arrangement exists, the delivery has occurred, the sales price is fixed or determinable, and collection is probable.” This stage naturally calls for an emphasis on competing more efficiently and effectively. Apple Inc. has to appeal to its customers based on their prices and also the marginal product differences. Apple Products and China GDP Although Apple is considered an American product, Apple has partnered with China to have its products made in this country. This is considered China’s exports. Although the assembly of Apple products helps to boost China’s exports, the most important thing is that this is also a trade balance. Everything correlates for a reason. After researching, every iPhone that is assembled in China costs a specific amount (China dollars), which equals a certain amount of U.S. dollars, as well. Each iPhone that is launched impacts China’s GDP in a positive way. As of 2016, China’s GDP is at a high of 11199.15 billion U.S. dollars (Trading Economics, 2017). The assembly of each iPhone or Apple product contributes to the manufacturing category of GDP. Although the profit that Apple makes from selling the iPhones impacts the US GDP because this is not nearly as much as what it costs to assemble the phones or other products in China, which impacts China’s GDP. China’s Central Bank China has one of the largest economies. According to the People’s Bank of China, they still have room for economic growth and continue to utilize the resources available in their monetary policy to be prepared for any risks that may occur when building their economic growth (Reuters, 2016). In order to do better, China needs to focus on restructuring, the growth of its economy, and how to manage the potential risks that can occur. I do not think that China’s central banks would use money depreciation in order to continue to boost their exports because if they do, then the economy would become unstable in the sense of their currency.

Apple’s Dominance: From SWOT Analysis to China Partnerships and the Brand’s Enduring Appeal

This concludes that the fiscal policy in China would continue to be active. Recommendation, The SWOT analysis of Apple Inc. shows that the Company has major strengths which can be utilized to efficiently address organizational weaknesses. Apple Inc. should use the strengths of the Company to exploit the opportunity to increase its distribution network. In addition, the Company should use its brand image as well as its fast innovation processes in order to successfully improve and unveil new product appearances. However, Apple Inc. faces major threats of hostile competition and Imitation. The Company should address these threats by creating a strong patent portfolio as well as a continuous invention so as to ensure the competitive advantages of its products even if its main competitors try to catch up. Apple Inc. should try to reduce the prices of its products. This will assist in creating new potential customers as well as retaining existing customers and, in return, increase its market share. The Company should also improve its relationship with the workers. It should reduce the working hours for the employees as well as increase the rate of salaries. By so doing, the workers will work on a good relationship with the Company and hence register commendable profit. Conclusion To conclude, Apple has helped to boost the GDP of China and has brought tremendous revenue to both the United States and China.

Apple’s Strategic Mastery: Balancing Branding, Pricing, and Global Partnerships

As a very successful business, Apple uses very strong strategies to ensure they are consistently hitting their goals and producing both bigger and better products. These strategies abide by the monetary policies of both China and the United States relating directly to the costs and marketing of the products. As a monopolistic organization, Apple follows intensive strategies to maintain a spot in this tough competition. One of the noticeable goals of Apple is that their products are user-friendly and are constantly up to date with the changing technology trends. Apple has unique marketing strategies that appear in the eyes of many individuals of all ages. As a teenager, I was given the opportunity to be in a commercial for Apple iPod. However, I was a dancing silhouette. This commercial captured many people’s attention and increased the sales of their newly designed IPod product. Not many people seem to pay attention to the fact that Apple is, in fact, considered an American Product, yet it is assembled in China. It is all a part of the brand and making sure that Apple never falls off as one of the top companies. To date, the opposing audience would argue that Apple products are very expensive, especially if you buy them directly through the Apple store. It is very interesting how many stores that sell Apple products, such as Sam’s Club, Walmart, Best Buy, and Costco, can sell these products at a cheaper rate than the actual Apple store does. In reality, the profit is more so or less going to Apple than they are to these third parties. However, the cost of Apple products would probably never decrease because consumers are paying for the brand name, not just the product at hand. Will Apple decrease its prices? Probably not, because revenue would decrease, and they would probably not hit their goals consistently as they do. Overall, Apple will remain a very successful company and will formulate bigger and better ideas with China as well.

References

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