?Apple Inc Multinational Company Revenues and Costs & Foreign Operations Paper

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Business Finance

Description

Select a U.S. multinational company, and respond to the following questions:

  • In terms of currency denomination, describe how the firm prices its revenues and costs.
  • For multinational enterprises (MNEs) with multiple foreign operations, consider any 2 of those operations and the contribution they are making to the parent firm's profits.
  • What means do they use to hedge against exchange rate risk?
  • Using this information, what do you think would be the effect of increases or decreases in the dollar’s exchange value on the firm’s profitability?
  • Be sure to show all applicable work.

Present your findings as a Word document of 7–10 pages formatted in APA style. Include 5–7 academic, peer-reviewed references that are relevant to and support the deliverable.

Submitting your assignment in APA format means, at a minimum, you will need the following:

  1. Title page: Remember the running head AND THE TITLE IN ALL CAPITALS.
  2. Abstract: This is a summary of your paper—not an introduction. Begin writing in third-person voice.
  3. Body: The body of your paper begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The type face should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics except as required for APA-level headings and references. The deliverable length of the body of your paper for this assignment is 3–4 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged.
  4. Reference page: References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hang indention, italics, and upper- and lowercase usage as appropriate for the type of resource used. Remember, the Reference page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

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Explanation & Answer

I have su

Running Head: APPLE INC

1

Apple Inc
Student’s Name
Institutional Affiliation
Date
Instructors Name

APPLE INC

2
Abstract

This report has analyzed the Apple Company and its operations exploring the strategies it
utilizes to increase its profitability in the competitive global markets. Since 64% of its profits are
realized from foreign markets, the analysis will establish the benefits of the hedging strategies
utilized to inhibit the foreign exchange rate risks in the global markets. To evaluate the
profitability, the report touches on the effects of the increase or decrease of the dollar value
concerning the foreign markets. Additionally, it analyses the two major global markets of Apple
Inc including China and Europe.

APPLE INC

3
Introduction

Apple Inc. is a multinational technology company with its headquarters in California,
United States. Ever since it was incorporated in 1976, it has expanded its operations worldwide
owning an estimate of 506 retails in 25 countries as of 2018. Apple has succeeded in increasing
the demand for its products despite the increased competition in the global market. As a result, it
has gained power over its prices hence becoming one of the most successful technology
companies according to the Forbes list. As of 2018, 64% of Apple's revenue was recorded from
its advantage; Apple applies a strategy known as "Minimum Advertised price" which provides
that a retailer should advertise at the lowest price. However, the company has been faced with a
lot of challenges due to currency fluctuation in international markets(Flota, 2014).
Apple has been struggling to keep its prices unchanged despite the different currencies it
is exposed to in the global markets. Foreign currencies as compared to the United States dollar
have been becoming weaker over the past decades. However, by increasing the prices in the
international markets, Apple has managed to counter the fluctuations of the currencies which
tend toreduce the revenue generated. Consequently, the strengthening of the dollar has
diminished the value of other currencies that have been unable to keep the pace. When currencies
depreciate, the multiplier effect impacts the generated profits since the headquarters of the
company are located in another country.
Further, in the last quarter of 2018, Apple has seen a significant decrease in the generated
revenue in China, which is one of the largest markets of its brands. The 27% decrease in the
revenues have come as a result of the decline in demand. As a result, Apple has opted to cut its
prices in China to keep the market prices at a steady pace which will increase the demand. For...


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