MBA 502 Final Project Part I Guidelines and Rubric
Overview
There are two parts to the final project in this course. For your first project, you will produce an individual microeconomic analysis paper related to a publicly
traded company that you will choose from a given list. This paper will equip you with the knowledge and skills required to analyze the effects of microeconomic
factors on a company’s supply and demand, product market, production and costs, competitive environment, business strategy, and financial performance.
(For your second project, you will produce an individual macroeconomic analysis paper related to the publicly traded company chosen for the first project. The
focus of the macroeconomic analysis will be on the United States. You will come away with the knowledge and skills necessary to evaluate how macroeconomic
conditions impact a product’s or service’s supply and demand as well as a company’s financial performance. For details of that project, please review the Final
Project Part II Guidelines and Rubric document.)
In today’s business world, it is vital for companies to carefully assess their markets and competitive environment and operate efficiently. A critical skill for
business managers is the ability to effectively assess the effects of microeconomic factors on the supply and demand of a company’s products and services as
well as on a company’s business strategy and financial performance.
For this first project, you will produce a microeconomic analysis related to a publicly traded company chosen from the following list:
Apple
Exxon Mobil
Johnson & Johnson
Procter & Gamble
Wal-Mart
Alternatively, you may select a company of your choosing with instructor approval. Instructor approval should be secured through university email. To begin your
analysis, you will choose a type of product or service offered by your chosen company, ensuring that this product or service relates to one specific sector in which
the company operates (e.g., Apple operates in the tablet industry and the smartphone industry). Next, you will apply microeconomic concepts as well as gather
and analyze information related to your chosen company’s supply, demand, market equilibrium, production, costs, and the market structure of the specific
industry selected. Finally, you will assess the effects of the industry’s market structure on the company’s business strategy and financial performance.
The project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Three and Five. Final Project Part I will be submitted in Module Seven.
This project addresses the following course outcomes:
Determine the extent to which price and nonprice factors affect the supply and demand of a company’s products or services by applying elasticity
concepts
Predict the effect of changes in supply and demand on the market equilibrium for informing business decisions
Analyze the factors that affect the combination of inputs in the production function of products or services for informing production decisions
Assess how the type of market structure impacts the business strategies and financial performance of companies for informing business decisions
Part I Prompt
Your individual microeconomic analysis paper should respond to the following prompt: Assess how microeconomic variables impact (1) your chosen product’s or
service’s supply, demand, market equilibrium, production, and cost; (2) the market structure of the industry in which your chosen company operates; and (3)
your company’s business strategy and financial performance.
Specifically, the following critical elements must be addressed:
I.
Overview: Provide an overview consisting of a brief description of the chosen company and your chosen product or service, including the industry the
product or service falls under. You should include key details about the company, including its main products and/or services, number of employees, and
annual sales.
II.
Supply, Demand, and Market Equilibrium
a) Determine the extent to which the supply and demand of your chosen product or service are sensitive to changes in price by applying the
concept of elasticity. In other words, what is the price elasticity of supply or demand for your product or service?
b) Select two nonprice factors that impact the demand of your chosen product or service. Justify your selections.
c) Select two nonprice factors that impact the supply of your chosen product or service. Justify your selections.
d) Define the industry related to your chosen product or service and the market equilibrium associated with the product or service.
e) Predict the effect of changes in supply and demand on the market equilibrium.
f) Based on the predicted changes, what decisions related to supply and demand for your product or service would you make?
III.
Production and Costs
a) Describe three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product or service.
One example of an input is machines, which are fixed costs. Keep in mind that all inputs will either fall under fixed or variable cost.
b) Analyze the factors that impact your choice of inputs to produce the chosen product or service. For example, how would a change in the price of
raw materials impact the combination of inputs?
c) Based on this analysis, what production decisions would you make? Be sure to support your decisions with examples or data.
IV.
Market Structure
a) Determine whether the market structure of the industry in which your chosen company operates is perfectly competitive, monopolistically
competitive, oligopolistic, or monopolistic. Justify your response.
b) Assess how the type of market structure impacts your chosen company’s financial performance as measured by performance variables over the
past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income,
stock price) over time.
c) How would possible changes in the industry’s market structure impact your chosen company’s business strategy in the future? Keep your
company’s current business strategy in mind in your response.
Milestones
Part I Milestone One: Supply, Demand, and Market Equilibrium
In Module Three, you will submit the supply, demand, and market equilibrium component of your microeconomic analysis paper. This milestone should be a 2–3page paper structured as follows: First, it describes the price elasticity of supply or demand for your product or service. Second, it explains how two nonprice
factors impact the demand of your chosen product or service. Third, it explains how two nonprice factors impact the supply of your chosen product or service.
Fourth, it defines the industry and the market equilibrium associated with the product or service. Fifth, it predicts the effect of changes in supply and demand on
the market equilibrium. Finally, it describes the decisions related to supply and demand for the product or service that you would make based on the predicted
changes in supply and demand on the market equilibrium. This milestone will be graded with the Part I Milestone One Rubric.
Part I Milestone Two: Production and Costs
In Module Five, you will submit the production and costs component of your microeconomic analysis paper. This milestone should be a 3–4-page paper
structured as follows: First, it describes three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product
or service. Second, it analyzes the factors that impact your choice of inputs to produce the chosen product or service. Third, it examines the production decisions
that you would make based on the analysis of the factors impacting the choice of inputs to produce the chosen product or service. This milestone will be graded
with the Part I Milestone Two Rubric.
Part I Final Submission: Microeconomic Analysis Paper
In Module Seven, you will submit your microeconomic analysis paper. It should be a complete, polished artifact containing all of the critical elements of Final
Project Part I, including Sections I and IV, which were not covered in the milestones. The final submission should first determine whether the market structure of
the industry in which your chosen company operates is perfectly competitive, monopolistically competitive, oligopolistic, or monopolistic. Justify your response.
Second, it should assess how the type of market structure impacts your chosen company’s financial performance as measured by performance variables over the
past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over
time. Finally, your paper should answer the following question: How would possible changes in the industry’s market structure impact your chosen company’s
business strategy in the future? Keep your company’s current business strategy in mind in your response. The final microanalysis paper should reflect the
incorporation of feedback gained thus far in the course. This submission will be graded with the Final Project Part I Rubric.
Final Project Part I Rubric
Guidelines for Submission: Your microeconomic analysis paper should adhere to the following formatting requirements: 5–6 pages, double-spaced, using 12point Times New Roman font and the most current version of APA formatting.
Critical Elements
Overview
Exemplary (100%)
Meets “Proficient” criteria and
description expertly balances
key detail with brevity
Proficient (90%)
Briefly describes the chosen
company, product or service,
and associated industry,
including key details
Supply, Demand,
and Market
Equilibrium:
Elasticity
[MBA-502-01]
Meets “Proficient” criteria and
analysis shows keen insight into
the factors impacting supply
and demand
Determines extent to which
supply and demand of chosen
product or service are sensitive
to changes in price by applying
the concept of elasticity
Supply, Demand,
and Market
Equilibrium:
Nonprice Factors for
Demand
[MBA-502-01]
Supply, Demand,
and Market
Equilibrium:
Nonprice Factors for
Supply
[MBA-502-01]
Supply, Demand,
and Market
Equilibrium:
Industry and Market
Equilibrium
[MBA-502-02]
Supply, Demand,
and Market
Equilibrium: Predict
[MBA-502-02]
Meets “Proficient” criteria and
shows keen insight into how
nonprice factors impact the
demand of products or services
Selects and logically justifies
two nonprice factors impacting
the demand of chosen product
or service
Meets “Proficient” criteria and
shows keen insight into how
nonprice factors impact the
supply of products or services
Selects and logically justifies
two nonprice factors impacting
the supply of chosen product
or service
Meets “Proficient” criteria and
details demonstrate a nuanced
understanding of the
characteristics of the industry
and market equilibrium
Accurately defines the industry
and the market equilibrium
associated with the product or
service
Meets “Proficient” criteria and
demonstrates a nuanced
understanding of the effects of
changes in supply and demand
on the market equilibrium
Predicts effect of changes in
supply and demand on the
market equilibrium
Needs Improvement (70%)
Describes the chosen company,
product or service, and
associated industry but has
gaps in accuracy or key details
or is wordy
Determines extent to which
supply and demand of chosen
product or service are sensitive
to changes in price by applying
the concept of elasticity, but
with gaps in accuracy or detail
Selects two nonprice factors
impacting the demand of
chosen product or service,
justifying selections but
selection(s) are inaccurate or
justification is illogical
Selects two nonprice factors
impacting the supply of chosen
product or service, justifying
selections but selection(s) are
inaccurate or justification is
illogical
Defines the industry and the
market equilibrium associated
with the product or service but
with gaps in accuracy
Not Evident (0%)
Does not describe the chosen
company, product or service,
and associated industry
Value
5
Does not determine extent to
which supply and demand of
chosen product or service are
sensitive to changes in price by
applying the concept of
elasticity
Does not select two nonprice
factors impacting the demand
of chosen product or service
and justify selections
7.5
Does not select two nonprice
factors impacting the supply of
chosen product or service and
justify selections
7.5
Does not define the industry
and the market equilibrium
associated with the product or
service
7.5
Predicts effect of changes in
supply and demand on the
market equilibrium but with
gaps in accuracy or necessary
detail
Does not predict effect of
changes in supply and demand
on the market equilibrium
7.5
7.5
Supply, Demand,
and Market
Equilibrium:
Decisions
[MBA-502-02]
Production and
Costs: Inputs and
Costs
[MBA-502-03]
Meets “Proficient” criteria and
decisions show keen insight
into the implications of changes
in supply and demand for
business decisions
Meets “Proficient” criteria and
demonstrates a nuanced
understanding of the inputs
and types of costs involved in
the production of products or
services
Meets “Proficient” criteria and
demonstrates a nuanced
understanding of factors that
impact inputs in the production
of products or services
Meets “Proficient” criteria and
decisions show keen insight
into implications of production
analysis for business decisions
Proposes decisions related to
supply and demand for product
or service based on predicted
changes
Market Structure:
Determine
[MBA-502-04]
Meets “Proficient” criteria and
demonstrates a nuanced
understanding of the
characteristics of market
structures
Determines the market
structure of the chosen
company’s industry and
logically justifies response
Market Structure:
Financial
Performance
[MBA-502-04]
Meets “Proficient” criteria and
shows keen insight into the
effects of the market structure
on the company’s financial
performance
Logically assesses how type of
market structure impacts
chosen company’s financial
performance, supported by
data and graphs illustrating
performance variables over
time
Production and
Costs: Analyze the
Factors
[MBA-502-03]
Production and
Costs: Decisions
[MBA-502-03]
Proposes decisions related to
supply and demand for product
or service based on predicted
changes but with gaps in logic
or detail
Describes three key inputs and
fixed and variable costs
involved in the production of
chosen product or service but
with gaps in accuracy or detail
Does not propose decisions
related to supply and demand
for product or service based on
predicted changes
7.5
Does not describe three key
inputs and fixed and variable
costs involved in the
production of chosen product
or service
7.5
Analyzes factors that impact
the choice of inputs to produce
chosen product or service
Analyzes factors that impact
the choice of inputs to produce
chosen product or service but
with gaps in accuracy or detail
Does not analyze factors that
impact the choice of inputs to
produce chosen product or
service
7.5
Proposes appropriate
production decisions based on
analysis, supporting response
with examples or data
Proposes production decisions
based on analysis, supporting
response with examples or data
but decisions are not
appropriate based on analysis
or lack detail or support
Determines the market
structure of the chosen
company’s industry and
justifies response but
determination is inaccurate or
justification is illogical
Assesses how type of market
structure impacts chosen
company’s financial
performance, supported by
data and graphs illustrating
performance variables over
time but assessment has gaps
in accuracy, detail, or support
Does not propose production
decisions based on analysis
7.5
Does not determine the market
structure of the chosen
company’s industry and justify
response
7.5
Does not assess how type of
market structure impacts
chosen company’s financial
performance, supported by
data and graphs illustrating
performance variables over
time
7.5
Describes three key inputs and
fixed and variable costs
involved in the production of
chosen product or service
Market Structure:
Possible Changes
[MBA-502-04]
Articulation of
Response
Meets “Proficient” criteria and
provides keen insight into how
changes in industry’s market
structure impact business
strategies
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented
in a professional and easy-toread format
Logically projects how possible
changes in industry’s market
structure would impact
company’s business strategy
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Projects how possible changes
in industry’s market structure
would impact company’s
business strategy but with gaps
in logic or detail
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Does not project how possible
changes in industry’s market
structure would impact
company’s business strategy
7.5
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
5
Total
100%
4.5 points
3.5 points
Briefly describes the chosen company,
product or service, and associated industry,
including key details
Describes the chosen company, product or
service, and associated industry but has gaps in
accuracy or key details or is wordy
Does no
product
6.75 points
5.25 points
0 points
Meets “Proficient” criteria and analysis
shows keen insight into the factors
impacting supply and demand
Determines extent to which supply and
demand of chosen product or service are
sensitive to changes in price by applying the
concept of elasticity
Determines extent to which supply and demand
of chosen product or service are sensitive to
changes in price by applying the concept of
elasticity but with gaps in accuracy or detail
Does no
and dem
sensitive
concept
7.5 points
6.75 points
5 points
0 points
Overview
Meets “Proficient” criteria and description
expertly balances key detail with brevity
Supply, Demand, and
7.5 points
Market Equilibrium:
Elasticity
Supply, Demand, and
Market Equilibrium:
Nonprice Factors for
Demand
Meets “Proficient” criteria and shows keen Selects and logically justifies two nonprice
insight into how nonprice factors impact the factors impacting the demand of chosen
demand of products or services
product or service
5.25 points
Selects two nonprice factors impacting the
demand of chosen product or service, justifying
selections but selection(s) are inaccurate or
justification is illogical
0 points
Does no
impactin
service a
Supply, Demand, and
Market Equilibrium:
Nonprice Factors for
Supply
7.5 points
6.75 points
Meets “Proficient” criteria and shows keen Selects and logically justifies two nonprice
insight into how nonprice factors impact the factors impacting the supply of chosen
supply of products or services
product or service
5.25 points
0 points
Selects two nonprice factors impacting the
supply of chosen product or service, justifying
selections but selection(s) are inaccurate or
justification is illogical
Does no
impactin
service a
5.25 points
0 points
Defines the industry and the market equilibrium
associated with the product or service but with
gaps in accuracy
Does no
equilibri
service
Supply, Demand, and
7.5 points
Market Equilibrium:
Industry and Market
Equilibrium
Supply, Demand, and
6.75 points
Meets “Proficient” criteria and details
Accurately defines the industry and the
demonstrate a nuanced understanding of the
market equilibrium associated with the
characteristics of the industry and market
product or service
equilibrium
7.5 points
6.75 points
5.25 points
0 points
Market Equilibrium:
Predict
Supply, Demand, and
Meets “Proficient” criteria and demonstrates
a nuanced understanding of the effects of
Predicts effect of changes in supply and
changes in supply and demand on the market demand on the market equilibrium
equilibrium
Predicts effect of changes in supply and demand
on the market equilibrium but with gaps in
accuracy or necessary detail
Does no
and dem
Market Equilibrium:
7.5 points
6.75 points
5.25 points
0 points
Meets “Proficient” criteria and decisions
show keen insight into the implications of
changes in supply and demand for business
decisions
Proposes decisions related to supply and
demand for product or service based on
predicted changes
Proposes decisions related to supply and demand Does no
for product or service based on predicted changes and dem
but with gaps in logic or detail
predicte
Decisions
7.5 points
Production and Costs:
Inputs and Costs
6.75 points
Meets “Proficient” criteria and demonstrates
Describes three key inputs and fixed and
a nuanced understanding of the inputs and
variable costs involved in the production of
types of costs involved in the production of
chosen product or service
products or services
7.5 points
Production and Costs:
6.75 points
5.25 points
Describes three key inputs and fixed and variable
Does no
costs involved in the production of chosen
and vari
product or service but with gaps in accuracy or
of chose
detail
5.25 points
Analyze the Factors
Meets “Proficient” criteria and demonstrates
a nuanced understanding of factors that
Analyzes factors that impact the choice of
impact inputs in the production of products inputs to produce chosen product or service
or services
Production and Costs:
7.5 points
6.75 points
Meets “Proficient” criteria and decisions
show keen insight into implications of
production analysis for business decisions
Proposes appropriate production decisions
based on analysis, supporting response with
examples or data
Market Structure:
7.5 points
6.75 points
Determine
Determines the market structure of the chosen
Meets “Proficient” criteria and demonstrates Determines the market structure of the chosen
company’s industry and justifies response but
a nuanced understanding of the
company’s industry and logically justifies
determination is inaccurate or justification is
characteristics of market structures
response
illogical
Decisions
0 points
0 points
Analyzes factors that impact the choice of inputs Does no
to produce chosen product or service but with
choice o
gaps in accuracy or detail
service
5.25 points
0 points
Proposes production decisions based on analysis,
supporting response with examples or data but
Does no
decisions are not appropriate based on analysis
on analy
or lack detail or support
5.25 points
5.25 points
7.5 points
6.75 points
Meets “Proficient” criteria and shows keen
insight into the effects of the market
structure on the company’s financial
performance
Assesses how type of market structure impacts
Logically assesses how type of market
chosen company’s financial performance,
structure impacts chosen company’s financial
supported by data and graphs illustrating
performance, supported by data and graphs
performance variables over time but assessment
illustrating performance variables over time
has gaps in accuracy, detail, or support
0 points
Does no
the chos
response
0 points
Market Structure:
Financial Performance
Market Structure: Possible
Does no
impacts
perform
illustrati
Changes
7.5 points
6.75 points
5.25 points
0 points
Meets “Proficient” criteria and provides
keen insight into how changes in industry’s
market structure impact business strategies
Logically projects how possible changes in
industry’s market structure would impact
company’s business strategy
Projects how possible changes in industry’s
market structure would impact company’s
business strategy but with gaps in logic or detail
Does no
industry
company
3.5 points
0 points
5 points
4.5 points
Articulation of Response
Submission is free of errors related to
citations, grammar, spelling, syntax, and
organization and is presented in a
professional and easy-to-read format
Submission has no major errors related to
citations, grammar, spelling, syntax, or
organization
Submission has major errors related to citations,
grammar, spelling, syntax, or organization that
negatively impact readability and articulation of
main ideas
Submiss
citations
organiza
ideas
Points earned out of 100
Points earned out of 100
Points earned out of 100
Points e
91 or more
71 or more
1 or more
0 or mo
The overall submission earned 91 points or
more. Final calculation of grades can be
found in the gradebook.
The overall submission earned 71 points or
more. Final calculation of grades can be
found in the gradebook.
The overall submission earned 1 points or more.
Final calculation of grades can be found in the
gradebook.
The ove
more. Fi
found in
Overall Score
Overall Score
Running Head: APPLE iPhone 8 MACROECONOMIC ANALYSIS
Julian Sanchez
Apple iPhone 8 Macroeconomic Analysis
SNHU: MBA 502 Economics for Business
Dr. George Darko
1
APPLE iPhone 8 MACROECONOMIC ANALYSIS
2
Apple Inc. Market Structure
The market structure of Apple Inc. is oligopolistic and monopolistic competition. In
particular, Apple Inc. operates in a market dominated by few firms who offer products and
services that are common in nature, use, and utility but slightly differ in terms of design, features,
color, size, and level of technology (Apple Inc., 2018). Thus, the fact that the cellular industry in
which Apple Inc. operates in is dominated by few firms but a wide variety of products that are
closely related and perform the same functions mean that the market is both monopolistic and
oligopolistic competitive (Barro, 2015). Mobiles phones product, such as the iPhone 8
manufactured by Apple Inc. has close substitutes such as Galaxy S8, Galaxy S9, Nubia Z17
Borderless, Galaxy Note 8, Xiaomi Mi 6, Smartisan U3 Pro, HuaweiP10, Pixel2, ONE PLUS,
Honor 9, Honor Magic, Meizu Pro among others.
The customers in the phone industry are aware of the differences that exist between
iPhone 8 and the other products that act as substitutes even though the prices only differ by a
smaller margin. They have sufficient knowledge and information about the firms and the
respective products in terms of specification, features, functionality, memory, speed, design and
even level of satisfaction for each. As such, iPhone customers are very selective and have a
higher bargaining power (Gupta, 2014). The fact that there exist substitutes for iPhone 8 and the
customers are well informed about the nature of the substitutes is enough to justify why Apple
Inc. operates in an oligopolistic and monopolistic market competition environment. Thus, being
in an oligopolistic and monopolistic market mean that the success of iPhone 8 product in the
market will depend on the actions of the rival companies on how they design their product to
outcompete iPhone 8.
APPLE iPhone 8 MACROECONOMIC ANALYSIS
3
Being in the oligopolistic market has enabled Apple Inc. to establish a stable customer
base with its high-end products that have managed to attract customer loyalty in the competitive
industry. The customer support system, both online and physical contact has made it more
competitive than its rivals in the industry. The company has managed to outcompete the other
rivals and emerge as the largest phone manufacturer in the industry, thus controlling a huge
market share (Barro, 2015). None the less, Apple Inc. is the most outstanding of the oligopolies
in the cellular industry that is also dominated by other players such as Motorola, Samsung, Sony
Erricson, “LG” Google, Blackberry, and HTC. Each of the players has a significant effect on the
market dynamics and thus Apple has to set its strategies based on the behavior of other market
players.
Impact Of The Market Structure On Apple Inc.’s Financial Performance
The oligopolistic and monopolistic market structure in which Apple operates in impacts
its financial performance. To begin with, Apple has managed to use its competitive advantage,
huge customer base and the customer loyalty it enjoys in the market to outcompete its rivals. As
a result, the company has managed to register a massive growth in its stock prices since 2014.
The advanced technology and continuous innovations that Apple incorporate in the design and
development of iPhone 8 has led to a steady growth in its stock prices as illustrated in table 1.
The company has improved the features, speed, memory, and functionality of the iPhone 8
cellphone to make it more attractive and appealing to customers (Dwivedi, 2016). The end result
is a huge sales volume that translates into high revenue and profit in the long run. The overall
impact of the market structure is an improvement in performance of the company and position in
the stock market. Figure 1 below illustrates how the market structure has had an impact on the
financial performance of Apple for the past three years.
APPLE iPhone 8 MACROECONOMIC ANALYSIS
4
Figure 1: Graph of iPhone 8 nets sales over the past three years
Source: (Apple Inc., 2018).
Year
2016
2015
2014
Stock Prices
$165.2
$162.7
$154.2
Table 1: impact of the cellular market structure to the Stock Prices of Apple Inc.
Innovation and product diversification has also increased the dominance and performance
of the company due to the competitive edge attributed to such elements. The company has also
improved the customer experience by providing ready support services and one-touch login
portal to aces all information relating to its products (Gupta, 2014). The company will thus
operate efficiently by supplying iPhone product in the market that meets the demand of its
customers. As such, it will be in a position to achieve its profit maximization since its marginal
cost will be equal to the marginal revenue generated.
The overall market share of Apple in the cellular industry is 26%, with the other player
sharing the remaining 74%. However, the behavior of its rivals in the industry and constant
innovation has threatened its market share (Dwivedi, 2016). The incorporation of android into
Samsung smartphones has led to a decline in its market share significantly. Note withstanding all
these, the company has remained steadfast in increasing its market dominance with innovation
APPLE iPhone 8 MACROECONOMIC ANALYSIS
5
and creativity in its iPhone products, coupled with high level of technology to make its products
more competitive and unmatched. Its financial performance has always remained high in the
industry as illustrated in the table below.
Impact of the Possible Changes in the Industry's Market Structure to Apple’s Business
Strategy
Possible changes in the cellular market structure will impact the business strategy of
Apple Inc. in many ways. First, being both monopolistic and oligopolistic competitive market
structure, many competitors may be tempted to enter into the markets due to the huge profits that
the company is currently enjoying. Such a move will give the consumer more choices to select
from, thus reducing the customer base of Apple and leading to a decline in the demand for its
products. The demand curve for Apple’s iPhone 8 product will thus shift to the left as illustrated
in figure 2 and 3 below. To save itself from possible collapse due to loss of revenue, the
company must initiate a new business strategy that will enable it to survive the competition
(Altug, Chadha & Nolan, 2013). Thus, the company will step up its level of technology and
innovation to make its product more outstanding and unmatched in the market. This strategy will
keep its customer glued to the products and not shift loyalty to the new competitors and
substitutes in the market.
Demand and the Supply Curve
Figure 2: diagram of demand and supply curve for Apple iPhone 8 before the stiff competition
APPLE iPhone 8 MACROECONOMIC ANALYSIS
6
Source: (Apple Inc., 2018).
From the above graph, it can be clearly illustrated that the quantity of iPhone 8 that Apple
Inc. supplied into the market was lower than the number of iPhone 8 demand in the market. The
company may respond to the deficiency by increasing its production capacity to meet the ten
million units of iPhone 8 product demanded in the market (Dwivedi, 2016). Expansion of the
production capacity will help the company meet the equilibrium supply and demand where
neither underproduction of overproduction occurs as illustrated in figure 4.
Figure 3: graph illustrating the effect of substitutes on the demand and supply of iPhone 8 in the
market.
Source: (Apple Inc., 2018).
Determination of the Equilibrium Price of iPhone 8
Figure 4: Graph showing equilibrium price of iPhone 8
Source: (Apple Inc., 2018).
APPLE iPhone 8 MACROECONOMIC ANALYSIS
7
The company’s strategy in the monopolistic market structure is to manufacture iPhone 8
products that meet the minor income level in line with the peripheral cost. It embarked on
manufacturing more iPhone 8 products every month and charged only $255 per unit (Apple Inc.,
2018). The company managed to register a profit of over $120 per unit leading to an overall
financial benefit of $820 million on a monthly basis.
The company may also undertake product differentiation and diversification to give its
customer more varieties and options to select their preferred products. The innovation and
advanced technology will put Apple ahead of all its competitors to overcome the threat of
substitutes in the market (Altug, Chadha & Nolan, 2013). It must also change its strategy in
response to how its rivals behave in the market to ensure that it counters every move that any
competitor makes. One example is to make strategic decisions concerning the quantity
manufactured, marketing approaches and the prices charged for its iPhone 8 based on the values
of the substitutes in the market as shown in table 2 below.
iPhone 8
Apple total net sales
Proportion of iPhone 8
Sales to total sales
2016
Change
$80,477,000 71%
$197,512,000 45%
53.5%
2015
$68,057,000
$108,249,000
52.83 %
Change 2014
87%
$65,152,000
66%
$84,486,000
47.92%
Table 2: Table illustrating the impact of changes in the market structure to the financial
performance of Apple and iPhone 8 generally
Source: (Apple Inc., 2018).
As illustrated in Table 2 below, the sales volume of iPhone 8 increased yearly as the
company implemented new strategies to counter the growing competition and influence of its
rivals in the market. Such an outstanding performance is unmatched in the cellular industry,
APPLE iPhone 8 MACROECONOMIC ANALYSIS
8
given the fact that Apple managed to sell 1 million iPhones within less than three months just
after its launch (Apple Inc., 2018).
References
Apple Inc. (2018). iPhone 8. Retrieved on 2nd April 2018 from https://www.apple.com/shop/buyiphone/iphone-8.
Altug, S., Chadha, J. S., & Nolan, C. (2013). Dynamic macroeconomic analysis: Theory and
policy in general equilibrium. Cambridge [u.a.: Cambridge Univ. Press.
Barro, R. J. (2015). Macroeconomics. Cambridge, Mass. [u.a.: MIT Press.
Dwivedi, D. N. (2016). Macroeconomics: Theory and policy. New Delhi: Tata McGraw Hill
Education Pte Ltd.
Gupta, G. S. (2014). Macroeconomics: Theory and applications. New Delhi: Tata McGraw-Hill.
Purchase answer to see full
attachment