Management Economics 2: Analyzing Apple's Market Structure

This article discusses Apple's market structure and how it operates in different market structures. It analyzes the different types of market structures and how they apply to Apple's products. The article also discusses the competition that Apple faces from other companies and how it differentiates its products to gain market power. The subject is Management Economics 2 and the course code is not mentioned. The article is relevant for students studying economics, business, and marketing. The college or university is not mentioned.

Management Economics 2

Table of Contents
Management Economics 2.....................................................................................................1
Table of Contents.............................................................................................................................2
Description of Apple..............................................................................................................3
Analyse the market..........................................................................................................................3
Different market structure................................................................................................................5
Did the company operate in a different market structure?...............................................................7
REFERENCES..............................................................................................................................10

Description of Apple
Apple Inc. is an American multinational technology which basically deals in computer
software, consumer electronics as well as online services. This is known as the world’s largest
technology company (Acquavia and et. al., 2021). The founder of this company is Steve Jobs,
Ronald Wayne and Steve Wozniak. This company designs and manufactures different personal
computers, smartphones, wearables, tablets and accessories. iPad, iPhone, Mac are the most
popular products of Apple. iPhone is the line of smartphone for this company. It is based upon
iOS operating system. Another product Mac is known as line of personal computers based upon
Mac OS operating system. Other products of this company include purpose tablets which
depends upon iPad OS operating system. Apple TV, Airpods, Apple Watch, Home Pod, etc. The
services provided by Apple are Cloud services, Applecare, Advertising, Payment services,
Digital content, etc. The customers of Apple are basically small, mod sized business, enterprise,
education and government markets. In the year 2018, Apple has made history by becoming one
of the first company that is having publicity trading valued 1 trillion dollars. According to the
first quarter of 2020, it was seen that there was revenue between 85-89 billion dollars. Services
offered by Apple is led by Apple Music and App store. The iPhone business has accounted for
60% of total sales in the year 2019. There is growth in Apple’s services. The home, wearables
and accessories segment consists of 9.4% sales. iPad has accounted for 8% sales this year.
Personal computers of Apple have been built around Mac and these have generated sales of
approximately 30 million dollars.
Analyse the market
There are different varieties of market structure systems in market economies. These depend
upon companies and industries. It is very essential for small businesses to operate n feasible type
of market structure (Breen and et. al., 2016). It specifies the way of production and pricing
decision. This helps to determine whether there is need to enter or leave the industry. basically,
there are five types of market structure which are mentioned below –
Perfect competition – This type of market structure is characterised by sellers and buyers. In
context of classical theory, it is seen that perfect competition exists in market structure where
there are infinite number of sellers and buyers. There is less possibility of one participant to alter

prevailing price in this type of competition. If they are able to do so then sellers and buyers are
having infinite alternatives for pursuing.
Monopoly – This is a type of market structure which is exact opposite of perfect competition.
There is only one producer of specific service or product and there is no substitution of the
product (Eklund, 2017). A monopolist is allowed to charge price according to own choice as
there is no competition. The limitation for this type of market structure is that the overall revenue
is limited by willingness or ability of customers to pay the price or amount.
Oligopoly – In context of oligopoly, it is considered that it is similar to monopoly. The main
difference in oligopoly is that rather than having only one producer of product or service. There
are lot of producers which are making up for dominant majority regarding production within
market system. On the other hand, oligopolists are not having same pricing power.
Monopolistic competition - This is known as type of market structure that consists of different
elements of monopoly. In context of perfect competitive market system, a lot of competition is
present within market. There is difference which is differentiated from others. It concludes that
there is great price than perfect competitive company. An example of this market structure is
music.
Monopsony with one buyer – Market structure is differentiated by number of supplier within
market. There are infinite number of sellers and buyers within perfectly competition (Getahun
and et. al., 2017).
In context of Apple, it is considered as oligopoly and monopolistic competition. Apple Inc. is
maintaining oligopoly market structure in reference to smart phone competition. Apple Inc. is
known to be monopolistic competition in branded computers. As monopolistic competition is
defined as market in which sellers are producing highly differentiated products. This provides
description of demand side that is parallel and on supply side there is monopolistic competition.
There are several economists who have stated that monopolistic competition is more realistic as
compared to the perfect competition. Apple Inc. is selling un-identical technology and it enables
to sustain in market efficiently. There are more competitors in monopolistic competition than
oligopolistic. That is why Apple’s super tablet computer is known to be monopolistic one. There
are different branded computer organisations like HTC, Dell, Samsung and these are known to
be competitors within mobile industry. The sales revenue which is generated by Apple is close to
these competitors.

Apple is having an “i” for revolutionary technology. iPhone of this company has made
revolutionary change within market of mobile and cell phones. Apple has one popular product
naming iPadtablet that has become change within technology. Apple is having one big
competitor Samsung and it is engaged in a rivalry relationship (Hickert and et. al., 2016).
Samsung has all capabilities to knock down Apple Inc. and get to the top most position in
modern era of technology. This is an organisation which is having key strategy for using
economies of scale. It is used for gaining competitive advantage. In context of monopolistic
competition, both Samsung and Apple are behaving monopolistic in context to market power.
These companies are gaining profit and there are different competitive companies which are
entering market because of low entry barriers. There are several new entries which are trying to
capture the market by earning profits.
From the above graph, it is clear that shaded area between P’s, Ac’s and AR is known as
abnormal profit that Apple can make. AR is defined as demand curve and it is average revenue
of Apple Inc.
Different market structure
Oligopoly is known as market structure followed by Apple as it consists of different smaller
firms. There was rise in oligopoly in the year 1980 as there was new trade which is a collection
of economic model at international trade (Hoseinzade and Haratizadeh, 2019). It has emphasised
upon role of enhanced scale and network effects. It is analysed that oligopolies alongside

monopolies emphasise upon financial hurdles in context of economic model in international
trade. The degree of competition is having long interest in case of researchers and they are
playing an essential role for studying market power, performance and business behaviour. There
are different market sectors which are characterised on the basis of high concentration (Kodama,
2017). In context of oligopolistic market structure, few interdependent firms are present which
dominate market. This can be explained with an example that if iOS is changing price than
Android is also changing the offering price. The development of technology in context of mobile
development and services has given rise to most important elements of informatics. He usage of
computers which consists of different characteristics has the ability to provide competition in
market. Operating system is known as group of basic programs that are allowing user for
conducting specific tasks in an efficient manner. In context of mobile, The European economy is
contributing to grow rapidly. The user base is increasing because smartphone penetration rates
have reached up to 50%. According to this statistics, the penetration rate has reached 40% of
mobile users. It is possible for consumers to fuel corresponding enhancement of app
development markets. Apple iOS is experiencing oligopolistic. In a more precise manner, it is
concluded that Apple is playing significant role in market. There are loyal customers and no
competition is present within market. Apple is an independent product and there are two sellers
which caters to majority of world. There are other sellers who are not able to enter game as the
barrier for new market. Apple and Samsung are creating unique market for mobile technology in
which individuals are either buying one product or service. There are other brands which are
considered unsafe and of low quality.
Apple Inc. is a multinational company that operates in consumer electronics market.
Apple is operating in oligopoly type of market structure since the beginning of business. There
are several small firms which are controlling biggest chunk of market share. There is
specialisation of high end smartphone which is dominating approximately 50% of dominance by
selling high end smartphones (Jan, Rab and Sajid, 2015). There are other small players of high
end smartphones which are diminishing market share of Apple. The oligopoly market of Apple is
differentiating monopolistic market because there is no single supplier who is having any
considerable control over prices. Few competitors of Apple have attempted to differentiate
products over years and it consists of changing appearance to products. By adding new features
to phone, improving brand image and releasing new products on regular basis will lead to sustain

within market for longer period. There are many Apple products which have innovated every
time are a success factor. Product differentiation is when the organisation is seeking to develop
products by unique combination of shape, colour, size and material (Ocasio and Joseph, 2018).
In context of economics, this is assumed that consumers are rationally making money when
economic decisions are developed using certain demand curve. This helps to develop brand
loyalty and it is interpreted that product consists of rationality. Profit of Apple is eventually
decreasing due to monopolistic barriers of competition. Apple has developed brand image and
reputation as characterised by sleek shapes and designs.
Did the company operate in a different market structure?
The oligopolistic market of Apple differs from perfect competition because there are no buyers
and sellers and market. Brand dominance and recognition of Apple is different because there are
different potential customers who are ready to pay amount for acquiring an iPhone. Apple is
having considerable but not total control over price of smartphone (Pyanikova and et. al., 2021).
The oligopolistic market structure of Apple differs from other market structure. There is no
single buyer which has total control over price and demand. The smartphone market is having
diverse clientele with no control over prising of the products. At the time of operating in
different market structures, Apple is known to be acing various level of competition. As stated
by Michael, in a business, there are different levels of competition according to collusion, co-
existence, co-opetition, competition and conflict. Apple is operating in an oligopoly market
structure since many years. Apple is having brand value of 11.89 billion dollars as per the
statistics and evaluation. According to the result, it is considered that most of the consumers and
potential customers are ready for paying amount which is needed for acquiring iPhone. Apple
Inc. is having considerable power to manage the prices of it’ s services and products.
Level of competition – When Apple operates in different market structure, it is contributing in
following manner –
Oligopoly – Apple is currently operating in oligopolistic smartphone market. Apple and
Samsung are key players in smartphone industry. in context of 5C’s model, fourth C is
considered which is competition (Qiao and et. al., 2015). Apple is currently facing stiff
competition from Samsung as it is also providing similar type of technology in smartphones.
Samsung is able to catch up the profit as compared to Apple. Samsung is also investing huge
amount in research and development. There is stiff competition that these companies are

occasionally facing problem. In context of business economics, imperfectly competitive markets
differentiate the product for increasing market power and price making power. There are lot of
laptop computer organisations and these have to increase demand of their product over other
competitors. Apple computers are one such example and these have successfully differentiated in
the line of computers. They have provided customers new features like Macbook for attracting
consumers and diminishing brand value of competitors (Reig and et. al., 2015). In the year 2019,
Apple launched Macbook Air which was liked by many customers as it was light and thin. There
is creation of new technology within products of Apple and innovation in laptop computing. The
main goal of imperfectly competitive firm such as Apple is able to enhance the market power by
enhancing specific product by advertising, product differentiation, loyalty and brand
development. Apple can easily increase the amount of computers it is selling by charging a lower
price than competitors. By differentiation that is equal to making products attractive and unique
for consumers, Apple is attempting to increase the demand for computers. On the other hand, it
makes demand less elastic. Apple can gain price making power over computer laptop.
Figure 1Apple computer market structure
(Source: Product differentiation in imperfectly competitive markets –
the MacBook Wheel.2021)
After the differentiation of Apple, the slopes of demand curve are increasing due to brand
loyalty. This means that Apple is making brand to become best among customers. There are

several consumers who are attracted by quality and look of Apple products because they are
willing for buying them at a high price. The demand of Apple is elastic. When there is change in
price, it causes a large change in quantity which is demanded. As Apple succeeds in
monopolistic competition, the demand of Apple is inelastic (Sebesi, 2016). The economic profits
are seen to rise overtime and when this company is maintaining profits in long run then there is
need for satisfying loyal demand by just innovating products within new generation and new
function as well as output. In context of monopolistic competition, it is seen that product
differentiation is present in Apple for function and appearance. Apple is coming up with new
innovative ideas in it’s products. Apple also keeps on updating new applications for the products.
From the above graph, it is concluded that slope of demand curve increases when there is
successful product differentiation. When products are differentiated, Apple is able to enhance
price and this makes demand curve steep. Brand loyalty is the reason for slope within demand
curve. There are consumers who are willing to buy Apple products at high price. When the
market of laptop computers are monopolistically competitive then economic profits of Apple are
going to diminish with time. The reason behind this is in a competitive market, there are lot of
barriers of entry and that is why organisations are attracted into market because of abnormal
profits. In this case, Apple is going to lose customers and business can be taken away from
present firms. There is need to have better customer services and this enables to attract more
consumers. Products of Apple are more inelastic and this increases customer loyalty.

REFERENCES
Books and Journals
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Primary and Secondary Metabolites of Apple (Malus domestica) Fruits: A
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and annual flowering in apple.Scientia Horticulturae, 210, pp.258-267.
Eklund, P., 2017. Logic-Based Medicine versus Evidence-Based Medicine for Modeling
Qualified-Self Health Kits. In Ecosystems and Technology (pp. 201-206). Apple
Academic Press.
Getahun, S. and et. al., 2017. Analysis of airflow and heat transfer inside fruit packed
refrigerated shipping container: Part II–Evaluation of apple packaging design and
vertical flow resistance. Journal of Food Engineering, 203, pp.83-94.
Hickert, S. and et. al., 2016. Survey of Alternaria toxin contamination in food from the German
market, using a rapid HPLC-MS/MS approach. Mycotoxin research, 32(1), pp.7-18.
Hoseinzade, E. and Haratizadeh, S., 2019. CNNpred: CNN-based stock market prediction using
a diverse set of variables. Expert Systems with Applications, 129, pp.273-285.
Jan, I., Rab, A. and Sajid, M., 2015. Influence of calcium chloride on storability and quality of
apple fruits. Pakistan Journal of Agricultural Sciences, 52(1).
Kodama, M., 2017. Strategy Transformation Based on Holistic Leadership: A Case Study of
Apple. In Developing Holistic Leadership. Emerald Publishing Limited.
Ocasio, W. and Joseph, J., 2018. The attention-based view of great strategies. Strategy
Science, 3(1), pp.289-294.
Pyanikova, E.A. And et. al., 2021. Sensory and physic-chemical properties of wheat bread
prepared with apple pomace. In E3S Web of Conferences (Vol. 285, p. 05001). EDP
Sciences.
Qiao, A., and et. al., 2015. A novel triterpenoid isolated from apple functions as an anti-
mammary tumor agent via a mitochondrial and caspase-independent apoptosis
pathway. Journal of agricultural and food chemistry, 63(1), pp.185-191.
Reig, G. and et. al., 2015. Phenotypic diversity of Spanish apple (Malus x domestica Borkh)
accessions grown at the vulnerable climatic conditions of the Ebro Valley,
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Sebesi, C., 2016. High quality apple peppers for the canning industry. In Proceedings of XVIth
EUCARPIA Capsicum and Eggplant Working Group Meeting in memoriam Dr. Alain
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Online
Market structure of Apple.2021. [Online].Available through:<
https://www.ukessays.com/essays/economics/market-structure-of-competitive.php>

Product differentiation in imperfectly competitive markets – the MacBook Wheel.2021.
[Online].Available through:< http://welkerswikinomics.com/blog/2009/01/28/product-
differentiation-in-imperfectly-competitive-markets-the-macbook-wheel/comment-page-4/>