Management Economics: Analysis of Apple's Market Structure and Government Intervention

This report analyzes the market structure of Apple, its history, and the optimal market structure for the firm. It also discusses government intervention and its impact on Apple's operations. The report suggests that operating in a monopoly market scenario is more optimal for Apple. It also discusses the high government intervention faced by Apple, including the request to weaken iPhone security.

Management
Economics:
Assessment 2

Contents
Introduction......................................................................................................................................3
Company, its products/services and history:...................................................................................3
Operates in one of the market structures i.e. oligopoly, monopoly:................................................4
Company operate in a different market structure in its history.......................................................5
Operating in a different market structure is more optimal for this firm:.........................................7
Would you suggest greater/lesser government intervention?..........................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

Introduction
There are different forms of market that are affecting the choice of business structure. Market is
introduced for the purpose of societal benefit their forms are characterized as per the degree and
nature of competition (Ren, Ren and Glasure, 2018). In the present report there is analysis of the
market segment that is selected by a particular organisation. Further there is discussion of the
way a particular market segment is selected and the main characteristics associated with it.
Company, its products/services and history:
Apple is American multinational Technology brand that is specialising in customer it electronics
online services and computer software. It is world’s largest Technology brand having revenue of
around 270 4.5 billion dollars in the year 2020. Since January 2021 it has been world’s most
valuable organisation and is 4th largest Smartphone manufacturer. Apple was founded by Steve
jobs Ronald Wayne and Steve wozniak (Sugden, 2018). It was started in the year 1976 for the
purpose of developing and selling personal computers. It was further incorporated by was neck
and jobs as Apple computer in the year 1977. In the year 1980 with instant financial success
Apple went to public. They have shipped new computers featuring innovative graphical user
interface that is critically acclaimed advert 1984. With the high prices of its products and limited
application there have been power struggles between executive.
With the times, when personal computers expanded and Apple has lost considerable market
share because of the low price duopoly of Intel and Microsoft windows. In the year 2018 Apple
became the first publicly traded United States brand to be valued at 1 trillion dollars. It is also
valued at 2 trillion dollars 2 years later it is having a high level of brand loyalty and is among the
world’s most valuable brand. The branch is receiving significant criticism because of the labour
practices Business ethics and environmental practices. But in the year 2021 there have been 1.65
billion Apple products at a used across world. Apple high commitment to the functional
organisation is related with the structure that has remained static. The importance of artificial
intelligence has resulted into change in the structure where there are innovation benefits and
leadership challenges path of evolving organisational model. Main purpose of Apple is to create
product that can help in and reaching the daily lives and development of new product categories

at include Apple watch and iPhone. For creation of innovation Apple is relying on a structure
that centres on functional expertise. The main fundamental belief is that experience and expertise
is a domain that must possess right decision in the context of organisation.
Operates in one of the market structures i.e. oligopoly, monopoly:
Apple is a brand that is operating in oligopoly market structure that is a state of limited
competition. It is a state of market that is shared by a small number of sellers of producers. Apple
is also part of monopolistic competition that is a situation exceeding in a market where buyers
and sellers are so numerous and inform that all the elements of monopoly are absent (Kim, Fujii
and Takatera, 2019). In this situation market price of a commodity is beyond the control of
individual buyers and sellers. Apple Inc is considered as a part of monopolistic or oligopoly
competition because there are large numbers of competitors who are willing to maintain the
position in the market because it is too costly or difficult for other rival brands to enter the
market.
Entry barriers: There a large number of entry barriers that may result in two difficulty for large
organisations like apple to switch products. People were willing to buy Apple products are
continuing because of the loyalty that is developed towards the brand. Therefore it can be said
that high amount of loyalty towards the brand is one of the major reasons that is leading towards
difficulty in maintaining a competition level for apple.
Cost: is also entry barrier that may result in to competitors to enter the market. Apple is willing
to all the products together through applications iCloud and iTunes are making a greater
incentive to buy more from this brand.
Level of competition: There several levels of competition that are faced by apple. 13 different
levels of competition in diverse market structures as mentioned below:
Oligopoly: Apple is presently operating in oligopolistic Smartphone market. Competition is the
average level of business that is faced by most organisations. Industries are competing together
and investing heavily in research and development (Martínez Lucio. and MacKenzie, 2017).
Samsung S1 such plant that is providing stiff competition presently because of the low prices and
high quality as compared to Apple.

Perfect competition: Apple is facing coexistence level of competition while operating in a
perfect competition market structure. It is third levels of business competition we are competent l
recognise each other’s presents without any formal agreement. In this type of structure there is
no single brand that is willing to control the prices. Business people are willing to choose and
recognise each other’s market position for the purpose of establishment market needs as the
number of buyers is numerous. For example Apple is swelling to open new stores if there are
more than 20000 people in town having no other competitive brand.
Monopoly: while operating in the Monopoly market Apple has to experience a specific level of
business completion that is collusion. Collusion is regarded as a standard form of competition
that is experience because of lack of competitors. This type of competition and reasons to brands
colluding the fix prices. This type of collision takes place in the form of cartels.
Monopolistic competition: while working in the morning politic market structure Apple will be
competing with forms at a selling products differently and having no perfect substitute. In this
brand has to experience a competition level (Torres and Augusto, 2019). It is a standard form of
competition where Apple has to compel to enter into a joint alliance with other brands.
Competitive strategies: Apple is a brand that is working towards tailoring of the approach
towards a particular situation. It is more focused on three main competitive strategies in the quest
of retaining market dominance. Presently apple as a patent right that is actually helping them in
achievement of required competitive advantage. They are also having smooth operations and
exceptional features that are helping them in achievement of a differentiation position.
Apple is presently operating in oligopoly market structure in which there are many sellers are
producing highly differentiate products.
Company operate in a different market structure in its history
Earlier apple used to operate in a monopoly market structure where this type of market is
characterised by the aspects of prince makers, profit maximizes, higher barrier to entries, single
sellers and high amount of price discrimination. It is related with economies of scale,
technological superiority, controlling of natural resources, deliberate actions and legal barriers.
Some of the basic characteristics of a, monopoly market are discussed below:
Profit maximise: In case of a monopoly market the organisation can maximise their profit as per
their specific requirements. There is lack of competition so a organisation can charge specific

prices above for the purpose of maximisation of their revenues. In this the organisation is
deciding the prices of products that are being sold.
High barriers to entry: In case of a monopoly market there are high amount of barriers to entry
of any new brand in the same industry (Alhadeff, 2020). Such as for instance while apple is
operating in monopoly market it is not possible for any other brand offering similar category of
products to enter at the same time becuse the products that are offered by Apple in this situation
cannot be imitated.
Single seller: In context of monopoly market the seller are producing all the output in terms of
products or services. The entire market is served by a single organisation. For the practical
purpose the organisation is same as the industry,
Price discrimination: In context of a monopoly market the organisation are able to charge prince
discrimination. But in context of apple this brand was not able to practise prince discrimination
because they were always focussing on creation of a standardised prince structure for its
products. They were charging high prices because of the high quality and features that this brand
was offering to its customers but there was a specific price structure in which there was no
discrimination done. The main sources of monopoly power in case of apple were because of the
economies of scale, there was no availability of substitutes, legal barriers, technological
superiority that this brand was experiencing in its products.
Entry constraints: In Monopoly market there are high amount of restrictions that a monopolist
captures the market with high amount of specialisation. It is not possible for other organisations
to competent with them. Apple as a premium brand had a patent and brand image that lead to
high amount of entry constraints for any other similar brand that was not possible to enter in the
similar market to which they were targeting.
Sustainability of production elements: In case of a monopoly market structure all the production
elements without which a organisation cannot survive in long run are complete stable that
denotes that all elements are completely movable it is one of the most essential components
behind monopolistic demand because of availability of resources not organisation can copy or
imitate such factors,
Precise knowledge: When apple was establishing itself as well known brand the monopolist
brand learnt quickly about the market conditions and the way various future uncertainties can be
avoided. The main aim was to create a loyal customer brand and offer them with high quality of

products so that they are able to trust the brand to such a extent so that they are ready to pay
highest of the amount for its products, the main benefit was in long run when apple was able to
charge extremely high process for its products which lead to maximisation of profitability in long
run.
Apples monopoly was mainly created through in app purchases and the apple store. Apple is
working towards creation of a market for Ios APLACTIOBS. Apple i phone is controlling the 25
percent of the global Smartphone market. It means that there are over one billion people in
United States where the market share has approached approximately 50 percent. The only way of
installing apps in apple is possible through its app store (Markusen and Scheffman, 2020). It
gives apple enormous influence over the way its software is created and then further consumed
across the world. The most beautiful expression of the power is Apple’s Exorbitant 30 percent
that is on tax developers that is now subject to various antitrust investigations in both European
Union and unites states.
Apple has further argued that the app store is based on in app purchases for paid features that is
available for purchase elsewhere. Apple wants nearly one third of their sales regardless of
whether they are willing to sell it on their platform or not.
Earlier the monopoly market scenario of apple let then generates some supra normal profits. The
monopoly power is based on the app distribution on iphones that permits the app store to
generate such normal profits. These profits are derived by extracting of rent from various
developers, who either pass tp further increasing of process for their customers or there are more
innovation by managing of investments.
Operating in a different market structure is more optimal for this firm:
For apple operating in a monopoly market scenario is more optimal as it will help in achievement
of higher market share. For the purpose of creating a monopolistic market scenario it becomes
very important to understand the different aspects of the target market (Faujura, Gultom and
Sudjana, 2021).
In some instances the government may be willing to regulate a Monopoly market for the interest
of customers. Monopoly causes market power to set prices higher than other competitive

markets. Generally government is willing to regulate Monopoly market price that is limiting the
price increase. In case of Apple for the purpose of managing the Monopoly market government
has been focusing on use of regulations so that they are able to regulate the monopoly market
scenario.
It is recommended that apple can focus on creation of monopoly market they can make use of
several advantages that can provide them with long run competitive advantage:
High switching cost: the people who are presently using i phones are not willing to switch to
android phones that makes the distribution on apple devices better. Apple’s market power is
highly durable because of high switching cost, brand loyalty and ecosystem lock in that is
resulting into higher competitive advantage in long run.
Would you suggest greater/lesser government intervention?
Excluding rivals: the reports have suggested that apple can focus on using of its brand loyalty.
For the purpose of excluding its rivals by offering its own apps and services a boost. It may
include tweaking the search results for their app store to promote their won applications that can
boot competitors.
So, with time apple has successful moved from monopoly market to monopolistic market
scenario that has helped them in achievement of higher market share.
Government intervention is high in context of Apple the United States attorney general
announced in the year 2019 for Apple to unlock it’s to encrypted iPhones. Apple encrypts
iPhones in a manner that the on engineers cannot unlock the devices. This was one of the most
differentiation features that were offered by this brand in recent times. But in order to comply
with the government request apple how to work towards special software that may lead to
weaken the iPhone security (Halbert, 2017). The overall encryption protects a device from
important digital information related to family, political views,, finances of the user from getting
exploited. The government intervention has resulted into weakening of the strong encryption for
law enforcement purposes. In recent times Apple has also challenged the court order but united
state has an obligation to investigate and prosecute the encryption process of Apple. So in
present times it can be said that Apple is facing a high amount of government intervention in
some of its aspects that were providing it a competitive advantage.

Conclusion
From the above discuss scenario it can be said that there are different forms of market that
helps organisations in creation of a specific structure for the purpose of targeting the the present
and future prospective customers. Each of the market segments is based on several specific
features and regulations that are helping the organisation in creation of for different customer
base as per specific requirement of their products and services.

Reference
Books & journal
Ren, L., Ren, P. and Glasure, Y., 2018. On the different forms of returns from moving average
buy-sell trading rule in the stock market. Benchmarking: An International Journal.
Sugden, R., 2018. The community of advantage: A behavioural economist's defence of the market.
Oxford University Press.
Kim, K., Fujii, C. and Takatera, M., 2019. Comparing Japanese and British impressions of dress
forms. International Journal of Clothing Science and Technology.
Martínez Lucio, M. and MacKenzie, R., 2017. The state and the regulation of work and
employment: Theoretical contributions, forgotten lessons and new forms of
engagement. The International Journal of Human Resource Management, 28(21), pp.2983-
3002.
Torres, P. and Augusto, M., 2019. Understanding complementarities among different forms of
innovation. European Journal of Innovation Management.
Alhadeff, D.A., 2020. Monopoly and competition in banking. University of California Press.
Markusen, J.R. and Scheffman, D.T., 2020. Speculation and monopoly in urban development.
University of Toronto Press.
Faujura, R.P., Gultom, E. and Sudjana, S., 2021. The monopoly practice ad unfair business
competition in the technology transfer activity through the foreign patent in
Indonesia. UUM Journal of Legal Studies, 12(1), pp.69-91.
Halbert, D.J., 2017. The Curious Case of Monopoly Rights as Free Trade: The TPP and
Intellectual Property and Why It Still Matters. Journal of Information Policy, 7, pp.204-
227.
Online
Apple’s ‘monopoly power’ over iPhone app distribution gives it outsized profits, antitrust
committee says, 2020 [online], Available through<https://www.cnbc.com/2020/10/06/house-
antitrust-subcommittee-apple-has-monopoly-power.html>
US Government Challenges Apple on Encryption (Again) 2020 [online], Available
through<https://www.hrw.org/news/2020/01/16/us-government-challenges-apple-encryption-
again>