Management Economics e Assessment 2

This article discusses the market structure of Apple, its products, and history. It also explains how operating in different market structures is optimal and provides suggestions for lesser or greater government intervention. The subject is Management Economics and the course code is not mentioned. The college/university is not mentioned either.

Management Economics
Assessment 2

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Description of business, its products and history........................................................................1
Analysis of market in which the company has been operating since inception. The reason for
organisation choice to operate in one of market structures.........................................................3
Organisational operation in different market structure................................................................5
Nature of industry wherein firm operates....................................................................................7
a. Operations of company in different market structure is more optimal. Discussion................7
b. Suggestion for lesser or greater government intervention.......................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Managing an enterprise with the help of economic concepts, theories or tools is refereed to
managerial economics. It is amalgamation of economic theories and thoughts of managers for
better decision making addition to problem solving. It assists in analysing, predicting addition to
assuming organisational conditions (Chandra, 2020). Key role of managerial economics in a firm
are bringing coordination, studying business environment, analysing investment, setting prices,
controlling cost and scheduling production. For the assessment, considered enterprise is Apple
which was established in 1976 at California, US. It works with vision of making bets products of
globe and leaving the world better than it is found. It is largest information technology and fourth
largest PC vendor along with smartphone manufacturer.
The assessment highlights overview of company, description of its activities and
products. It also entails discussion about its market structure and suggestion regarding
government intervention.
MAIN BODY
Description of business, its products and history
About the company
Apple is American informational technology venture founded by Steve Jobs, Ronald
Wayne as well as Steve Wozniak in order to develop together with sell Apple I personal
computer. It operates in cloud computing, retail, media, computer hardware, artificial
technology, consumer electronics, semiconductors, digital distribution, financial technology and
computer software. It strives for bringing best computing based experience to educators,
consumers, students and creative professional around the globe by using innovative software,
hardware addition to internet offerings (Apple, 2021). Key purpose of the establishment is to
create commodities which enrich daily lives of people. It not only develops entirely new
categories of products, including, iPhone or Apple Watch, rather continually innovate categories.
Its products or services
Apple designs, manufactures along with market wide categories of smartphones, tablets,
accessories, personal computers, wearables and sell variated related services. Mentioned below
are products or services of Apple:
1

Figure 1 Products of Apple. 2021
(Source: Products of Apple. 2021)
From the above graph, it is analysed that products of Apple includes Mac, iPod, iPhone
and iPad (Products of Apple, 2021). Other than these, other products of the firm are wearables,
home and accessories. iPhone of Apple is most valuable product along with major revenue
source which is responsible for generating around 50 per cent of overall revenue of Apple.
History
Apple was established on April, 1976 for selling Apple I which was a computer designed
together with hand built by Steve Wozniak. In 1977, it invented Apple II that differs from major
competitors that were Commodore PET and TRS-80. Till 2000, the business had huge staff of
computer designers along with production line. The organisation also achieved success in
developing and selling Apple III, Apple II series, Macintosh, PowerBook, iPhone, iPod and
many more. In 2002, it purchased Nothing Real to advance digital compositing application
Shake and Emagic. Till 2011, Apple achieved huge success with mobile devices. At present, the
company have around 154000 employees.
2

Analysis of market in which the company has been operating since inception. The reason for
organisation choice to operate in one of market structures
Market structure defines the ways in which different industries are differentiated as well as
classified as per degree and nature of competition for products or services (Cotter, 2022). It is
concerned with features which influences behaviours and results of businesses operating in
particular market. As diverse market structure results on various sets of choices that are faced by
organisational decision makers. Understanding market structure helps in analysing issues
comprising pricing of products and potential for enhancing profitability. In aspect to Apple,
operating in a market structure determines the business to access production factors at low cost
and types of consumers which are interested in offerings. Mentioned below are certain types of
market structure described in aspect to Apple:
Perfect competition: A market structure comprising various organisations that sell similar
commodities or services and their profits are virtually non-existent because of intense rivalry is
termed as perfect competition. In the market structure, there are many number of sellers and
buyers. In case, when Apple operates in perfect competition market, it can attain maximum
consumer surplus addition to economic welfare. It can enhance possibility for the venture to
allocate resources effectively. The company could only make normal profits resulting to
covering opportunity costs only (Fahrurrozi, and Lisawanto, 2021). In the market, an
organisation faces high threat of new entrant due to no barriers for entrance or exit. Supply and
demand plays key role in determining production level of commodities or services and market
prices established by enterprise in market.
Monopolistic: A market structure which is imperfectly competitive market attributed for
having many producers that sell differentiated products but compete with each other is
monopolistic structure. An organisation takes price charged by competitors and ignores impact
of own prices on product prices of rivals (Wang, and Wang, 2021). In aspect to Apple, if it plans
operation in monopolistic market structure, it can operate with knowledge which its practices
will not impact on actions of others. It will have degree of control over prices and work with
principle objective of maximising profits. Decision about price along with output of the entity
will not affect behaviour of competitors resulting to no conscious rivalry among enterprises.
Within the market structure, producers and manufactures freely enter and exit in market on the
basis of attractive profitability.
3

Oligopoly: Market structure consisting fewer large businesses which sell identical or
differentiated commodities or services is oligopoly structure (Ferrante, and Esposito, 2021). As
there are fewer players in market, competition is restricted that allows all businesses to carry out
operations successfully. When managers of Apple plans to comprise oligopoly market, it will
make it possible for existing smaller players to operate dominated by few. The company is
known as price setters and deals to set pricing of products which are higher against ruling
organisational marginal costs. It will not enter in any price wars, rather funnel more resources in
research for the purpose of improving offerings and attaining sales growth in optimal manner.
Monopoly: A market structure attributed as individual seller which offers unique items or
services in market is monopoly (Torres-Rojo, and Bray, 2021). Company maintaining monopoly
structure have significant market power for charging higher prices that are concerned to
declining within social surplus. In association to Apple, maintaining working in monopoly
market structure will possess information which is not known in market. It will be guided by
requirement of maximising profit by raising prices or expanding sale production.
Since inception, Apple has been operating in oligopoly market structure as there are
fewer firms responsible for manufacturing and production (Apple, 2021). The company operates
in the market because consumer prices within the market are higher against under regular level
of competition. Within the market structure, investment made by company is transferred into
research and development that assist in refining existing inventory together with enhance overall
value proposition which are experienced by consumers in all situations. Companies that are
operating against Apple in the industry are Sony, Microsoft, Lenovo, Samsung Electronics,
Hewlett Packard Enterprise, Dell Technologies, Acer, Huawei and many more.
4

Figure 2 Apple Annual Revenue by Region: FY 2013 – 2020. 2021.
(Sources: Apple Annual Revenue by Region: FY 2013 – 2020. 2021)
The above graph represents annual revenue of Apple by region between fiscal year 2013
to 2020. In the year 2019, organisational total revenue amounting approximate of $ 116914
million that is around 44.9% came from Americas (Apple Annual Revenue by Region: FY 2013 –
2020, 2021). The company claims around 92 per cent of aggregate profits of the whole industry.
Organisational operation in different market structure
Apple is a transformative establishment which has made changes in market structure for
consistently moving forward. Since inspection, the company was operating in oligopoly market
structure, but, by considering the requirements of company about future success, it transformed
its decision to maintaining practices in monopolistic market structure. Within this market
structure, sellers produce and sell highly differentiated smartphones (Kim, 2019). Characteristics
of previous market structure of Apple that is oligopoly market structure are as follows:
Interdependence: Oligopoly market structure is attributed for few firms holding
significant share in total output of industry. Within the market, all businesses are impacted or
influenced by decision making about prices and output of other companies. While working in
oligopoly market, Apple carry out operations that are inter dependent with other businesses. It
5

considers actions together with reactions of rivals when planning or determining pricing strategy
and output levels. For example, when small number of sizeable companies constitute in the
sector, one of firm takes initiation of designing new model of product that captures market
immediately, it provokes countermoves on part of competitors in the industry.
Barriers to entry: Within oligopoly market structure, firm earn super normal profits in
long run because there are huge entry barriers that are control over crucial resources, patents and
licences (Kuzmanova, 2018). In aspect to Apple, operating in the market benefits in maintaining
position through huge barriers to entry. It makes it low threat of new entrant for building
presence in market addition to attracting wider customer base. Important barriers that new
entrant against Apple are economies of scale, access to expensive addition to complex
technologies, patents and many more.
Indeterminateness of demand curve: Oligopolists faces indeterminateness of demand
which shows level of amounts of products which a company will sell at different prices. In
aspect to Apple, it becomes complex to determine demand cure of company because of wider
interdependence among competitors. Moreover, indeterminateness of demand curve arises due to
uncertainty about reactions of other businesses. When prices of organisational product are
changed, it enhances possibilities that rivals can react differently which makes demand curve
indeterminate for Apple.
Non price competition: In the market, businesses tend to compete other than prices. For
Apple, some of terms or aspects in which it competes with other oligopolies includes loyalty
schemes, product differentiation and promotional techniques. All these are perceived less risky
as well as brings less impacts to the company (Liu, 2021). As there are few sellers, any action
other than prices, immediately affects practices of businesses. All the companies are always on
alert addition to keep close watch on movement of others for possessing counter move.
No Unique pricing behaviour patterns: In oligopoly market, competition that arise from
interdependence between firms results in two conflicting moves. It is analysed that all businesses
want to work independently and achieve maximum profits as possible. In relevance to Apple, it
is perceived that the company act and react for movements on price-output of another that is key
part of uncertainty. In contrary, when fewer firms are influenced through maximisation of
revenue, Apple wishes to cooperate with competitors with the aim of reducing or eliminating
element of uncertainty.
6

Group behaviour: It is significant characteristic of oligopoly market in which group
behaviour analysis plays key role for proper solution to issues or challenges to determine price
and output (Mirza, 2019). Within the market, few firms work interdependently that carry out
practices as a group. Apple in the market works with small number of enterprises that are aware
about actions and effects on others in group.
Nature of industry wherein firm operates
a. Operations of company in different market structure is more optimal. Discussion
Market structure plays significant function as it influences outcomes through impacting
motivation, decisions of economic actors and opportunities. While operating in different market
structure, a company determines in which market it is able to access production factors and
resources at low cost. In context to Apple, operating in different market structure is optimal as it
assists in looking towards target customers which are interested in offerings. Moreover, it forces
investors to carry out research about the ways firms align financial spectrum which goes beyond
following smart funding and understanding business politics addition to power plays. In highly
competitive business market, working in different market structure aid managers to analyse
present and future goals (Nayar, 2021). With this, strategist of Apple frame decision making in
the manner that reduces impacts of decision on others. With this, business concern is able to
achieve success in improving its customer base, revenue generating sources and sales volume.
While operating in oligopoly market structure, Apple performed optimally by earning extra
profits, bringing price stability, offering wider information to target audience and product
refinement. At same time, operating in monopolist market, the company achieves economies of
scale, reward to get patent and using high profits in research and development to attain dynamic
efficiency (Rao, 2018). With this, it becomes possible for administrators to emphasis on
predicting outcomes and making necessary modifications in present strategies to avoid losses and
making higher profitability.
b. Suggestion for lesser or greater government intervention
Government intervention is said to regulatory action undertaken by political system
which seek changes in decision making by people and business concerns about economic and
social aspects. For a company, government intervention assists to meet needs and wants of
modern market or society. It is suggested that there should be more invention of government in
7

companies like Apple as more government intervention results in competition whereas lesser
government intervention leads to situations where companies are taking advantage of the
freedom of government. Also when the intervention of government is less, it can result in
arbitrary practices which can create an impact negatively on Apple's performance. More
intervention of government can impose control over false advertisement of company and also
allow them to provide standard quality of products to customers. It is also important for purpose
of removing inequality in the market through taxation, subsidies, and regulation (Saleem, 2018).
It allows the government to protect personal data for customers and does not allow companies to
use it for their personal benefit. Intervention of government helps to promote fairness in the
economy and also promote the social welfare of people. It not only provides benefit to customers
and society but also to the company as they will get more subsidies and tax benefit. it also
provides them with different marketing opportunities for expanding their business operation. It
creates a force on the managers of Apple to adopt various legal and ethical practices which is
important for an organisation in order to create a positive image in minds of their consumer.
CONCLUSION
From the presented information, it is concluded that management economics aids business
concerns to improve efficiency through employing all possible resources that decreases
unproductive practices and increase output. It plays role of chalking business policies, planning
future of company, controlling cost, coordinating organisational practices, forecasting demand
and analysing impacts of government regulations. Market analysis assist in exploring reputation
of enterprise that permits better understanding where brand needs adjustments for achieving
goals. With effective analysis of market, organisational managers establish metrics and
benchmarks for future usage to measure progress for desired objectives. Market structure
elaborates how various industries are classified as well as differentiated as per degree and nature
of competition. Greater government intervention is essential in a company as it protect safety and
health of public along with environment.
8

REFERENCES
Books and Journals:
Chandra, M., 2020. Analyzing Impact of Managerial Economics. NOLEGEIN-Journal of
Performance Management & Retention Strategies, pp.18-22.
Cotter, T. S., 2022. Replacement Analysis. In Engineering Managerial Economic Decision and
Risk Analysis (pp. 287-304). Springer, Cham.
Fahrurrozi, M., Tiris Sudrartono, S., and Lisawanto, L., 2021. Managerial Economics in
Managerial Decision Making. Turkish Online Journal of Qualitative Inquiry
(TOJQI). 12.
Ferrante, F. and Esposito, P., 2021. Control Freaks or Good Fathers? Revealing Entrepreneurial
Motivation through Managerial Strategies. Revealing Entrepreneurial Motivation
through Managerial Strategies.(September 27, 2021).
Kim, M. N., 2019. Managerial Structure of Editorship: Functions and Purposes. Administrative
Consulting.
Kirkeby Niebuhr, N., 2020. Managerial Overconfidence and Self-Reported Success. Department
of Economics and Business Economics, Aarhus University.
Kuzmanova, N.M., 2018. Teams-Standard In The Contemporary Managerial Praxis. Economics
and Management. 14(1). pp.230-241.
Liu, Y., 2021. CEO General Managerial Skills and Labour Investment Efficiency.
Mirza, A. P., 2019, September. Managerial Learning from Economic Turbulent Conditions in
Petrochemical Industry. In British Academy of Management Conference.
Nayar, P. K., 2021. eSSay: The Managerial University and Liberal Arts’ Balancing Act (No.
id: 13161).
Rao, P., 2018. Insurmountable business problems and optimal managerial decisions: Significance
of elasticity of demand. International Journal of Advances in Agriculture Sciences.
Saleem, M., 2018. Islamic Economics System and its Managerial Principles (Doctoral
dissertation, Qurtuba University of Science & Information Technology, Peshawar).
Torres-Rojo, J. M., Guevara-Sanginés, A. and Bray, D. B., 2021. The managerial economics of
sustainable community forestry in Mexico: a case study of El Balcón, Técpan, Guerrero.
In The Community Forests of Mexico (pp. 273-302). University of Texas Press.
Wang, X. and Wang, L. F., 2021. External bargaining versus internal manipulation: A theory of
managerial delegation. Managerial and Decision Economics. 42(1). pp.134-142.
Online:
Apple Annual Revenue by Region: FY 2013 – 2020. 2021. [Online]. Available through:
<https://dazeinfo.com/2019/09/25/apple-annual-revenue-by-region-graphfarm/>
Apple. 2021. [Online]. Available through: <apple.com>
Products of Apple. 2021. [Online]. Available through: < https://dazeinfo.com/2019/09/25/apple-
products-sales-worldwide-by-year-graphfarm/>
9