Trade Policies & Profitability: Apple Inc. Performance Evaluation

This report evaluates the impact of trade policies and economic variables on Apple Inc.'s global operations and profitability. It identifies key challenges such as US-China trade war, Trump's tariffs, taxation policies, and economic factors like income levels, interest rates, inflation, and economic depres...Read More

Running head: PERFORMANCE PROFITABILITY 1
Performance Profitability- Evaluation Criteria
Student
Institution

PERFORMANCE PROFITABILITY 2
Apple Inc.
Incorporated in 1977, Apple operates in a highly competitive mobile design industry
where it faces stiff competition from Samsung, Black Berry, Microsoft, Sony, Lenovo, and Dell
just to mention a few (Nathaniel, 2019). Apple encounters various trade policies and economic
variables that impact its global operations. For purposes of business policy and formulation,
Apple has hired an economic analysis.
The trade policies that impact on Apple’s global operations range from the US-China
trade war and Trump’s tariffs, taxation laws, and tariff imposition on its products across borders
(Witney, 2016). It is important for the CEO, CIO, CFO, and CTO of Apple to note that the
proposed $200 billion tariff by Trump on China would adversely affect its profitability and
growth in China (Apple, 2012). Also, the fact that Apple operates in different countries exposes
it to a threat of varied taxation policies on its income, and this should be factored into major
decisions especially by the CIO and the CFO. The Trump tariffs have a great potential to force
Apple raise the prices for its watches, phones, and headphones so as to recoup the lost revenue.
On the other hand, economic variables such as income levels of the target market, interest
and tax rates, inflation, and economic depressions (Appeldorn, 2013). Normally, the products of
Apple are expensive and this eliminates certain groups of people from using its products. In
decision making that surround pricing, the CTO, CEO, CFO, and CIO should consider the
varying economic or social status of the target market and ensure that products that are
affordable to all classes of customers are designed.
The other economic problem that disturbs Apple’s global operations is inflation. The
average prices for products in different countries keep on changing. In this regard, the purchasing

PERFORMANCE PROFITABILITY 3
power of the target market falls due to reduced salaries and wages in relations to the cost of
goods. In addition, interest and tax rates impact on Apple’s global operations (Apple, 2012).
Often, different governments change fiscal policies in attempts to raise business cycle and thus
increase taxes on Apple’s incomes. Such fiscal policies affect the pricing of Apple and this in
turn has an adverse impact on their business.
Out of this analysis, the following recommendations should be considered in Apple’s
business policy and formulation by the CIO, CFO, CEO, and CTO:
 Since Apple Inc. has the strengths of rapid innovation, strong brand image, and huge
profit margins, the company should continue with rapid and aggressive innovations so as
to develop its products and eventually maintain competitive edge of rivals.
 Apple needs to come up with a unique global tariff policy that does not discriminate
against any region through government involvement, and this would eliminate the threat
posed to its business policy and relations with regions like the Chinese market.
 Apple needs to initiate a pricing structure and policy that considers the income level for
all target markets; this would help in increasing global coverage and profitability.
In conclusion, Apple is a highly reputable and competitive firm in the mobile design
industry. The company needs to create partnerships and strategic alliances with more distributors
across the globe so as to advance the overall market coverage as well as its distribution network.

PERFORMANCE PROFITABILITY 4
References
Appeldorn, R. H. (2013). Technology Transfer in a Diversified, Global Manufacturing
Company. Journal of Technology Transfer, 22(3), 57-64.
Apple. (2012). Apple Reports Third Quarter Results: 17 Million iPads Sold. Chicago: Apple Inc.
Retrieved from http://www.apple.com/pr/library/2012/07/24Apple-Reports-Third-
Quarter-Results.html
Nathaniel, S. (2019). Apple Inc. SWOT Analysis & Recommendations. Business Management,
7-15.
Witney, K. (2016). Apple Incorporated Performance Analysis. Business Analysis, 1-10.