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Apple Inc Business Analysis

Essay by   •  June 8, 2011  •  Case Study  •  3,819 Words (16 Pages)  •  2,274 Views

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Apple Inc. -Business Analysis - II

Apple has created its mark as one of the leading industries in the world by producing new and innovative products. This is a consumer based industry and the growth of the company depends upon how well it can retain its customers and sells its products. Recent economic developments have great impact on businesses worldwide, especially in the United States because of recession. A large number of companies went out of business with customers cutting on their spending. Let us review how the recent economic trends have impacted Apple Inc.'s business and strategies the company has applied to overcome the economic slump and the role of its human resource department to manage the resources to drive the organization.

Recent Economic Trends

World is changing at a rapid pace and businesses are positioning themselves in such a way to meet the consumer wants and needs. Recent development in the global economy has taken a toll on business and consumers and in turn caused imbalance in the microeconomics, which is a study of individual choice and how that choice is influenced by economic forces. It revolves around what people want, how much they are willing to spend on the commodities and how the companies are pooling money to produce the goods that people want. The recession hit American market has shown its impact in all sectors across the world starting from food industry to IT industry. Consumers started to feel the lightness of their wallets because of cost increase in regular commodities like food, fuel and clothing. Recent economic trends have created an impact on the way businesses are run and the way consumers are spending. Let us look at some of the recent economic trends that changed the livelihood of a common man.

a. Unemployment

Unemployment rate has doubled from 2007, when the recession started. Analysts predict it may not come down in the near future, though recession comes to an end. One of the reasons being employers not willing to hire until the economy is completely stable. Unemployment causes consumers to stop spending the money, which will impact the business and in turn brings down the price of commodities. This results in profit reduction that can cause companies to shut down. Businesses are taking extra effort to market their products at cheaper prices to turn down the inventory and keep the business away from bankruptcy. When the employment rate increases, consumers are more willing to spend the money that increases the countries GDP, which is a measure of the economy.

b. Deflation

Economy is recovering from inflation, but analysts predict that it is moving toward deflation. Deflation leads consumers to postpone the consumption while expecting prices to fall further, this triggering a long slump. Deflation is very dangerous to country's economy and, especially for the business people who run the business on debt. They have to pay back the loans with the dollars that worth less than they borrowed. This results in the debts more expensive to pay off and banks holding off on loans. This situation is extremely dangerous to the business operations and will impact the economy if it continues further. Fed, which monitors the inflation and deflation needs to take necessary action to pull the economy out of deflation.

c. Weak Dollar

Dollar value has declined considerably in the international market. This causes the imports to be expensive than exports resulting in trade deficit, which might result in inflation. If the Fed increases the interest rates to combat inflation, it might slow down the business resulting in more serious condition, called stagflation. Foreign investors are backing away because of the America's economic instability and its financial systems. Multinational business, which operate across the world are heavily impacted as the foreign exchange fluctuation can seriously impact the operations and the profit margin. For a country to be economically stable and strong, its exports should be greater than imports. The US government and FED need to take necessary actions to increase the dollar value in the international market.

d. Outsourcing

Outsourcing is one of the latest trend the business is adopting to decrease the operational costs and thereby increase the gross profits. Non-core competency-related work is sent to other countries where the cost of labor is cheap. This adds to the unemployment rate and has a greater impact on the American economy.

e. Global Economic Crisis.

Not only United States but also United Kingdom and other European countries are hit by the recession. This is making it more difficult for the US government to tackle the recession. UK and European countries are the highest investors in the American market. This has changed in the recent past because of economic downturn in the housing and financial sectors in both the countries. The rise of China as an economic super power and halt on its investments on the American treasuries has resulted in the decline of United States exports.

f. Global Warming

Clean technology and environmental conscious investing is causing business to spend more in developing clean products and energy saving gadgets. This increases the production cost and thereby reduces the returns. This is not as bad as the other factors mentioned above. In the current economic situation, where businesses are trying hard to sustain the fluctuations, this can create an impact.

g. Regulations

The US government has tightened the regulations after the credit crisis in 2007. Investors are taking all sorts of precautions to ensure that the people will honor their promises. Too much regulation will result in lack of competition and innovation and thereby economic growth. On the other hand, too little regulations will create instability with scandals and crisis. But all the developing nations are loosening the regulations to increase the competition and spur the economic growth.

h. Gross Domestic Product (GDP)

This is the measure of economic growth of the country. The United states economy is relatively flat, which on one aspect reflects that the country's economy is kind of stable and on the other hand being flat raises a concern, as it reflects the development and growth after the recession, which is expected to increase.

Strategies the company has used or could use for adapting to changing

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