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Apple isPad Business Proposal

By bthere Oct 18, 2014 903 Words

Apple isPad Business Proposal
ECON 561
June 9, 2014
Dr. Jerry King
Apple isPad Business Proposal
Economic Analysis Section
isPad with Retina display delivers a razor sharp text and detail in an amazing thing and light design ("Apple Info", 2014). It features the ability to exchange data with non-Apple products utilizing Apples iCloud storage and cloud computing service from Apple. isPad is powerful and power-efficient Apple-designed A7 chip with 64 bit desktop class architecture, wireless with faster built in Wi-Fi and expanded LTE cellular connectivity, and hundreds of other great features ("Apple Info", 2014). isPad will be produced in 16, 32 and 64 gigabyte at a marginal cost of manufacturing of $260, $289 and $348. The selling point of these three isPads are $499 for 16 gigs, $599 for the 32 gigs, and $699 for the 64 gigs ("Apple Info", 2014). The isPad will produce a healthy profit and marginal revenue. Profit are calculated to maximize when marginal revenue is equal to marginal cost that is depicted to be at the quantity of 80 million units. Market Structure

Apple has a patent on the isProducts and the market structure for this line of product is a monopoly. isProducts will posses making power because it is a unique product that no other firm is producing. Apple is a firm who has market power therefore it will influence the market price of the product and will behave in a different way than a firm who has perfect competition. Elasticity

The calculated elasticity through the incorporation of marginal revenue and price concludes that the 16 gig isPad has an elasticity of demand of -2.09, the 32 has -1.93 and the 964 has -1.99 ("What Is An Apple ipad's Elasticity of Demand?", 2012). These three products have a very close elasticity. The item's demand is considered relatively elastic. This data depicts that if the prices change from current levels, the percentage change in quantity demanded would exceed the percentage change in price. Non-Pricing Strategies

isPad non-pricing strategies of advertising and branding. Commercials will be launched using famous couples, families and students exchanging data to encompass all market areas. The feature is so easy even a baby will be included in ad campaign to capture the heart of the people. The most powerful non-pricing strategies Apple has is branding. Consumers expect quality products, next level technology and the stigma of owning an Apple product. This approach will allow us to maintain our current market status and enter or create new markets. Fixed and Variable Cost

This product will be produced in China in warehouses where the labor is cheaper, and Apple owns the warehouses to control fixed and most variable cost. The variable cost component that is being explored is shipping cost and if there is a change in that industry there could be a change in the overall projected variable cost. If there is a major effect Apple has the option of manufacturing product in both the states and China to reduce shipping cost by producing and shipping in perspective regions. Economic Conditions, Macroeconomic Indicators and Business Cycle

The economies conditions can quickly change over time in line with the economic and business cycle. Currently the economy is going through an expansion. Therefore, the economic conditions are considered to be sound and increasing economic output. We conducted a survey to help in facilitating business decisions and to identify economic indicators that companies follow. The top two economic indicators are unemployment and inflation which are focal points, but other indicators that are in our radar are consumer confidence and spending and Purchasing Managers' Index. Consumer confidence and spending has been a proven indicator that effects our goods therefore, we are prepared to utilize non-pricing strategy to manage this.

As a company operating in a modern economy, there are uncertainties with the business cycle because each of the components each reflects different levels of the economic activity and circumstances occurring during each stage. As a business, we are stargazing to use the business cycle effectively to position our investment portfolio. For example as the economy is in an expansion phase, cyclical stocks in the technology sector tend to outperform, because we are aware of this trend this is our season to launch this product ("Investopedia", 2014). Retail sales and number of employed people economic indicator will be monitored to prepare for the peak with expectations of economy's GDP to be high during expansion and peak. This reflects the economy is operating efficiently. Contraction stage is opposite of the expansion phase if this develops we are prepared to produce fewer good and reduce employment. Trough is the final month of its contraction phase and is recognized normally after it's over. As a mature company that has been in this industry for many years operating at a profit level the resources are available to address the business cycles as they occur. Apple designs the best personal computers in the world ("Apple Info", 2014). Apple has reinvented and revolutionized technology and is continuing to define the future of computing devices. References

Apple Info. (2014). Retrieved from http://www.apple.com/pr/library/2013/11/12iPad-mini-with-Retina-Display-Available-Starting-Today.html

Investopedia. (2014). Retrieved from http://www.investopedia.com/terms/b/businesscycle.asp

What is an Apple iPad’s Elasticity of Demand?. (2012). Retrieved from http://applecoeconomics.wordpress.com/2012/05/17/what-is-an-apple-ipads-elasticity-of-demand-9/

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