Economics Demand and Supply For IPhone

1.0  Introduction

Apple Inc. was rated as the most admired company in the world from 2008-2012 by Forbes magazine for its smart phone, “The iPhone”. It was first established in April 1976 and only produced personal computer dubbed “ The Mac” but it achieved widespread success with the release of iPhones on January 9 2007. Apple Inc. is the first company to achieve mass-market adoption of touchscreen with pre-programmed gestures. Reputed as the second largest information technology company, the third largest smart phones manufacturer and the second largest publicly traded company in the world.

1.1 Problem statement

      Analysis of the demand and supply of IPhones smart phones in relation to change in market factors.

1.2 Objectives

·      To evaluate the demand of Apple smartphones

·      Factors which determine the demand and supply of Apple smartphones

·      Identify the competitors of Apple Inc. in the consumer electronics market

1.3 Limitations/ constraints

·      Time- the time to carry the survey was a bit short since the survey required us to go through a number of steps.

·      It was difficult to get clear feedback

·      Resources were a bit limited such as money and transport to carry out the whole survey.

1.4 Research type

The research will be a qualitative because it will be based on facts, which we will gather from the findings (McNabb, 2012). The research will strive to identify and define various facts, which support different market structure of companies.

2.0 Research Instrument

The research we are going to use in the survey is questionnaire. We are going to construct a questionnaire, which we are going to distribute to the selected Taylor’s lakeside University student body. The questionnaire will be having 20 questions.

2.1 Research steps

·      Choose a research question and company

·      Design a research question

·      Design a research instrument (questionnaire).

·      Distribute the questionnaire to student body

·      Gather the information

·      Tabulate the data gathered in form of graphs

·      Evaluate the data

·      Make conclusions and recommendations

2.2 Data collection method

The strategy for data collection we are going to use is interviews conducted through questionnaires distributed to the students and staffs in Taylors University. The research is a qualitative hence it requires us to use this method of data collection because it is a fact based rather than quantitative that is based on numbers.

2.3 Data analysis

The research used the survey method. The analysis included the views from demanders for the phone product they are purchasing. The analysis consists of graph and the statistics of the buyers, which are recorded.

2.4 Findings

2.5 Market structure

From the research finding it shows that Apple phone products mainly fall under the demand and supply concept that the company fulfills it demand and supply concept. Demand & I Phone supply: .

 IPhone 5 hit the market on September 21, 2012; the analysts expected that more than 10 million iPhone 5 would be sold. However, it only reached 5 million units of sales; Apple’s CEO Tim Cook explained that the small figure was not due to the declining demand from customers but due to the insufficient supply of iPhone, Apple also insisted that the demand for iPhone 5 was actually exceeded its supply.

Based on Graph 1, the quantity demanded for iPhone 5 exceeds the quantity supplied by Apple; therefore there is a shortage of supply. Apple could actually make more sales because the quantity demanded is expected to be 10 million units. If Apple managed to supply 10 million units of iPhone 5 to meet the future demand from consumers, Apple can maximize its profit at the equilibrium point where efficiency takes place; neither overproduction nor underproduction.

2.6 Industry Rivalry

Apple Inc. vs. Samsung Electronics Co., Ltd. was the first of a series of ongoing rivalry lawsuits between Apple Inc and Samsung Electronics that shows the design of smart phones and tablet computers and accessories between them. The companies made more than half of Smartphone sold worldwide as of the year 2012.  In the year 2011, Apple began their rivalry against Samsung in infringement suits, while Apple and Motorola Mobility were already engaged in a patent war on who is the best. Apple's multinational litigation over technology patents became known as part of the mobile device patent wars, extensive litigation in fierce competition in the global market for consumer mobile communications. By August 2011, Apple and Samsung were litigating 19 ongoing cases in nine countries, by October, the legal disputes expanded to ten countries. By July 2012, the two companies were still embroiled in more than 50 lawsuits around the globe, with billions of dollars in damages claimed between them. While Apple won a ruling in its favor in the U.S., Samsung won rulings in South Korea, Japan, and the UK.

2.7 Demands, Supply and Equilibrium

The demand of the I phone product follows the customer’s tastes. The customer are more favorable to the Apple product compared to any other product which are conducted under the survey in Taylors University. The shifting of demand curve definitely increases the equilibrium quantity of I phone product purchased. The desirable of the IPhone by customers increases the demand of the I phone products. As the demand increases, the demand curve will shift rightward as the following diagram:

Figure 1

. The shifting of supply curve definitely increases the equilibrium quantity of I phone product purchased. The desirable of the IPhone by customers decreases the supply of the I phone products. As the demand increases, the supply curve will shift leftwards as the following diagram:

Both figures shows the response of demand increased and supply decreased.

2.8 Recommendations

    This recommendation is based on the move made by Android to lower prices; Game theory suggests that it is in Apple’s best interests to keep prices stable so that demand for Iphones increases as Apple and Android are substitute suppliers. However we would recommend an investigation of the conditions of Apple’s supply market. This investigation could reveal that the same factors that lead to Android lower its prices, may affect the entire industry. If the supply quandary is revealed to be at certain parts of the world, for example in Korea because of Samsung from which IPhones in America still has not recovered; then it can be concluded that Samsung will not be affected.

However in light of this price move we feel that it is better that IPhone lower prices in order to retain and gain its market since the demand of Android is raising compared to recently due to lower prices of Android smartphones such as Samsung and HTC which has also increase its supply in the market and raised their market sales due to increase in demand and supply of Android Smartphones.

2.9 Conclusions

From the research finding it shows that Apple phone products mainly fall under the demand and supply concept that the company fulfills it demand and supply concept. I Phone supply & demand.

 3.0 References

Brand directory. (2012).  Global top 500 brands.   www.brandirectory.com  19^th July 2012.

IPhones. (2011).  Sales and Revenue.  http://www.apple.com   19^th July 2012.

CNN money. (2012). Most admired company by fortune magazine. www.CNN.com.

Graham, R. J. 2013. Managerial Economics For Dummies. John Wiley.

Keat, P.G. and Young, P.K.Y. (2009), Managerial Economics- Economic tools for today’s decision makers, (6^th edition), Chapter 9 pp 372 – 378 N.J.: Pearson Prentice Hall.

Marczyk, G. R., DeMatteo, D., and Festinger, D. 2010. Essentials of Research Design and Methodology. John Wiley & Sons.