WRITTEN RESPOINCES Essay Example
QN1. PRICES OF WOOLWORTH AND COLES PRODUCTS
Woolworth products are viewed to be cheaper than Coles products. Despite the fact that Woolworth products invest a lot of cost on them, they are still viewed to be cheaper than Coles products. This statement is objected by the Coles Spokesman who suggest that, a reduced number of items does not dictate that Woolworth is cheaper than Coles (Greenlands, 2016).
The stakeholders affected
The key stakeholders affected by the reduced prices of Woolworth and Cole are shareholders, employees, suppliers, competitors and the consumers.
A price war has been between Woolworth and the Coles over the past years. The expansion an entry of IGA and markets like Aldi and Costco created a potential decrease in prices. This created competition in the global market.
They are given numerous benefits when prices of commodities are cut. But this makes them face limitations in terms of choice of products because completion results to a market where every entity will offer cheapest prices and hence small retailers will exit the market (Greenlands, 2016).
Market domination gives Woolworth and Coles control over the other suppliers. What creates a negative impacts on small suppliers is the launch of self-products and cut prices for their products.
They article reveals that Woolworth has made efforts in cutting prices since the year began. $200m has been invested in this by Woolworth creating more than 1200 job opportunities in the labor market (Wardle, 2015).
A drop in the net profit for Woolworth products as impacted shareholders aversely. Action plans and strategies tend to be in high interest for the shareholders.
QN2. REDUCED APPLE SHARES
The Apple Company is struggling to sustain the huge market for iphone 7 it is planning to come up with a new model of laptop. The laptop has a new Macbook Pro. The Macbook pro has a panel replacing keys above its keyboard. Furthermore, it contains a fingerprint sensor screen text and graphics. This new model apple leaked in September by IT experts before it was officially launched. Consequently, the Apple Company reduced 22% of their shares totaling to US$ 115.5 (Lennon,16)
The Apple Microsoft is the dominating figure in Australian market. Due to the increased Information technology, Apple is dominating in the global market making it the world’s software sold. The stakeholders that are affected by the supply of Apple Microsoft include the shareholders suppliers, workers, consumers and competitors (Hens, 2015).
Loss of shares from the Apple Microsoft leads to a reduced total revenue. This reduces the total supply in the market having that there is increased demand for the sales Apple and Microsoft.
Reduced share prices makes Apple to face a stiff competition from Microsoft. This reduces maximum supply of their products in the global market (Lennon,15).
A drop in the shares reduces the company’s employees and increasing the revenue in order to maintain the prices of Apple. This increases the number of unemployed people in Australia (Lennon, 2016)
A reduced number of shareholders leads to price regulations in order to stabilize revenue. This should be done in order to maximize profits.
New Macbook Pro in Apple makes the customers have a wide range of products to choose from in the global market.
QN3. Economic theories/concepts/diagrams that can be applied to this news story
The demand elasticity measures the extent at which the product’s demand responds to the changes in prices (Verrini 6) (Verrini 7).
The demand of a particular product is said to be elastic if the quantity demanded significantly reacts to changes in the prices (Verrini 9). For Instance, the demand of an iPhone will depends on the model and the stage in which the item cycle is at. As a rule, the demand of an iPhone is inelastic which it implies that the increase in the cost would least influence the number of iPhones demanded (Verrini 7).
As the figure below shows, the increase of demand of an iphone, produces another point of equilibrium at x’. That means that the product will make significant profit even if the demand decreases. Also in the instances that the product supply is limited, the firm will be able to set prices, which in turn will affect the equilibrium point. As the firm sets, the new equilibrium point, the revenues increases from A to B. That is why Apple managed to make significant profit despite experiencing limited supply. The diagrams below illustrate the equilibrium point in inelastic demand and limited supply of Apple;
Inelastic Demand for the Iphone
Therefore for the iPhone’s models that were there before the iPhone 5, the demand gets to be elastic. Apple needed to bring down the cost with a specific end goal to continue making profit on them. Apple cut the cost of olds model which created an increase in the demand in terms of quantity for old models. Bringing down costs, opened the market to low salary purchasers, and demonstrated an expansion in the organization’s aggregate income (Verrini 6).
QN4: Other issues
First is the Perfect Competition, where there are numerous purchasers and venders, each too small to impact the cost of the item. Secondly, there is a Monopoly, a type of market where there is a solitary firm which sales the items to numerous purchasers (Verrini 4). The third type is a Monopolistic competition. In this market, there are numerous merchants of separated items and it is easy for them to enter and exit the market. Lastly, there is an Oligopoly where there are few vender of homogeneous or separated item (Verrini 4) The Apple iphone smartphone is found in an Oligopolistic market (Verrini 4).
The oligopolistic market is called differentiated because in this market, the participating firms are offering different products in the same niche (Verrini 5). The price rigidity affects the firms in oligopoly market. That means that, if a firm increases the price, it will probably lose substantial number of its customers. The iPhone product experienced a decrease in the number of consumers, because the product is priced higher than most of its competitors. The low demand of the firm’s products will affect the firm’s performance at the stock exchange (Verrini 5).
However, the oligopolistic market theory rarely affects Apple’ iPhone produc (Verrini 5) t. This is because; the iPhone is still the most expensive Smartphone that has a lot of loyal customers. The company has also been at the forefront in technological innovations over many years (Verrini 5). Apart from the mentioned reasons, the company’s marketing campaign is very convincing and strong. The campaign makes the Apples’ products to appear as fun despite being expensive. In addition, the durability of Apples’ products has helped the company to earn the consumers trust (Verrini 4-9).
Aula, P. and Heinonen, J., 2016. Risk of Risks. In The Reputable Firm (pp. 133-162). Springer International Publishing.
Greenland, S.J., Johnson, L. and Seifi, S., 2016. Tobacco manufacturer brand strategy following plain packaging in Australia: implications for social responsibility and policy. Social Responsibility Journal, 12(2).
Hens, L., 2015. STA201 Intermediate Statist Notes. Vesalius College, Brussels.ics: Lecture
Lennon, S. 2016. Apple shares drag on wall St after iPhone sales slide.
. 1st ed. 2016. Print.Iphone’s Economic AnalysisVerrini, Alessandro.
Wardle, J.L. and Chang, S., 2015. Cross‐promotional alcohol discounting in Australia’s grocery sector: a barrier to initiatives to curb excessive alcohol consumption?. Australian and New Zealand journal of public health, 39(2), pp.124-128.
Lennon, S. 2016. Apple shares drag on wall St after iPhone sales slide.
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