Macroeconomic analysis of Apple Inc. (Essay Sample)

Assignment Title: Apple Inc. Student’s Name Course Title Instructor’s Name Date Company Overview Apple Inc. is one of the most successful firms in the world. It is an American multinational that have won the heart of many customers due to its high-quality products. The companies headquarter in Cupertino, California. The company deals in the field of technology, manufacturing products including online services, consumer electronics, and customer software. Steve Woznick and Steve jobs were the founders of this firm on April 1, 1976. Ronald Wayne was also a key member in founding this company. The company is known for producing iPhone smartphone. Mac Computers, IPad tablets Apple smart watch. In the field of software, the company manufactures IOS operating system. The firm also has online services including iOS App Store and iCloud. The company boasts of being the leading technology firm by total assets and by revenue. It is ranked second in the field of manufacturing smartphones. Its online iTunes boasts of being the leading in the music retailer. The company employs 115,000 full-time employees based on the data collected in July 2015 (Sanchirico, 2015). The company boasts of massive revenue. Its annual sales increase each year, thanks to its good management. In the year ending September 2015, the company recorded an annual revenue of $233 billion, an amount that is 1.25% of the entire Gross domestic product of the American economy. In this total revenue, the company made an annual profit of $53.4bn. For the Q3 2016, the company recorded a slowing revenue. With international sales accounting for 63% of the sales in this quarter, it shows that the firm’s attention is slowly moving out of USA. During this short period, the company recorded a total revenue of $42.4 billion as opposed to that recorded during the same period last year (Sanchirico, 2015). These sales get attributed to the great demand for the company’s high-quality products. The company, however, faces criticism due to its labor and environmental practices. Discussion Macroeconomic variables Annual sales of Apple Inc. get affected by a macroeconomic variable. The first variable is Variations in real wealth. This variable refers to the amount of money in customer’s hand. The sum of money these customers have will determine the amount of Apple Inc. products they will buy. As the money customers have increased, they will demand more goods and hence the company will supply more products. When these funds reduce, the demand will be low and hence the supply. The other variable got changed in inflation. The inflation makes money lose value by eroding its value. If consumers expect there to be inflation, they will buy more Apple Inc. products as the money will lose value in the future and hence will not be able to purchase the products in future. On the other hand, if inflation makes the cost of production go high. If inflation reduces, it allows Apple Inc. to supply more goods at the same price. The third variable is change in the real interest rate. High-interest rates make the prices of Apple Inc. go high hence lowering the demand for the company’s products. Low-interest rates encourage consumption as products become cheap. Inflation in USA for the past three years was 0.7% for 2015, 1.5% for 2013 and 0.8% for 2014. This inflation had a profound impact on the sales of Apple Inc. The medium income for each household appears to stagnate for the past few years. In 2014, this value stood at $53,657. This figure differed from that recorded the previous year of 2013 which stood at $53,105 and this data for 2012 stood at $52,970. With the data for 2015 yet to get released this September, the trend above shows that the real wealth of the Americans has remained fairly constant with a minimal increase. On the other hand, looking at the interest rates in the USA for the past three years the federal interest rates have flattened on 0.50 percent mainly due to the strong USA economy. This macroeconomic variation had an impact on the USA economy as a whole. Looking at the sales of Apple Inc. for the past three years, the company recorded revenue of 170.87 billion for 2013, for 2014 the value was 182.24 and 231.28 billion for the year 2015. These figures were directly affected by the macroeconomic variables. The figure for 2014 recorded an improvement from that of 2013 due to a decrease in inflation rates. Increased value of money allowed Apple Inc. to manufacture more products at the same price and hence sell them to customers at an affordable price. Despite an increase in inflation the following year, customers maintained added revenue thanks to a slight increase in the real wealth of the American population as a whole. The revenue for the next years continues to grow due an ever increasing median income of the entire population. The growth in sales in 2014 could also get attributed to an expected inflation the next year, which made customers buy more products in anticipation for the inflation. The federal interest rate has remained fairly constant and hence have minimal impact on the sales of this firm. Macroeconomic policies A set of tools namely monetary and fiscal policies are used to implement. Key aims of this policy are to keep the economy stable to improving the overall state of the citizens. Fiscal policies in the USA relates to the collection of revenue and the government spending (Dosi et al, 2015). The government uses this policy to maintain the economy at the accepted rate. In case there is a slowing demand for products such as iPhones, the USA government can step in and spend more money on the citizens. This move will increase the demand for the company’s Products. If the government records low demand for products, it can decide to reduce the taxes that citizens pay to allow them to have more income. The USA also issues bonds to keep the economy at a level where they want it to be. This move constitutes an expansionary policy as it increases the national debt. On the other hand, monetary policies aim to slow or speed up the USA economy and the central government controls it. These values relate directly to the money supply. The USA central bank uses reserve requirements and the interest rates; the Federal Reserve rate to be precise. This move, for example, entails efforts to curb inflation. In controlling the inflation, the central bank uses an increase in interest rates. This step lowers money supply for the country hence maintaining the inflation at the accepted value. The open market operations are also an avenue that the bank uses to control the money in the country. They include Federal Reserve purchases. Both the Fiscal policies and the monetary policies affect the operations of Apple Inc. If the government decides to reduce taxes imposed on citizens and spend a lot of money on the customers, more customers will afford to buy the products of the company and hence increase the sales by the firm. In a bid to minimize inflation, the government may raise the interest rates, making the supply of money lower. This effort will go down to the customers and lower their purchasing powers and hence reduce the demand for the products of Apple Inc. Increasing the government spending on the customers and lowering taxes increases their real income and increases their ability to purchase. However, this move increases inflation. Rising interest rates reduce inflation but also reduces the customer’s real wealth. This step implies that any action that the government performs will have an impact on the sales of Apple Inc. as they will influence the demand for its products. Cha...