Introduction
Apple Inc. is an illustrious multinational corporation of the contemporaneous era. Not only has the company been developing and growing but it has also been selling great products. Apple Inc. has built an incredible platform and ecosystem for its trustworthy clients within which the corporation could further sell apps and services. Well-financed companies such as Alphabet, Samsung, Amazon Inc., HP, Xiaomi, and Huawei are also posing great competition to Apple Company. Despite the formidable competition, the corporation has managed to grow and thrive within its industries and possesses one of the best balance sheets as well as financial metrics among its peers, in the world.
Overview of Apple Inc.
There exist many countries all over the world in which the presence of Apple Inc. is evident. The two nations of the United Kingdom (UK) and India are important because of the peculiarities of the effects of the two countries’ policies on the Apple Company’s operations. More precisely, the oddity of the two countries’ economic policies lies in the fact that their monetary guidelines are related since India was a British colony. In both nations, the tech firm invents, assembles, and sells electronics, personal computers (PCs), and a variety of related software and services (Ewa et al., 2017). The manufacturer sells its products in India and UK through its retail outlets, virtual stores, and direct sales force. More specifically, it sells to Indian and British individual consumers, small and midsized businesses, academic institutions, and other public corporations (Dolata, 2017). As evident, Apple Company is a multinational corporation that sells technological products and services.
Apple Products
Due to the great demand for apple products, the company has diversified its merchandise and services to suit the needs of clients. Among all its commodities, iPhone is Apple’s primary product, which brings the largest share of the revenue for the company (Ewa et al., 2017). iPhone is the line of premium smartphones functioning on the proprietary iOS operating system. Another great product that is manufactured by Apple is the iPads, which are compatible with both Mac and Windows PCs and have easy access to Apple’s digital stores such as iTunes, App Store, and iBooks Store (Ewa et al., 2017). Notably, the firm’s products and services are interrelated as they work interdependently with each other and that is the reason why the corporation has been able to build a unique brand.
The products of Apple Inc. are not limited to iPhones and iPads only but there is also a wide range of merchandise the company is associated with manufacturing. For instance, most corporation’s devices use operating system software such as iOS, watchOS, and tvOS (Ewa et al., 2017). In addition, the company also provides internet services through some of its software they have patent rights. A good example is iTunes Store which allows customers to buy and download music and video files (Ewa et al., 2017). Other internet services include App Store, iBooks Store, Apple TV, App Store, iCloud, and Apple Pay. Accessories associated with Apple Inc. incorporate, Apple TV, Apple Watch, headphones, displays, storage devices, and other connectivity products (Ewa et al., 2017). As such, any client that wants to shop from Apple has at least one product that suits their needs.
Market Structure for Britain and India
Apple Inc. operates in an oligopolistic market structure and monopolistic competition in both India and UK. As much as there are great tech companies in the two nations, Apple still controls the largest market segments in these countries (Valaskova et al., 2019). Indeed, there exist few huge technological corporations in both India and UK. Other enterprises that offer similar goods and services in these two countries are new and possess an inefficient capital base hence cannot offer the best services or products as Apple Inc. (Dhingra & Morrow, 2019). For instance, Apple Inc. in the UK faces competition from Microsoft, Adobe, and VMware which do not have a large financial capacity. In India, Tata Consultancy, and Wipro Limited among other tech firms cannot match corporation’s great range of diversified products (Dhingra & Morrow, 2019). Therefore, the Indian and UK markets for technological products are oligopolistic because they shared between Apple and a few tech firms such as Huawei or Microsoft among others.
Since Apple Inc. operates in an oligopolistic market structure in India and UK, it sets prices for technological devices and accessories. It means then that the Company is constantly seeking and forming partnerships and deals, to establish new prices that are higher than other tech companies’ marginal costs (Mankiw, 2020). In consequence, this has led to collaborations that have encouraged success for not only Apple Company but other companies offering the same services. Because of the oligopolistic nature of the Indian and UK markets, Apple has been able to channel its funds into research to improve its goods and services, instead of engaging in price wars (Cherunilam, 2020). Therefore, continuous research has been a strength that the company has been able to derive from oligopolistic Indian and UK markets.
For some of its products, the Indian and UK markets provide a perfect example of monopolistic competition markets to the Apple Company. Specifically, the products are the accessories and devices such as PCs and iPads. Within the Indian nation alone, it is undoubtedly true that there are many tech companies of Indian origin and some foreign (McConnell et al., 2018). However, the products, as well as services, cannot be compared to the products of Apple as they are similar but differentiated in a way that each company operates independently of one another (Salvatore, 2019). In essence, this type of market structure provides a form of imperfect competition.
As aforementioned before, monopolistic competition has a greater effect on the operations of Apple Company in India and Britain. Tech firms in these nations produce differentiated products which have close substitutes hence limiting market power for certain products of Apple such as display monitors, PCs, and other electronics (Yusoff & Husnina, 2018). For illustration, HP produces computer display devices that can be substituted with Apple display devices. As such, if Apple Inc. increases its product prices by greater margins then the Indian and UK consumers can shift to other HP products as substitutes (Yusoff & Husnina, 2018). Clearly, the Indian and UK markets are partially monopolistic with regards to specific products such as electronics and computer accessories.
Comparative Analysis of Macroeconomic Indicators
GDP and GDP Per Capita at Constant Prices
Apart from the market structure of India and the UK, there exist microeconomic factors that influence the operations of Apple Inc. in these nations. The UK’s economy is a highly developed social market with a gross domestic product (GDP) of slightly above $3 trillion (The World Bank, 2022a). India’s GDP is estimated to be about 3.17 trillion, a figure that is slightly below that of the UK (The World Bank, 2022a). Without a doubt, this has an impact on the operations of Apple as it can expand its operations as a result of the increased spending by the Indian population which is continually increasing. Another macroeconomic factor that may shape the operations of Apple is the GDP per capita at constant prices in India and UK. GDP per capita at constant prices in Britain affects the prices of electronic goods manufactured by Apple (The World Bank, 2022b). Due to the difference in rates of inflation between the UK and India, prices of electronic goods may vary from one country to the other.
Inflation Rates and Unemployment Rates
Additional factors that affect the operations of Apple Inc. are inflation rates and unemployment rates. India’s central monetary regulator, the Reserve Bank has raised the inflation forecast for the current financial year of 2022 to 6.7 % (Reserve Bank of India, 2022). This is a rise in the previous year’s figures which shows that the prices of products and services at Apple across the Indian nation are bound to increase. In the UK, the current inflation rate stands at 9.1% which shows that the price of the same commodity in India would be different in India which has a lower inflation rate (Bank of England, 2020). Furthermore, the unemployment rate is also a significant factor in the operations of Apple in India UK. Unemployment in India as of April 2022 stands at an average of 7.6% (Dua & Goel, 2021). The UK’s unemployment rate is at a figure of 3.8% (International Monetary Fund, 2022b). Undeniably, inflation rates and unemployment impact the Apple Company in a way that affects the prices of goods and services thereby affecting the production of goods.
General Government Balances and Balance of Payments
General government balances and balance of payments (BoP) are the ratios that have affected the business operations of Apple in the Indian and UK markets. UK fiscal balance is forecasted at 4.3% which is expressed as a quantity of the UK’s GDP in 2022 (Bank of England, 2020). On the other hand, the fiscal balance in India is estimated at a percentage of 6.9 of the GDP in 2022 (Reserve Bank of India, 2022). As a result, the influence on the operations of Apple is varying among the countries. While the government of India needs at least 6.9% to fully achieve its budgetary expectations, the UK government needs 4.3%, requiring the former to increase its tax rates compared to the latter (Ottaviano et al., 2018). Therefore, this policy may force Apple Company to cut its production costs in the UK while maintaining the same for India. In addition, the 2022 balance of payment stands at $9.6 billion, 1.3% of the GDP of the whole economy in the second quarter of 2022 (Bank of England, 2022). The balance of payments for the UK is at 3.7% of the GDP (The World Bank, 2022a). From the results, it can be deduced that Apple Inc. is bound to increase its BoP by increasing its exports.
Interest Rates in India and Britain
Conventionally, interest rates are the payments that are done by a borrowing entity to a financial institution. Furthermore, the rates can be used to refer to those amounts of money that financial institutions pay to individuals for saving money with them. Nonetheless, every country has a principal monetary institution that is tasked with regulating the rates to shield the consumers from exorbitant rates. In particular, the UK has a stipulated bank rate to be 1.25%, which is sometimes referred to as the interest rate (Bank of England, 2022). Indeed, this rate affects how Britons and English people spend which affects the price of consumer products such as electronic products. With the rate of 1.25%, it means that consumers spend more, and the prices of electronics are bound to increase thereby production levels are increased to satisfy the rising demand for Apple items (Yusoff & Husnina, 2018). Maintaining interest rates low also helps in maintaining inflation at low and stable levels. As such, Apple Inc. can borrow money to expand its operations within the UK confines (Yusoff & Husnina, 2018). Analytically, low-interest rates enhance the growth of Apple in the UK as it boosts the consumers’ spending habits.
In comparison to the UK, India has a relatively higher bank rate. Currently, the interest rate for most commercial banks in India is set at a 5.15% rate (Reserve Bank of India, 2022). With this high interest, spending of most Indians is gradually decreasing, a factor that is eminent in their reduced spending on the electronic goods that are manufactured by the Apple Company. Interestingly, this explains why the value of the stock in Apple Inc. is dropping in the Indian market (International Monetary Fund, 2022a). With regards to the current interest rates, the costs of electronic goods are higher in India as compared to the UK. Consequently, consumers tend to spend little as the costs of goods are decreasing (Hans, 2017). With interest rates higher than 5% it then means that many Indians have reverted to saving as opposed to spending. An immediate result is that the Indian rupee has appreciated against the American dollar, precipitating a price increase for Apple products to maintain the corporation’s relevance in business (Reserve Bank of India, 2022). This impedes the expansion efforts that Apple may undertake within the Indian market or increasing its outlets within the nation.
Despite the different interest rates, consumers of Apple products are affected in a different way irrespective of the country they live in. Purchasing power of individuals greatly influences their spending behavior regardless of the interest rates (Mankiw, 2020). For instance, Indian consumers with large mortgages are disproportionately affected by the interest rates. Consumers with huge savings are however shielded from the ravaging effects of inflation (Dua & Goel, 2021). Contrariwise, reducing inflation will require the interest rates to rise above those levels that cause difficulty to the consumers with large mortgages. This is why monetary policy is an important tool in macroeconomic environment of a business. Critically, the low interest rates may help Apple Company to seek loans from financial institutions to hire more people and increase production. From the explanations, it is comprehensible that interest rates are directly associated with the economic activities of any firm.
Foreign Trade Policy and Forex Rates in India and UK
An important macroeconomic tool in trade is the foreign trade policy that aims at making a country a major player in global trade. The guidelines incorporate the financial policies relating to foreign trade as well as foreign exchange rates (FOREX). As its policy, the government of India is focused on promoting the exportation of high-value-added products where the nation has a strong domestic manufacturing base (Singh, 2018). In particular, the exported goods are to include engineering goods, electronics, drugs and pharmaceuticals, textiles, and agricultural commodities. This is advantageous to Apple Inc. as it can manufacture large quantities of products and send them out of the Indian market to fetch large amounts of foreign revenues (Singh, 2018). This is a boost to the economy of India as increased production points to increased revenue generation.
Exchange rates are also a factor in the economic policy of a country such as India. From the data that is available from the Reserve bank of India, one US Dollar retails for 78.99 rupees. Moreover, a Euro retails at a price not lesser than 82.4 Indian rupees (Reserve Bank of India, 2022). Like any other nation, Forex reserves are held by the Reserve Bank of India. In the case of India, the reserves are held in the currencies of dollars (USD), Sterling Pound (GBP), Euros (EUR), and Japanese Yen (JY) (Reserve Bank of India, 2022). The reserves are important as they facilitate trade between two different corporations such as Apple Inc. and any other commercial enterprise in any part of the world. The second advantage of the Indian Forex reserves is that they help in maintaining India’s currencies at a fixed rate. Therefore, Apple Company taps into the reserves to ensure it meets its foreign obligations and liabilities.
Fundamental to UK’s economic guidelines is the principle of the prosperity of the whole UK as well as the world economy. The trade policies aim to provide higher wages and ensure more Englishmen and women access a variety of goods and services at lower costs (Ottaviano et al., 2018). As a result, the households’ incomes increase further, more so for the poorest in the society. For instance, the principles that are enshrined in the UK’s trade policy are in tandem with the business operations of Apple as a company. The tech firm has manufactured a variety of products at lower prices for every person in the society (Yusoff & Husnina, 2018). Notable rule in the UK is the Brexit legislation that has enabled the UK to secure benefits of free trade as well as protecting its domestic industries from unsafe trading practices such as dumping of subsidies (Ottaviano et al., 2018). Apple Inc. operating in the UK has automatically benefited from the policy as it enjoys government protection against an unfair competition by other enterprises.
The most recent available data showing the relationship between Pound Sterling and other currencies shows that the GBP has remained stable amid the COVID-19 pandemic in the UK since 2020. By illustration, 1 GBP was exchanging at an amount of US$ 1.20 up to the first of July of 2022, while 1 pound sterling was retailing at 1.15 Euros (Bank of England, 2022). All these data show that the economy of the UK remained stable despite all challenges as the businesses operating within the UK were equally thriving and stabilizing up to the second quarter of the year 2022 (The World Bank, 2022c). With these fair Forex rates within the two specific examples, Apple can expand its operations in the European markets through the use of Euros and US dollars as the currencies for trade.
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