Apple's iPhone: Quality Smartphone, Cutting-Edge Tech - Essay Sample

Introduction

Apple Inc. is a multinational technology company based in America dealing in various items. The company develops and sales consumer electronics, computer software, and provides online services. It has its headquarters in Cupertino in California. Among the products in the hardware store includes iPhones and iPads. It is among the best technology companies with the highest quality goods and services. This iPhone is a smartphone that is designed and sold by Apple Inc. which combines a computer, iPod, digital camera and a cellular phone to make one device with a touchscreen interface (Chen & Ann, 2016). The company's annual sales from range from $30 billion to $150 billion. In the fiscal year 2017, the company's sales from iPhones only was a total of $216.76 million.

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Macroeconomic Variables

Three macroeconomic variables impact the supply and demand for iPhones in the United States. They include inflation, unemployment, and the Gross Domestic Product. These three variables significantly influence the performance of the company at large (Mokhova &Zinecker, 2014). Inflation, for example, determines the strength of the dollar concerning other currencies. When the exchange rates are high in favor of the US dollar, the returns the company is likely to reap from foreign markets will be relatively high.

Unemployment determines the purchasing power of people. High rates of unemployment may lower the purchasing power as people are poor. This may reduce the sales of the iPhones and therefore lowering the performance of the company. However, where employed people are more than the unemployed, their ability to buy increases due to a stable income and the company can then make sales. This will, therefore, increase the financial performance of the company.

Gross domestic product similarly influences the performance of the iPhone. This is because the GDP determines the income the country generates internally. This will, therefore, determine how much phones can be sold. The higher the GDP, the higher the phones will be sold since people have enough resources and income too but the phone. Likewise, when the DP is low, the purchasing power of the people is also low.

Macroeconomic Trends

Macroeconomic trends involve the directions which the variables above take, namely, inflation, unemployment, and Gross Domestic Product. It answers the questions or change in interest rates, unemployment rates, and terms of trade. According to statistics for the performance of the variables in the United States in the past three years, the company is likely to increase its sales. This would consequently lead to increased revenues, and the financial performance of the company goes up.

In the past three years, the United States has been experiencing a steady growth rate of the three variables. The Gross Domestic Product has increased over the past three years, with a growth rate below three percent (3%), ranging from 1.6 % to 2.9%. This is significantly high for an economy like the United States, which is quite advanced. For inflation, according to changes that were made in the consumer price index, inflation has been mild, hovering around two percent (2%) with the lowest being recorded in 2018 at 1.9%. The rates of unemployment have also been significantly reducing, reaching below four percent (4%) in the months which experienced low rates of unemployment, at 4.7% at most when it was considered high( Rosoiu, 2018). Currently, the economy is operating nearly full employment in general (. (Check the table below). The table indicates the trends in the macroeconomic variables from 2016 to 2018 December, according to data collected by The Balance, edited by Kimberly Amadeo.

U.S. Annual Year / GDP Growth / Unemployment Rate / Inflation / Business Cycle Phases

Year GDP Unemployment Inflation Business Cycle Phases

2016 1.6% 4.7% 2.1% A strong dollar, low oil prices

2017 2.2% 4.1% 2.1% The weakening dollar caused growth

2018 2.9% 3.9% 1.9% Tax plan for Trump caused growth.

The data above provides the statistics for trends in GDP, Unemployment, and Inflation for the United Stated from the year 2016. The percentages presented are as per the end of the fiscal years normally in December. The chart indicates a stable growth in the three variables and therefore, means that Apple Inc. has a chance of increasing its sales. The data presented represents an average done for the performance of the variables throughout the year. It is likely that with the Trump policies, which led to this like the tax plan and the introduction of the strong dollar, it is likely that these rates would continue to go lower.

These steady rates of growth, low inflation, and low levels of unemployment is an indication of high purchasing power of the people and a good growing economy. With the high quality of products and services that Apple Inc. is offering, the demand and the supply for the goods and service are likely to increase and consequently increase sales. Apple Inc. is, therefore, confident that there is a market for their products and sales are likely to increase. This would also increase the company's performance financially.

Macroeconomic Policies

The monetary policy deals with the supply of money of a country into the market. This policy regulates the amount of money that a country prints and circulates in its economy. The monetary policy of the United States is controlled by the Federal Reserve, which is the nation's central bank. The bank regulates it using the levels of unemployment where, when the rates of unemployment are below full, it is kept at neutral rates.

In recent years, the rates of unemployment have been below four percent while the inflation rates have maintained a low rate of 2% and even below in the lowest months. This was contributed by several factors. Two changes are attributed to have led to these changes. They include the tax cuts (P.L. 115-97) in the year 2017, and the boost to discretionary spending, namely FY2018 and FY2019, which both agreed in the P.L.115-123 (Labonte, 2019).

The Federal Reserve uses two methods to maintain its target for monetary and fiscal policy. These include open market operations and interest on reserves. Open market operations involve Fed buying the U.S treasury securities that are in the secondary market and does so with the equivalence of newly issued currencies. Interest reserves reduce the opportunity costs for banks of holding and therefore, influences lending. This affects mostly the interest rates and therefore, affecting the countries fiscal policy.

This monetary and fiscal policy affects the Apple Company in several ways. They affect the government taxation and of the country, which influences the employment rates and incomes rates of individuals. This also affects the spending levels the country from an individual point of view. The inflation rates in recent years have been below 2%, and the unemployment rates are below 5%. This, therefore, means that the income of people is high and the levels of spending are high. For Apple Inc., this promotes sales, and therefore, the company is to realize increased profits and growth.

The policies also protect the corporation from environmental downturns and at the same time, it prevents the company from taking advantage of some opportunities. Since the company is one of the most protected in the country, changes in the monetary and fiscal policy, for example, rise in the spending of the government may not directly affect it because it is insulated. The retailers are the ones who are affected most and thus affecting the company indirectly as the retailers are the ones who retail the company's products and services.

Macroeconomic Conditions and Company Performance

Apple Inc. Stock Pricing has been high and increasing tremendously in recent years with the introduction of new products, especially the iPhone X. Over the past three years, there has been a short interest increase from 40million shares to 97million shares (United States Securities and Exchange Commission, 2019). The shares of the Company has experienced a palmate in recent years, hitting 9% in the previous year. This led to a loss of $73 billion since October last year. This was due to the high pricing of the products and therefore, reducing the annual sales of the company.

The company's revenue has been increasing over the past three years. At the end of 2016, the total revenue was $215.639 billion, 2017 was $ 229.595 billion and 2018 $265.595 billion, which marked a 15.86% increase (Macrotrends, 2019). On 31st March 2019, which marks the first quarter of the financial year, recorded a revenue of $58.015billion, which is a 5.11% decrease. The net income of the company has also been increasing in the past three years. In the year 2016, the net income was $45.68 billion, 2017 was $48.351billion, and 2018 was $59.53billion.

The performance variables for the company include the stock price and the sales that the company makes. These are influenced by macroeconomic factors such as unemployment, inflation, and GDP. Inflation and unemployment rates affect the spending of people. Higher rates of unemployment and inflation reduce the sales of the company, which may force it o reduce the stock price and therefore may lead to loses. The domestic cross product also influences the monetary and fiscal policy of the country, which will affect the company, especially from its retailers. The graph below displays a one-year performance of the company, t.

The fiscal and monetary policy of the United States may affect the company's performance in several standards. In recent years, the rates of unemployment have been below 5%, and the inflation rate was playing around two percent. This is favorable for the company as it will be able to grow due to the high spending generated by these policies. I the short term period of about six months to one year, there might not be significant changes in the policies. This will, therefore, not alter operations in the company. This is because the Federal Reserve announced that they are patient with the interest rates and have no plans of increasing it soon. They are waiting for the economy to grow first following the recent tax cuts before any rates are increased. Therefore the monetary and the fiscal policy of the country may not affect the organization tremendously in the short run.

Conclusion

In conclusion, the macroeconomic factors that affect Apple Inc. mainly include the GDP, Inflation, and Unemployment. These are the factors that determine the fiscal and monetary policies of the country, which affect the company's performance. Mainly, they influence the factors that affect the company's performance factors like the stock price and the net income.

References

Chen, C. M., & Ann, B. Y. (2016). Efficiencies vs. importance-performance analysis for the leading smartphone brands of Apple, Samsung, and HTC. Total Quality Management & Business Excellence, 27(3-4), 227-249.

Labonte, M., (2019). Monetary Policy and the Federal Reserve: Current Policy and Conditions. Retrieved from https://fas.org/sgp/crs/misc/RL30354.pdf

Macrotrends. (2019)Apple Revenue 2006-2019 | AAPL. Retrieved from https://www.macrotrends.net/stocks/charts/AAPL/apple/revenue

Mokhova, N., & Zinecker, M., (2014). Macroeconomic factors and corporate capital structure. Procedia-Social and Behavioral Sciences, 110, 530-540.

Rosoiu, I., & Rosoiu, A. (2018). The relation between the unemployment rate and economic growth in the USA. International Journal of Economic Practices and Theories, 4(2), 162-167.

United States Securities and Exchange Commission. (2019). Retrieved from http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AAPL_2017.pdf