Current macroeconomic topic on the iPad

Current macroeconomic topic on the iPad
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Introduction
Macroeconomic factors affect consumer spending on iPads, which in turn affects sales revenue. Nowadays, Apple Inc is in the forefront of producing innovative technology in the computer, electronics and handset markets. In 2010, the company unveiled a new device the iPad tablet. The iPad is a touch screen device that operates on the iOS same operating system of Apple’s handsets and smartphones. The device is the most popular in the tablet market with the Samsung Galaxy versions being a second. This is unlike the iPhone, which suffers stiff competition from many handset manufacturers.
Macroeconomics and business
Macroeconomic factors affect the national economy of a country while microeconomic factors affect each firm. Macroeconomic factors are external issues beyond a firm’s ability to control them and mostly relate to the level of interest rates in an economy, inflation and factors affecting economic growth. Following the recent global financial crisis of 2008, business leaders are keen to understand the behavior of customers during recessions and the manner in which other economic variables affect business. Ultimately, an increase in the demand of iPad, results to more increased revenue for Apple and possibly the rise in both iPad’s market share and stock price. In any case economic growth of a countries leads to increased demand for the iPad especially in the emerging world.
The iPad and macroeconomics
The sale of the iPads depends on the economic situation in many countries although the device is a premium product. Following the global recession, many consumers became more prudent in their spending habits and this may undermine the products sales if other major recession occurs in the near future. Consumers in North America and Western Europe may not be price sensitive like those in the emerging markets, but iPad’s revenue growth depends on the growth of these new markets. Thus, consumer expenditure is a major determinant on increased revenue sales for the Apple iPad device. The move towards adoption of the iPad mini in favor of the iPad in the emerging market is an indication of price sensitivity among buyers in this market.
North America is the traditional market of the iPad, but sales exports are increasingly becoming an important component of the sales revenue. Thus, global economic conditions may prevent Apple from meeting their revenue targets as credit markets become tight together with reduced worldwide consumer spending. Equally, the strengthening of the dollar in recent years may eventually have a negative effect on the company’s revenue. This typically occurs because the company raises the price of the iPad in the international market when the dollar increases in value. With the advent of globalization, consumers tend to be more aware of global economic conditions, which then influence their spending habits.
The purchasing patterns of durable goods differs front hat of non-durable goods during times of recession. This is because durable goods have more volatility. Thus, on the onset of the recession, consumption of durable goods including the iPad fell sharply, but unlike other recessions, the global recession also affected consumption of non-durable goods. However, in some cases the consumption patterns did not change in the traditional market where brand loyalty was strong. This indicates that many consumers switched from using PC computers to tablets, offsetting a likely sharp decline in the purchase of the iPad. In essence, the purchase of non-durable goods depends on consumer’s confidence in the ability of the American economy to recover fully from the aftermath of the global down turn.
The effects of the global recession could have a long -lasting effect because of increased unemployment in the emerging markets. In America, the rise in unemployment did not lead to a sharp drop in the sales of the iPad. However, buyers in the emerging market are less likely to exhibit brand loyalty in times of unemployment. This occurs because a rise in unemployment also leads to a fall in disposable income in families. The target market of iPad sales are the young to the middle aged, the young people and professionals were hard hit by economic recession. For the young people the iPad acts as a fashion statement, and they are more enthusiastic to buy newer versions of the product than other market segments. Thus, a rise in unemployment leads to reduces sales revenue outside the traditional markets, where the youth are the majority.
The pricing strategies of the tablet market are a reflection of the target market and determine the level sales revenue. The iPad is a premium product and Apple Inc sets prices that are competitive in view of the forces of demand and supply. Equally, the company intends to gain a bigger market share of the tablet market with competitive prices being a determiner of this. Apple has resulted to assembling the iPad in China which has a low cost of production than most manufacturing countries, and it outsources components from cheaper sources. Thus, the sales of the iPad have led comparative advantage among premium products in the international market. The iPad is now emerging as a major contributor of sales revenue in the company, although production only began in 2010.
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