Economics for Managerial Decision Making: Market Structure
Economics for Managerial Decision Making: Market Structure
Introduction
As legend and reality have it, Steve Jobs and Steve Wozniak started Apple Computer in a garage in Cupertino, Calif., in 1976. From those humble beginnings, and through extreme market swings, Apple Inc. has become the most valuable company in the world. “Given the company’s unbelievable innovation over the last few years, and the subsequent mountains of cash that it has earned as a result, the likely catalyst for the stock to eventually peak and decline will be Apple’s inability to continue to innovate at its current pace. Certainly, this is likely to happen at some point as the company confronts the burdens of stunning success in a relatively short period of time” (Forbes, 2012, p. 2). Following the death of co-founder Jobs in 2011, Apple’s new management must take careful steps to maintain and grow its market.
Strategic Variables
Apple Inc., now headed by CEO Tim Cook, still has the overwhelming customer loyalty it built under Jobs’ stewardship. Jobs was a major component in not only product and strategic development for Apple, but also was its highest-profile spokesman, often turning product introductions into major events. Nearly a year after his death, however, customers still camped out in front of Apple stores in September 2012 to wait for the new iPhone. No other technology company has this type of overt showing of customer loyalty and support. To maintain this, Apple must continue to produce innovative, elegant products. In nearly all categories, other companies sell more products—smart phones, computers, tablets, etc.—yet it was Apple, not Samsung, Hewlett-Packard, Dell, or any other company that hit the heights Apple hit this year on Wall Street. The fluctuations, not on Wall Street, but with consumer tastes must be taken into account for Apple to keep its lofty place. “Tech companies often rise and fall in 10- to 15-year cycles, [James Ragan, stock analyst with Crowell
Introduction
As legend and reality have it, Steve Jobs and Steve Wozniak started Apple Computer in a garage in Cupertino, Calif., in 1976. From those humble beginnings, and through extreme market swings, Apple Inc. has become the most valuable company in the world. “Given the company’s unbelievable innovation over the last few years, and the subsequent mountains of cash that it has earned as a result, the likely catalyst for the stock to eventually peak and decline will be Apple’s inability to continue to innovate at its current pace. Certainly, this is likely to happen at some point as the company confronts the burdens of stunning success in a relatively short period of time” (Forbes, 2012, p. 2). Following the death of co-founder Jobs in 2011, Apple’s new management must take careful steps to maintain and grow its market.
Strategic Variables
Apple Inc., now headed by CEO Tim Cook, still has the overwhelming customer loyalty it built under Jobs’ stewardship. Jobs was a major component in not only product and strategic development for Apple, but also was its highest-profile spokesman, often turning product introductions into major events. Nearly a year after his death, however, customers still camped out in front of Apple stores in September 2012 to wait for the new iPhone. No other technology company has this type of overt showing of customer loyalty and support. To maintain this, Apple must continue to produce innovative, elegant products. In nearly all categories, other companies sell more products—smart phones, computers, tablets, etc.—yet it was Apple, not Samsung, Hewlett-Packard, Dell, or any other company that hit the heights Apple hit this year on Wall Street. The fluctuations, not on Wall Street, but with consumer tastes must be taken into account for Apple to keep its lofty place. “Tech companies often rise and fall in 10- to 15-year cycles, [James Ragan, stock analyst with Crowell
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