Therefore, demand for Android Phones is rather elastic, depending tremendously on the price of the phone and its type (low-end, mid-range, or high-end) and being highly responsive to changes in the market. A small change in price affects the demand greatly.
It is noticeable that the Android phone manufacturers make the best out of their profits through the means of their budget phones, rather than their luxury, premium range ones.
This aims to bring the PED as closely as possible to one, according to the formula above, and thus maximizing the revenues.
On the other hand, iOS products differ much from the Android ones, in terms of what they offer. Unlike Android phones, the iPhone is the only Smartphone of its kind. There are no other iOS phones on the market, and as a result, those who prefer it over Android have no other choice than the iPhone. Consequently, this builds up a market that is quite the opposite from the Android one in regards to variety.
This has led to the birth of the renowned brand name, Apple heavily relying on their customers’ knowledge and recognition of its brand, causing it to be one of the main reasons to choose iPhone over Android. This also ensures steady demand, the iPhone being one of the phones that has lasted on the market almost ten years, through refined improvements related to design and detail that are brought to the product yearly. The design of the phone itself is considered to be also superior and aesthetically pleasing when compared to the flagship phones of the Samsung Company. That would be because Apple has also made a brand out of their Smartphone design, which has become an icon in the industry.
Moreover, while it is true that the OS does not offer as much diversity in terms of customization, it is, however, a proprietary system, meaning that Apple owns it, along with the software, guaranteeing tweaked services, specialized care, and increased security. Even one or two generations old iPhone compete with the newest flagships from Samsung or Huawei in strict terms of price, making it difficult for the iPhone to be chosen over other budget phones with similar specifications.
Demand For The iPhone
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Its Prices rises from one generation to the other, but surprisingly, the curve of demand remains unchanged, marking the iPhone to be an inelastic good. Large variations in price do little to nothing in changing the demand.
The best strategy Apple can apply for maximizing their profit is to keep exploiting the brand they have built. They have no reason to lower their prices, since they provide the only product of this kind and they already are in high demand.
In my opinion, both the iPhone and the Android phones have succeeded in monopolizing the market, being the indubitable two last choices when it comes to deciding upon purchasing a new Smartphone. There is a high opportunity cost at stake, since both smart phones have rather different advantages and disadvantages. While it seems as though they complete each other (what one has, the other lacks), I personally find them to be entirely different products, taking into consideration design, performance, quality, price, expectations, service and many other variables. The apparent superiority of the iPhone can be, however, disputed through the means of numbers. Android is still the preferred option on the market, Samsung selling more phones than Apple on an international scale. It is, nevertheless, an ever-changing market, and future might have much in store for both of the brands. I believe that having this choice is benefic, because it ensures and encourages competition on the market, something which is especially important if progress is to be desired.
In conclusion, the two main competitors in the Smartphone market not only have very different approaches when it comes to design, content, or production, but also when it comes to marketing strategies. Since both of the brands are different in what they offer, it is completely natural to obtain dissimilar curves of demand. It shall be very interesting to keep up with what the two brands will innovate in the future, in order to bring this war to a new level.
Question 2
Coca Cola Monopoly in Australia
Coca Cola has been dominating the beverage industry across the world. In Australia, the company has been competing with Pepsi but has the biggest market share that makes it a monopolistic company. Monopolistic firms tend to determine the output level for the prices that they should charge. By doing this, they exhibit the behaviors of a monopoly. The prices of goods that they deal in are determined by the market demand curve, which is also determined by the output level that the company decides. Just like in an oligopolistic market, monopolistic companies will always produce less output and set their prices higher than would be found in a perfectly competitive market. In this regard, it is apparent that Coca Cola has in one way or another there are several inefficiencies that might arise if there is no government intervention is accorded.
To begin with, starting a business venture requires adequate amount of capital both for financing assets and also day to day operation of the business. Different business structures have different sources of capital depending on the sector in which the business is operating from. In most cases there is usually the private and the public sector where different business entities usually operate in offering goods and essential services. A modern trend in business cycles such as liberalization has seen limited government involvement in most business operation, like it is in the case of Coca Cola. In most economies that are developed businesses operate in a capitalist market system where forces of demand and supply are at play to ensure market clears off. Consumer sovereignty is also important in creating an environment of competition which ensures delivery of effective services and goods.
One of the inefficiencies that might arise as a result of Coca Cola’s monopolistic operations is the issues arising from the aim of reducing operations cost. Many companies usually engage in cost minimization strategies as a way of maximizing profits. Relationship between cost minimization and environment can either be directly correlated or not. Optimization is very important in increasing a company’s profits as the effectiveness in conducting its operation is usually increased. Companies usually have an obligation to the surrounding communities due to the externalities. Externalities in this case can either be positive or negative. Negative externalities such as the use of non-biodegradable products such as plastic packing bottles used by Coca Cola to increase cost of operation have detrimental effects. Beverage companies in most cases usually have to come up with strategies of dealing with such negative externalities to the environment. As a way of reducing cost the company will use packing bottles that are environmental friendly. Environment thus directly affects the cost of operation of various business entities. Other aspects of the environment such as the legal and political environment also affect cost of business. Country with a strong legal system that supports investment will facilitate business operation and help in minimization of cost.
As indicated by the state government, these rates gives enough add up to keep up the destinations, streets and different luxuries required to prop drink up. Taking a gander at this sort of setup, drink organizations must be in a situation by beverages from the state through eminences. Through this setup, it is on the whole correct to presume that organizations associated with beverage have the "ability to purchase materials from the state government at a rate set apart as low cost. The organizations like Coca-Cola would then be able to continue to send out the beverages at a high cost and procure enormous benefits. Coca-Cola is set apart as one of the organizations making otherworldly benefits (Pinell, 2004).
Goverment intervention
In a market constrained by an imposing business model, Producer surplus is required to be high due to some factors. Producer surplus is noteworthy beacause of restricted choices accessible to the clients in wording item assortment. Furthermore , the buyer ha sno influence over the cost. Puchaser surplus is littler dependent on the reality value changes lies with the producer and the shopper's alternatives is to anticipate how to get such items.
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