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Decisions for Apple

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Identify the environmental factors that affect global and domestic marketing decisions for Apple (maker of Mac, iPod, iPhone, etc.). Address the following as they relate to the organization's marketing decisions:

1. Analyze the influence of global economic interdependence and the effect of trade practices and agreements.

2. Examine the importance of demographics and physical infrastructure.

3. Analyze the influence of cultural differences.

4. Examine the importance of social responsibility and ethics versus legal obligations.

5. Analyze the effect of political systems and the influence of international relations.

6. Analyze the influence of the Foreign Corrupt Practices Act of 1977, and the influence of local, national, and international legislation.

7. Explain the effect of technology.

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1. The influence of global economic interdependence on the marketing of Apple Inc is that since it is a US based company, Apple Inc has to respect all trade agreements that the US has signed. These are contractual agreements among countries. Apple Inc's marketing efforts will be affected by trade barriers that include tariff and non tariff barriers. For example, if imports of smart phones are required to pay a custom duty in one country, Apple Inc has to pay that duty when it exports iPhones to that country. The global economic interdependence has other implications for Apple Inc. One is the impact of the foreign exchange rate on marketing of Apple Inc products. An unfavorable change can wipe out profits or even cause loss to Apple Inc. Also, there are several economies of the world that are in recession. For example, the economy of Greece is weak. This weakness can adversely affect the sales of Apple Inc in that country. Not only that but global economic interdependence leads to weakness in other economies as well. The sales of Apple Inc products in those countries can also be weak. There are other implications of global economic interdependence. If one country imposes a sales tax on Apple Inc products, other countries may also do the same. Similarly, economic growth in one country may mean better business for its trading partners. This has implications for Apple Inc because it means improved marketing opportunities in trading partners.

2. Demographics and infrastructure play an important role in marketing decision making in Apple Inc. Young people below the age of 35 are targeted when Apple Inc launches most of its products. The products like iPad and iPhone have been targeted to individuals belonging to upper-middle class. The advertising decisions of Apple Inc are made to catch the attention of this target audience. Similarly, when Apple Inc markets its products globally, it examines the likes and dislikes of persons in their target segment. For instance, ...

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City of Apple Net Present Value & System Decisions

1. (Ignore income taxes in this problem) Five years ago, the City of Apple spent $30,000 to purchase a computerized radar system called Green Apples. Recently, a sales rep from Green Apples told the city manager about a new and improved radar system that can be purchased for $50,000. The rep. also told the manager that the company would give the city $10,000 in trade on the old system. The new system will last 10 years. The old system will also last that long but only if a $4,000 upgrade is done in 5 years. The manager assembled the following information to use in the decision as to which system is more desirable:

Old System New System
Cost of radar system....................$30,000 $50,000
Current salvage value..................$10,000 -
Salvage value in 10 years..............$5,000 $8.000
Annual operating costs................$34,000 $29,000
Upgrade required in 5 years.............$4,000 -
Discount rate.............................14% 14%

Required:
A. What is the City of Apple's net present value for the decision described above? Use the total cost approach.
B. Should the City of Apple's purchase the new system or keep the old system?

2. Peach Lindt is a division of a major corporation. The following data are for the latest year of operations:
Sales..............................................................................$25,550,000
Net operating income....................................................$1,149,750
Average operating assets..............................................$7,000,000
The company's minimum required rate of return..........14%

Required:
A. What is the division's return on investment (ROI)?
B. What is the division's residual income?

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