Apple Inc: Risk Reward Analysis

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Component 1: The international opportunity for Apple is that Apple should make and market products targeted at the lower price segments. The reason is that many customers will buy Apple products at lower prices, This will bring higher profits to Apple, Increase the market share of Apple globally, and will improve the sustainability of Apple Inc. There are large segments in third-world countries where customers use products of competitors of Apple because of the high prices. With its high prices, Apple seeks to target the premium segment. However, internationally, the premium segment is shrinking because of the aftermath of the pandemic, the shocks from the Ukrainian crisis, and the shrinking economies. In contrast, the market for low-priced smartphones is increasing rapidly. Launching lower-priced products globally will reduce competition in the marketplace (1). The current competitors of Apple include Samsung, Huawei, Dell, Lenovo, IBM, and LG. Even Google and Microsoft compete with Apple. There is a large number of products that Apple can sell globally if it reduces the prices of its products. Some of the products that Apple can sell at lower prices are the iPhone, iPod, iPad, and Macintosh. Other products that have a large global demand if the prices are reduced include the Apple Watch, Apple TV, and Logic Pro.

Lowering prices in the global markets presents considerable opportunities for Apple. The large volume of production will help Apple create low-cost operations in its global markets. The large volume of sales will enable Apple to reduce its development and production costs. This will enable Apple to earn larger profits. At lower prices, Apple will be able to increase its market share quickly because it will offer a stronger value proposition to its customers.

This is an important opportunity for Apple because in every country in which Apple operates its market share will increase. Globally customers will be able to balance their budgets with the need for value. Internationally customers will seek to purchase Apple products first.

With an increase in the global volume of sales, Apple will also increase the global use of MacOS, TVOS, and iOS. This will give it a competitive advantage. Moreover, the use of WatchOS and iPadOS will also increase. Reducing the prices of Apple products globally will improve the sustainability of the business. With the increase in the volume of products, the costs for Apple will decline and make its business sustainable. This is valuable when the market faces threats because of pandemics, the Ukrainian war, and the economic downturn. Further, the business of Apple will remain robust even when there is a price or a trade war. Apple will be able to compete well during a price war because of low costs. On the other hand, when a trade war occurs the firms with the lowest costs have a higher chance of surviving.

The opportunity of lowering the prices of Apple products will increase sales globally and will create more capital for Apple than it can use for growth. When Apple reduces its prices, the volume of production will increase the cost will decline as Apple increases its level of output. With economies of scale, the unit cost of Apple products will decline, the investors in Apple will get higher returns on their investments, and Apple will be able to ...