Apple

Will Apple business model continue to be robust going forward?

Apple has been sustaining its profit margin and will continue to do so by capturing its value. It is a huge firm which is essentially made up of three different companies working in concert: retail, manufacturing hardware and software engineering. This and the transfer of their manufacture base to China and Japan out-sources a significant share of R&D through its suppliers. Apple also ensured that they employed app designers who can only launch their apps on their platform which allows Apple to capture a percentage of their profit. Additionally, the fact that Apple is a recognized brand name facilitated the company to keep the prices of their products high and ensure that their distributors aren’t allowed to discount their value. Continued loyalty from their consumers’ further guarantees that Apple will most likely not suffer from an unwarranted decline in demand in the long run. As I briefly mentioned above Apple has built a large cash reserve and currently have a high stock which essentially makes it a bank. So the question of What Apple Inc. is going to do with all this money arises since they are not allowed to keep it. Investing it in R&D will be pointless since the firm needs a small sum for that sector as its costs has been reduced effectively. So in reality Apple doesn’t need to invest more than $10billion a year in these sectors so they have no choice but to give it back. Well known professor, William Lazonick argues that by giving it to investors ‘they are adapting to a set of norms that since the 1980s have taken hold of US business, resulting in instability and inequity while undermining the conditions of innovative enterprise (Lazonick, 2013b). This was in response to Apple giving investors $200billion worth of buybacks to their investors. However, Lazonick in his various articles fails to consider the advantages this investment has on the company. Since the investors will in turn...