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Apple Inc is a USA based manufacturing company having diversified range of products. The basic business;and retail outlets are in USA, whereas others are having worldwide presence. The company basically deals in;personal computers, mobile communication, digital music player and related softwares, peripherals and services.;The company is having a well-established brand and loyal customers. The innovative nature of the company helps;them to gain more and more market share. The companys profitability is also affected by economy variables of the;country. This may include GDP, consumer price index, unemployment rate etc. therefore, Apple has to formulate;its strategy after taking into due consideration of the various economic factors.;Analysis of U.S.A Economic Indicators;Introduction;Apple Inc is a California (U.S.A) based company formed in the year 1976 and is listed at NASDAQ;(AAPL). The company has global operations, including 317 retail stores (233 in U.S and 84 Globally located). The;company serves different segments of customers ranging from consumer, middle and small business units;educations, enterprise, governments etc. The company has diversified product offering including personal;computers, mobile communication, portable digital music players and related software, peripherals and services.;The product portfolio also includes third party products including Mac, iphone and ipod and related application;software, printers, speakers, storage devices etc [1]. Apple Inc is an organization having well known brand with;global presence and diversified product portfolio. The companys innovation, strong supply chain strategy, strong;financial positions and strong customer base, foster Apple to grow globally and achieve its bottom line more;efficiently and effectively. But as its major retail stores are located in U.S (317), the company profitability is also;affected by U.S. economy. U.S. economy health can be analysed with the help of U.S. economy indicators.;Economics is defined as science that studies human behaviour, administration of scarce resources having;alternative uses and its effect of decision-making process. Economics indicators are used to determine or know or;predict, economic performance. It helps us to know how well an economy is performing or will perform in future.;It includes Consumer Price Index (CPI), Employment Cost Index, Gross Domestic Product (GDP), Unemployment;Rate, Consumer Leverage Ratio, and U.S. personal earnings, Producer Price Index etc. The detail analysis of;economic indicator for U.S.A market is illustrated in the next section.;Gross Domestic Product;It includes incomes the incomes produced locally but accruing to non-residents and excludes the incomes;received from abroad by the residents. GDP provides total measure of economic activity. GDP is calculated by;output of production approach or income approach or expenditure approach. The real gross domestic product;increased at an annual rate of 2.6% (2010, 3rd Quarter). This figure denotes the output of goods and services;produced by labour and property in U.S.A. This increase was due to positive contributions from personal;consumption expenditure, non-residential;Analysis of U.S.A Economic Indicators;fixed investment, private inventory investment, exports and federal government spending. The individual;contribution of each are as given below;Price index for Gross Domestic Purchases increased by 0.7% in third quarter (last figure was an;increase of 0.1%);Real Personal Consumption increases by 2.4% (last figure was an increase of 2.2%);Real non-residential fixed investment increases by 10.0% (last figure was an increase of 17.2%);Equipment and software increases by 15.4% (last figure was an increase of 24.8%);Real Exports increased by 6.8% (last figure was an increase of 9.1%);Real federal government consumption expenditure increases by 8.8% (last figure was an increase;of 9.1%);Real sales of domestic product increases by 0.9% (last figure was same as in this quarter.);Current-dollar GDP increases by 4.6%;In this, final sales of personal computers contributed 0.29 percentages to third quarter GDP.;Consumer Price Index;The change in consumer price index is calculated through time and it includes purchases made by;households. In USA, the CPI-U is a measure of average change over time in the prices paid by the urban;consumers for all items less food and energy. The CPI is based on prices of food, apparels, shelter, fuels, and;charges for doctors, transportation charges and other related good and services. The index increases by 0.1% in;November. This increase was due to increase in shelters and airline fares, food at home, eggs, non-alcoholic;beverages, and gasoline. It also reflected decline in household energy, new vehicles, households furnishing etc.;Analysis of U.S.A Economic Indicators;Employment Cost Index;Employment Cost Index denotes the change in the cost of labour. It is not influenced by employment shifts;within occupations and industry. The compensation cost for civilian workers raised by 0.4% (seasonally adjusted);for the September 2010. This increase was with the contribution of an increase in 0.3 percent in wages and salaries;and increase of 0.6 % in benefits given. The compensation is made of 70% wages and salaries and 30% of benefits.;The compensation cost of private industry workers increased by 2.0% for 12-month period ending September;2010. (Wage and salaries increase 1.6% and benefits increase 2.8%).;Unemployment Rate;Unemployment rate is has increased by 9.8% percent in the November. The number of unemployed person;was 15.1 million (November). The increase was due to increase in unemployment rates for adult men, adult;women, whites, Hispanics. The job losers and persons from completion of temporary job increased to 9.5 million;in November and long-term unemployment figure had little change at 6.3 million. Whereas, increase in;unemployment rate in computer and related peripherals was reported to be 10.1% (November, 2010).;U.S. Personal Earnings;U.S. Personal Earnings provides insight about the earning capacity of the US employees. This concentrates;on pre-tax income that households receive from transfer payment and from employment. The real average hourly;earnings of all employees reduced by 0.1% in November as compared to October (Seasonally Adjusted).;Producer Price Index;It is an economy statistics that measures the change in price (in a specified time period) received by;domestic producer of goods and services. The change in the price is the average change. The index for finished;goods rose by 0.8% (seasonally adjusted, November).;Analysis of U.S.A Economic Indicators;Consumer Expenditure Survey provides information about the buying behaviour and habits of American;consumers. According to this survey, the percentage of U.S. households possessing desktop computers and laptops;are increasing gradually to a level of 75.6% (2008). Today, the computers have shifted from the segment of luxury;goods to a necessity.;Conclusion and recommendation;As the US economy is growing (GDP increases by 2.6% in the third quarter), there is good potential for;Apple to earn profit in the future. As well as the consumer expenditure also presents the statistics that consumer is;spending more and more on computers and computer peripherals, ipod and related products have now become;necessity item throughout each segments of consumers.;Analysis of U.S.A Economic Indicators;So, the Apple Inc can trap the market and increase the sale. As per the economic indicator i.e. Consumer price;index has increased by 0.1%. This increase in inflation will result in lower purchasing power of the consumers;making them think before they purchase and thus having adverse effect on the business. Moreover, increasing;Unemployment rate in the U.S. labour market also lead to decrease in the sales. As per data, the unemployment;rate in computer products and peripherals has increased to 10.1%. Additionally, decrease in personal earning also;has an adverse effect on the business of the company. This has restricted the disposable income with the;consumers. All these factors, along with sub prime rate issue in the economy has fostered financial crunch in the;market. So this has to be dealt carefully, in order to acquire more market share and increased profitability. As in;US, despite of economy position, there in increasing demand for the computer and related products. The company;should spend more on research and development to innovate new products having competitive price. This will help;to increase the sales of the company. As well as the company must expand its global business to subside the;negative effects of the US economy. This will help Apple to increase its operation worldwide as well as enhance its;triple bottom line.;Analysis of U.S.A Economic Indicators;References;;;;;Annual Report of Apple Inc. (2010), available at:; Indicators


Paper#30597 | Written in 18-Jul-2015

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