Posted: August 29th, 2013
Domestic Operations for Apple Inc
Domestic Operations for Apple Inc
An economic indicator is a statistic regarding the prevailing environment in any market. They are essentially essential in the analysis of economic performance and forecasting for future deliberations. Every month, if not weekly, many organizations and institutions carry out economic surveys and indicators. In the past, economists and business administrators utilized an added advantage by accessing this pertinent information in a timely fashion. However, the emergence of the internet has altered the corporate environment by availing this pertinent information to the public (Prakash, & Hart, 2000).
With the right skills and knowledge, the economic indicators can have a significant impact on any form or corporation on the market. With this regard, interpreting the information contained in economic indicators is of great importance to any investor. Apple Inc an American multinational company that deals in the design and marketing of consumer electronic products, software for computers and personal computers. Statistics indicate that the company commands a considerable global market share in the sale of consumer electronics. To maintain this standard, it is prudent for the company to study and analyze the available economic indicators for its deliberation processes (United States Department of Housing and Urban Development, 2008).
The Consumer Price Index (CPI)
One of the identified economic indicators pertinent to Apple Inc.’s deliberation processes is The Consumer Price Index (CPI). This economic indicator is essential because it provides the benchmark inflation guide for the United States of America’s market. The economic indicator utilizes a method referred to as a “basket of goods” approach that focuses in the comparison of an unswerving from time to time, usually on a yearly basis focusing on goods and services that are purchased and utilized by consumers on a daily basis.
Apple Inc. deals in a wide variety of items. Some of which are purchased on a daily or weekly basis. The products reported range from edible to electronic commodities. Such products include music and video downloads and computer application programs. In responding to the information retrieved from the consumer price index, the firm can therefore design a strategy in order to maximize the revenues in the years ahead. By studying the consumer patterns of the domestic market, Apple can therefore learn the needs of the consumers and therefore restructure their products to meet their needs. This can be through unleashing new products into the market or modifying their current products in order to satisfy the consumer needs. On the same manner, the company can analyze the information and realize the slow-moving consumer products. With this regard, the company can therefore strategize on how to minimize the production of such products with comparison to the market demands.
Employee Cost Index
Another pertinent economic indicator is the employee cost index. This is usually a quarterly report containing information on the compensation costs. This report is released in the last month of the quarter. It contains the cutoff date of payroll periods that are closed on the twelfth of the month during which the report is released. The employee cost index is regarded as an index-based indicator that provides the dynamics in wages, salaries, bonuses and benefits from the last quarter. This information is provided on an hourly basis.
The employee cost index economic index is important because it provides inflationary insights. Most of the firms including Apple Inc incur most of their expenditure through compensation costs. The compensation cost is evaluated by dividing the cost of goods sold with the selling general and administrative expense. The information provided by this report is divided from industry to industry because the relative percentages of the cost of goods sold will usually vary from industry to industry.
By evaluating the information provided by this economic indicator, administrative managers can design strategies aimed at maximizing profits in the future. This is through checking for any signs of inflation and information pertaining to the dynamism in perception of Wall Street. This is mainly because the level of inflation will cause changes in the bond market. With this regard, the stock will change in accordance with the prevailing performance relative to economic growth forecasts. The strategy can pertain the future planning of employment trends and revenue allocation to remuneration of staff.
Employee Situation Report
The employee situation report is an economic indicator that is carried out by the Bureau Labor of Statistics. This research survey is carried out by taking into account over four hundred thousand business entities across the United States of America. This report is pertinent to the decision making purposes of Apple Inc. because the information it provides can be used to determine the financial stability of the job market. This is mainly because of the research’s immense sample size and historical significance.
With this regard, by analyzing this report, the investors of Apple Inc can formulate strategies on whether it is prudent to add in additional investment in the company like setting up new branches or withholding on expansionist strategies based on the health of the job market. With this regard, the company can therefore run under optimum profitability both in the current environment and future as can be forecasted through the report.
Wholesale Trade Report
The wholesale trade report is an economic indicator whose information can be utilized by the administrative managers of Apple Inc. in the formulation of strategies that enable the company to run on maximum profits in the years ahead. The economic indicator provides an inventory to sales ratio that is highly important to both investors and economists. The ratio provides information regarding the imbalances in the supply and demand that exist in the corporate market.
When the retail demand of a certain commodity is greater than the prevailing production levels support, the inventory to sales ratio will indicate this imbalance by falling. When there are equal levels in both retail demand and prevailing production level support, the inventory to sales ratio indicates a ratio of one. With this regard, the administrators of Apple Inc. can therefore design strategies regarding the production levels based on the inventory to sales ratio. An increase in the inventory to sales ratio can guide the mangers into designing a strategy based on the high retail demand, or corporate profits. This is performed as increasing costs to maintain the inventory or lagging production increases. The ratio is also used in determining a possible occurrence of a recession through a study of the cycle. The inventories tend to become more during the time when the economy is lagging, and the sales become below par. The ration thus attains its cyclical optimum level in the middle of a recession.
Consumer Confidence Index
The consumer confidence index is an economic indicator that is extremely beneficial to manufacturers and producers or traders in general. The economic indicator provides information on how consumers are satisfied with a certain commodity. This is based on the purchasing ability of the consumers. A strong consumer confidence report can have the ability of changing the markets by motivating the investors into purchasing more equities. The idea behind this motivation is that a consumer with the perception of an improvement of his or her standards of living is more likely to increase in purchases and acquisitions especially regarding secondary and luxury commodities. This is especially when the economy is lagging below par.
With this regard, Apple Inc. can therefore use the survey into designing a strategy regarding the future production levels. With this regard, when the report indicates a strong consumer confidence level, the company is to restructure its production by increasing its production levels in order to meet the increase in demand in consumer products in the future. With this respect, a low consumer confidence will enable the company directors to design strategies aimed at decreasing future production levels in anticipation with the decrease in demand in the future (Organisation for Economic Co-operation and Development, 2011).
This economic indicator contains the capacity utilization levels for the various industries. The evaluation uses a base year as a benchmark level of one hundred percent. Currently, the year used as the benchmark is 2002. The indicator also provides aggregate utilization ratios for manufacturing and high technology production. The information provided by the economic indicator can be used by Apple Inc. in making future forecasting and designing strategies aimed at maximizing the revenue earned by the company.
By evaluating the capacity utilization levels, the company can make the relevant future adjustments to ensure profitability in the future. When the indicator presents capacity utilization levels that are above 82-85%, this indicates forecasts price increases or possible decrease in supply levels. Capacity utilization levels that are below eighty percent indicate a lagging in the economy and thus suggest future recession worries and unemployment (United States Department of Commerce, 2012).
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