Paper Instructions
These are short questions with answers
- USA China trade affect on purchasing apple psm, how the impact on apple purchasing, what do you suggest if in the future there is trade like this again to minimize the impact
The ongoing trade war between the USA and China is affecting many companies that ply their trade between the two countries including Apple.
The effect on Apple is two-fold, it has assembly plants for iPhones located in China. This means that any US government’s increase on tariffs on Apple’s goods that are imported from China will affect it, forcing the company to either transfer that increase to the prices hence to the to the consumer or it can decide to shallow up the tariffs and hence lead to its shares decreasing their earnings per share.
The second impact of the trade war is on Apple’s large market of its products in China which accounts for an average of 25% of total Apple annual sales. With the escalating trade war, the market sentiments in China is increasingly becoming negative towards Apple products. This means that future sales numbers from the Chinese marketplace are bound to drop as the trade war rages on.
Solution.
The company can start stop relying on Chinese assembly plants. This is a long-term solution which cannot be done overnight because of the logistics involved. It should minimize Chinese assembling to only the gadgets that will be sold to the Chinese markets (Bown, 2019, p. 23).
2. corona trade affect on purchasing apple psm, how the impact on apple purchasing, what do you suggest if in the future there is corona like this again to minimize the impact
The impact that Covid-19 pandemic has had on trade is overwhelming. Many companies have been forced to cut back on production or even lay-off staff because of low demand for products as the world focusses its efforts on fighting the pandemic.
Apple, is one company whose sales volumes have been affected by the impact of Covid-19. As the company prepares to unveil new products in September, it has to contend with issue of low demand occasioned by this pandemic. Many of Apple stores have also been closed in Europe and America, forcing the company’s supply chain to be disrupted hence orders not reaching the customers in time (Bolt, Mavromatis, & van Wijnbergen, 2019, p. 54). As more people in the US and Europe, which make up two thirds of Apple’s customers apply for unemployment benefits, it can only translate to a slump in sales.
For solution, the company can push for its online selling platform to compensate for its closed stores. It can also slash the price of its products to attract more customers who are hard pressed by the current economic slump.
References
Bolt, W., Mavromatis, K., & van Wijnbergen, S. (2019). The Global Macroeconomics of a Trade War. The Global Macroeconomics of a Trade War: The EAGLE model on the US-China trade conflict, 54.
Bown, C. P. (2019). The 2018 US-China trade conflict after 40 years of special protection. Economt journal, 23.