Competitive Strategies and Government Policies

Competitive Strategies and Government Policies

This paper will be based on the competitive strategies environment and government policies in the real world of the i-tablet, we now know the i-table falls on the category of the oligopoly. We will identify new companies entering the market and what mergers are used, horizontal, vertical, or conglomerate. Will also identify current and expected government policies and the regulations that are related with related externalities including the taxes, and what decisions are made by the companies in regards the labor demand, supply, relations, unions, rules and the regulations of the i-tablet.

Competitive Environment

The first area of concern for Apple is the competitive environment. Factors to consider here are new companies entering the market, mergers, and globalization, and how these will affect pricing and the sustainability of profits. What seems to be the biggest threat is a horizontal merger, or one that "combines two companies in the same industry" (Colander, 2012, p. 418). This could have a significant impact in the market as the combined footprint of two competitors directly competes with that of Apple. As recently as October 2012, there were negotiations between two of the world's largest book publishers, Random House and Pengin, in an effort to better compete with such firms as Amazon and Apple. This merger is of great concern to Apple as the new entity would control "nearly twenty five percent of the United States book market and feature an elite roster of authors", which is a direct threat to the eBook market of Apple's iPad (Chozick & Pfanner, 2012).

As you know, Apple exists within an oligopolistic market, or one "in which there are only a few firms and firms explicitly take other firms' likely response into account" (Colander, 2010, p. 361). With only a few direct competitors to the iPad, such as the Nook, the Kindle, and the Google Nexus 7, any action taken by the competitor directly affects Apple.

Government Policies and Regulations

Though Apple does have competitors, the company seems to have an edge on the market. This occurred through innovation and being the first device out of the gate with the technology to support society's demand on no longer being strapped to carrying around books, cds, maps, and many other forms of information that can be rather bulky to carry around. After the success of the iPad other companies such as Hewlett Packard decided to come out with their device in order to give the iPad some competition. Since the iPad had such a large lead in the market, it was difficult to obtain their foot hold in the market place. Since Apple, Inc. does have completion in the market place, there is little that the government can do about their strong hold in the market place. However, the government can restrict Apple from buying up too many smaller companies trying to make it in the technology market place. However, Market Based Policy is a little different. This is due to its policy being one that "align private incentives with social efficiency"(Mankiw, 2005). For example a corrective tax could be imposed on the apps that are used on the iPads and other mobile devices in order to ensure a market based policy of corrective tax. "A corrective tax would internalize the externality by taxing activities that have negative externalities and subsidizing activities that externalities". (Mankiw, 2005). Though many people would not like the tax that was imposed on an app, this corrective action could make way for new devices and companies in order to give Apple, Inc. more completion in the active

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