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CocaCola and Apple

COCA-COLA COMPANY

The coca-cola company is a soft drink company that produces the coca-cola concentrate, which they sell to licensed bottlers all over the world. The bottlers are responsible for mixing the concentrate with other ingredients such as sweeteners and water to make the final product. Coca-cola products are used all over the world, and the company is the largest in the soft drink industry.

Demand and Supply

Demand is the quantity of goods that a customer is willing and able to buy at a given period at a given price (Mankiw, 2014). Various factors determine the demand of a product. Demand for coca-cola products is determined by the price of related goods such as substitutes and complements, the income of the consumers, consumers’ tastes and preferences, Government policies, changes in the population and time. Supply is the quantity of goods a company is able and willing to supply at a given price. The supply of coca-cola company is determined by factors such as the price of the product, number of consumers, price of raw materials and the state of technology.

Substitutes and complements

Availability of substitutes is a major factor that affects the demand for coca-cola products. Available substitutes include Pepsi produced by the PepsiCo Company, Limca made in India and United States, Coffee for those who crave for Caffeine, Tea, Fruit juices, Kevita, and water. However, coca-cola products have no complements.

Elasticity of demand

It shows how the demand of a product responds due to a change in the factors that determine demand such as price (Png, 2013).  An increase in the price of the coca-cola product reduces the demand for the product and vice versa. In the short run, due to the consumers’ perception, the percentage change in quantity demanded is higher that the percentage change in price. This means that the price elasticity of demand is greater than one showing that demand for coca-cola product is price elastic in the short run. In the long run, however, consumers will adapt to the change in price and the percentage change in the quantity demanded will be lower than the percentage change in price. This means that the price elasticity of demand will be less than one showing that the demand for coca-cola product is price inelastic in the long run.

Production and Market structure

Production is done by automated machines, which mix the concentrate with other ingredients and then put the final mixture into bottles. The whole process from the cleaning of used bottles to refilling the bottles is automated. A few workers monitor the machines. Thus, it means that the production within the coca-cola company is capital intensive (Shephard, 2012). It focuses more on the use of machines and equipment. Due to the automation state of the production process, technology is very important. Technology is very dynamic, and the company has to keep up with new technologies for improved efficiency. Coca-cola operates in an oligopoly market because there are few firms in the industry, few entry barriers, and similar products but highly differentiated, presence of advertising and branding and imperfect knowledge. Since these companies in this industry are independent, they can choose to compete or collaborate.

Future prospects

Coca-cola company future prospects are to enlarge the consumer base with new and innovative products. With the level of competition the company is facing recently, it is working to introduce new products that the competitors do not have.

 

APPLE INC

Apple Inc. is a corporation that is an internationally known organization known for producing consumer electronics, software, computers, and servers. In early years, most of the people did not know what a computer was let alone how to use it. However, Apple developed a very simple and easy way to understand the computer.

Demand and Supply

Several factors determine the demand for Apple Inc products. These include advertising, price of competing products, and consumer perception of quality and the goodwill of the company. The supply for Apple Inc products largely depend on the state of technology. Technology is a major concern for the company. Other factors include demand of the company’s products, changes in the population, and changes in taxation rates (Mankiw, 2014).

Substitutes and Complementary

Apple has several competing companies producing similar products. These include Hewlett-Packard, Dell, Nokia, and Microsoft among others. These companies produce products that are substitutes to the Apple products. Complementary goods are used together (Mankiw, 2014). Apple products have complements such as chargers, software’s, batteries, and operating systems.

Elasticity of demand

In the short run, the elasticity of demand is very elastic. Any change in the factors determining demand changes the quantity demanded by a higher percentage than the change in the factor. In the long run, the elasticity is inelastic (Png, 2013). The consumers adapt to the change in any factor.

Production and Market structure

Apple products are produced using machines and human labor. The assembling of different parts to make a complete product is done by human labor. The company has employed many employees. Thus, it is agreeable that the company is labor intensive. Apple operates in an oligopoly market as far as the smart phone market is concerned (Png, 2013). There are few firms in the industry, few entry barriers, and similar products but highly differentiated. However, the company is duopoly to Microsoft in the operating systems market.

Future prospects

Apples Inc future prospects are to continue solving human problems with an appropriate and refined technology. Apple Inc has always engaged in identifying an existing problems and solving the problem using technology.

 

 

References

Mankiw, N. G. (2014). Principles of Microeconomics (7th ed.). Stamford, USA: Cengage learning.

Png, I. (2013). Managerial Economics (4th ed.). New York: Routledge.

Shephard, R. W. (2012). Cost and production functions (Vol. 194). Springer Science & Business Media.