Chapter 2: The Operation of a Market

http://brainstormtech.blogs.fortune.cnn.com/2009/10/06/survey-22-of-u-s-teens-want-an-iphone-15-already-own-one/

SUMMARY

When one mentions the word technology which company comes to mind first? Unless you’ve been living in a cave for the past decade the company Apple should sound familiar. A recent survey done by Piper Jaffray's "Taking Stock With Teens" suggests that American teenagers are more hooked to the brand Apple than ever before. Apple products such as the iPhone, iPod, and iTunes were still dominate in the music and cell phone buying preferences of around 600 surveyed teenagers from middle to upper middle class families. The statistics showed that 15% of the teens surveyed owned an iPhone and 22% plan to purchase one within the next six months. 87% own an iPod and of the 40% planning to purchase MP3 payers in the next year, 74% plan on buying an iPod. Most teenagers download their music from peer to peer networks, Limewire being one of the most popular, but the ones who buy their music online, 93% of teens use iTunes.

CONNECTION

Apple products are no doubt a demand factor. Consumers are craving for the next best thing apple has to offer. In chapter 2 we were introduced to the factors and elasticity of demand and supply. The demand factor for Apple products would be taste and preferences. Apple invests a lot of money into their marketing and advertisements with attractions such as celebrity endorsements and eye catching commercials in the media. They have even gone to making limited edition iPods with themes based on the style of the artist or band for a higher price. Besides Apple’s mainstream advertising, consumers are referring their products within their family and peers which means that they are helping to advertise their products as well. Apple products such as their iMac, iPod, and iPhones are all luxury products. This places them under the demand elastic category since it is not a necessity

REFLECTION

It seems that Apple is unstoppable with their ever growing products and franchises across the world. Every so often, newer versions of their popular products are emerging into the market. In the end it all boils down to the question: is Apple worth it? There are many alternative products for much lower prices out there. A good example would be the market for laptops. The majourity of laptops today run on Microsoft’s Windows platform while the rest run on Linux, or Apple’s operating system. Consumers can buy a laptop with more powerful hardware and bigger screen size for a lower price compared to an Apple laptop. But what attracts consumers into buying Apple laptops is their simplicity and ease of use. Actually the main target of Apple’s advertising is on how their products are simple and user friendly. Back to the laptop example, Microsoft Windows XP or Vista tends to freeze up occasionally when too many applications are run at once and causes the user to reboot the system. Apple on the other hand claims that their operating systems never freeze up and require no extensive set up after it is taken out of the box. Talk about user friendly.

Chapter 1: Introductory Concepts

http://money.cnn.com/2009/09/04/news/economy/jobs_august/index.htm

SUMMARY

As North America and other parts of the world are facing an economic recession; many workers, especially in the United States, have lost their jobs. In August, employers laid off fewer workers than they did in the previous months; 216,000 workers lost their jobs as compared to 276,000 in July. Even though they managed to reduce job losses; just two weeks ago the unemployment rate in the States jumped to a 26 year high of 9.7%. The last time the employment rate was this high was back in June of 1983. It is estimated that 6.9 million workers have lost their jobs since August 2008. Some people without jobs had lost hope and left the work force which caused the unemployment rate to drop last month.

CONNECTION

In chapter 1, we looked at the scarcity of resources, direct cost versus opportunity cost, and production possibility curves. First, the three resources used to produce goods and services are land, labour, and capital. When jobs are scarce, companies lay off workers which cause an excess amount of labourers. Second, laying workers off only require a direct cost of compensation by offering their employees severance pay packages according to the years they have been working for the company. But the opportunity cost could be higher as business rebounds and the company has to spend money hiring and training new employees or re-contracting ex employees. Third, when there are less workers the production possibility curve of a company decreases and shifts to the left. Fewer workers mean less production which in turn can hinder the company’s recovery process.

REFLECTION

In times of recession, companies have no choice but to reduce their expenses and lay off workers. The process of resigning employees gives the company instant feedback and cut in costs. But what about the hidden costs of laying off workers? When workers see that their peers are being laid off, it creates an environment of fear within the organization. Fear leads to reduced productivity and creativity of current employees and increased health issues due to the stress. Also there will be a lost of experienced employees when business returns. As I have mentioned in the connection, it costs more time and money to hire and train new employees rather than keeping experienced ones. Another downside of laying off workers is that it causes a vicious cycle of expenses. When consumers cannot afford to spend money on goods, the companies producing these goods are not profiting either. So what are some possible solutions to this issue? Companies can cut down on their employees work hours by giving them a shorter work week, eliminate working overtime, and last of all offer unpaid vacations. Until companies and corporations discover real solutions to the issues regarding worker lay offs, labourers will continue to lose their jobs.

First Class !

First class and i feel energy drained already... let's hope i make good use of this blog =)