Iphone Unit: Economics. Follow the 3 steps listed below:
1) First, read this:
Background: There is much interest in politics today as America readies itself for another round of national elections, but votes are being cast each Monday through Friday as buyers and sellers make exchanges in stock markets around the world. You may have never thought of it in this way, but it’s true. Each time an investor buys a stock, they are essentially casting a vote for that company and/or some aspect of that company’s product line. They are exercising a fundamental tenet of the market economy and democracy…choice. Those votes or choices are registered in a number of ways, but essentially the results are tallied electronically and those results may be seen and tracked almost instantaneously on the internet and later by the appearance and disappearance of products and companies. So how does this all work and what is a stock anyway?
Stocks are shares of a company and those who buy them are called “share holders.” That’s simple enough, but why would a company sell parts of itself and why would someone want to buy part of a company? First, let’s start with the company. Most companies start with a person or group of persons who have an idea. They may have an invention or a new way to apply an existing invention to create an innovation. What brings them together and gets them to act is what the 18th century philosopher Adam Smith called “self interest.” This self interest may be the desire to make a profit, a hope to benefit mankind, the excitement of a challenge, a combination of these, or any number of other things, but this self interest moves them like “an invisible hand” to take a risk. These risk-takers, also known as entrepreneurs, usually want to get their product into the hands of as many people as possible otherwise their goals cannot be actualized. These men and women have many questions to answer and many problems to overcome before they can bring a product to the market (consumers). Now, let’s look at a real example.
The Story of Two Steves: In the early 1970’s two guys who had an interest in computers and being their own bosses, Steve Wozniak and Steve Jobs, decided to take a risk with their time, their human capital, and what little money they had. They decided to build small, “personal” computers. There were a number of other people (competitors) engaged in similar work, but the two Steves wanted to make something that was easy to use and innovative in its format. There were many people who were interested in their idea of a simple, portable computer which displayed its characters on a television screen, but they lacked a way to produce their computer quickly (remember the competition), affordably, and in large numbers. They needed money to get the business launched. A production facility (factory) had to be built. Workers had to be hired and paid. Then there would need to be continued research and development and advertising. Selling their calculators and VW’s wouldn’t nearly begin to cover those costs, so they first sought out venture capitalists…people who loan money to entrepreneurs that are worthy of the risk, but that money could only take them so far so fast. In the end, they decided that it would be smarter for them to seek out a large number of people who each had a small amount of money to risk…to reach more investors and quickly raise more money for capital investment by selling stock.
An I.P.O. : Wozniak and Jobs went to the Securities and Exchange Commission (SEC) and got permission to make an Initial Public Offering (IPO) in 1980. At this time they offered a portion of the interest in the company for sale to buyers who were purchasing in hopes of making a profit (investors). The buyers usually use an experienced agent (stock broker) to make their purchase. In cases like this the company’s stock is listed on an exchange that specializes in similar companies. Apple was listed on the NASDAQ. That stands for National Association of Securities Dealers Automated Quotations. The two other big exchanges in the U.S. that you’ve probably heard of are the New York Stock Exchange (NYSE) and the American Exchange (AMEX). The NASDAQ assigned a stock symbol to Apple. A stock symbol is an abbreviation of the company name. In this case AAPL. Knowing the abbreviation of a stock helps you to find out information about it.
The Vote: So where’s “the vote” come into all of this? When the two Steve’s decided to take their company to the public and offer shares (by the way, they retained the majority of the shares so that they could continue to control the company) for sale, the buyers in the market had the choice to buy the stock or to refuse to spend their cash on Apple. You know what happened; otherwise, we wouldn’t all know about Apple and its products today. A lot of people bought Apple stock. In fact there was more demand for the stock at the original price than there were shares of stock to go around. This caused the price of the stock to go up. The votes were cast. Apple was a big success. But in the market economy the invisible hand can work for competitors too! Other PC makers got into the act as they saw what the public wanted and what they were willing to pay and they began to offer new products. This keeps the companies searching for new ways to get investors and general consumers to “vote” for their product by buying stocks or buying the products that companies make. If investors don’t buy, they have to try harder to convince them with more advertising, newer/better products, and sometimes with lower prices. If they can’t convince the investors to “vote” for them with their dollars, then they go out of business. Similar to politics, it’s a tough world for the entrepreneur. Their rate of attrition is 80% in the first three years!
2) Second, write the vocabulary words in the boxes below in your notebook and give the definition of each word in a full sentences or 2.
3) Copy and paste the questions below and answer all the questions It is easier if you type this assignment. Then print it and staple it in your notebook.
Student’s Name________________________________ Date_______________ Computer Lab Assignment Handout Instructions / Assignment/Apple Stock
1. Type: msn.com into your internet browser.
2. Near the middle of the page you will see “MONEY,” click on it
3. Now go to the middle of that page and type in “aapl” where it says “quote search” and click on it
4. Now see what a share of Apple stock is selling for today.____________________
5. Look at the chart on this page. Navigate around this page a bit. You’ll notice that if you drag your cursor across the graph, you can get specific stock prices for a particular week’s trading.
6. Click on “month”, below the graph. What was the price of Apple stock on the earliest day shown on the graph?____________
7. Click on “year” under the graph. What was the price of Apple at its lowest during the year shown on the graph? ______________
8. What was the price of Apple at its highest during the year? _________________
9. Look at the trend of Apple stock during the whole year. In 3-4 sentences, summarize the trend for Apple stock for the year (explain why it is going up and then down, etc). Include some of the information from the questions above in your summary:
10. Click below the graph on “all”. Knowing that Apple began to advertise the release of the iPhone during the summer of 2007, based on the graph, explain the cause and effect relationship between that action and how the market responded (voted) on Apple stock in the following months.
In other words, explain why the Apple stock went up or down when the Iphone came out.
Look also at the chart at this website: https://www.statista.com/chart/2684/apple-stock-price-after-product-announcements/ Write 4 sentences.
11. Look at what happened to the price of Apple stock after late January 2008. Using the MSN site and: https://www.statista.com/chart/2684/apple-stock-price-after-product-announcements/, explain what caused the price of Apple stock to act as it did. What were consumers in the market reacting to and how? Look up what products Apple was coming out with. 4 sentences.
12. Look up this article and read it: https://gigaom.com/2013/10/01/blackberry-the-one-time-smartphone-leader-its-fall-and-the-comeback-that-never-happened/
13. In 4-5 sentences, explain what happened to the Blackberry, according to the article.
14. What does this have to do with Apple’s iPhone? 2 sentences.
15. Look up the Palm Pilot at this website and read it: http://www.pcmag.com/slideshow_viewer/0,3253,l=260439&a=260439&po=1,00.asp
16. What did Palm make that is related to this assignment?___________________
17. Using what you learned with your research on Apple, what can you conclude about how the market “voted” when given the choice of similar products from Apple, BlackBerry, and Palm? 3 sentences.
18. Explain what you think happened to the Blackberry and the Palm and why. Include facts and dates. 2-3 sentences.
19. How do consumers like you (even though you may not own stock) benefit from the competition between companies like Apple, RIM, and Palm? 2 sentences.
20. Since everything has a cost, what can the “downside” of this competition be? (Use RIM and the Palm companies as examples)
21. In one 6 sentences paragraph, please summarize what you’ve learned.