Monthly Archives: September 2014

iPhones on the black market

It’s a well-known fact around the world right now, that Apple has released the iPhone 6 and 6 plus. After all, it was officially announced over a week ago. First weekend sales have already topped the iPhone 5s/5c sales with over 10 million iPhone 6’s sold within the first few days of release. Line-ups of people who waited hours for the iPhone 6/6 plus were turned away empty handed.

Image Source: Bloomberg Tech News

Meanwhile, the Chinese were exempt from the long-awaited release date as Apple has yet to get the license to sell them in China(despite the fact that over 200,000 people in Chinese factories worked on the iPhone). This has prompted a flood of iPhones on the so-called gray market. The new iPhone 6/6 plus, often shown as a status symbol, has turned into a large opportunity for individual sellers, who lined up that opening day in various countries around the world. While Apple has been unable to access China, resellers have been selling the iPhones at a 200-300% markup.

This is a display of the effects of government intervention on a market. While Apple loses some of the sales and profit they could have gained from access to China, the demand for iPhones(particularly the gold iPhone 6 plus) remains high. With the supply of iPhones so low, the price, naturally rises forcing Chinese consumers to pay a larger sum for an iPhone that could have been easily bought cheaper at an Apple store. While Apple has had impeccable sales numbers and still gains profit from the consumers planning to sell their iPhones, they lack what they could have gained from their market in China.

The Big Three: Blowing away competitors

Last week, a friend of mine bought a prepaid plan to Wind Mobile. Living in the suburbs, we expected the signal to be fairly weak, but figured that it’d be alright. When we got home, however, the phone wouldn’t work at all. No wonder nobody recommends Wind, right?

Telus, BCE (Bell Canada Enterp Logos taken from vancouverdesi.com rises), and Rogers, nicknamed the Big Three, have dominated the Canadian phone industry for years. While small, independent companies such as Mobilicity and Wind Mobile have struggled to survive, the Big Three have expanded to cover the majority, if not all of Canada. Meanwhile, smaller companies lack the resources to gain cellular coverage over large areas. In a recent article, the Big Three acknowledge that a fourth competitor could emerge, but they would likely struggle to match their quality of signal.

Clearly, emerging companies would struggle when pitted against such large corporations. While in the past, these companies had been given a large amount of assets free from the Canadian government, competitors are given a small advantage against the Big Three. According to the Huffington Post, when Verizon considered entrance to Canada, they would have gotten the opportunity to bid for two of four blocks of spectrum in an auction, compared to the one each of the Big Three. The Big Three, of course, protested this, posting campaigns over television and the internet. A bit unfair, seeing as a good amount of starting spectrum had come to them free.

While Canada is not the most expensive country in terms of wireless service, the addition of competitors could help lower prices, and possibly provide more jobs. Of course, the Big Three will likely hold their stake on the Canadian wireless market for a while yet.

The large overtaking the small. Problem?

According to an article from Quartz, many people are upset about General Mills buying Annie’s Homegrown, an organic and natural Mac and Cheese company. With a large amount of scrutiny on large corporations such as General Mills, Annie’s Homegrown is expected to lose a few customers.

“I’ll never buy @annieshomegrown ever again! They’ve sold their souls to the devil and let @GeneralMills take over.” are some of the comments online from previous Annie’s customers.

This is likely because many consumers today cherish the “underdog”. They dislike the large corporations that are often considered immoral for their pursuit of profits and domination of the industry. In this case, General Mills. One could consider what seems to be fraudulent competition unethical. Referencing this chart, two companies, such as Ruffles and Lays, both owned by Pepsico, seem to be competing brands yet are part of the same conglomerate. Thus, this false competition is in a way manipulation of the customer.

However, is this unethical?

While one may be against these large companies taking over small, independent companies, it can be argued that the take-overs are beneficial to all stakeholders involved. Being absorbed into a larger company often gives the niche brands an opportunity to grow, “without compromising the quality of their product”, benefiting from the added funding and support. On the other hand, the conglomerate has a new aspect and both the tangible and intangible assets involved in the niche brand. Customers still receive the quality of the product they receive. Stock holders of the conglomerate gain due to the rising large company. Employees can benefit from the experience of working for a more well-known company.

Thus, while belonging to a large “power-hungry” company can have negative connotations, it has the possibility of being beneficial for the stakeholders involved.