Question

Decentralized Activities

Differential Analysis and Product Pricing. Decentralized Operations is when decision making and authority is transferred to subunits of the company. This is the difference in revenue and expenses between different products. Please choose a company which produces more than one product. Take at least two of these products and discuss the different costs between these two products which may make one more profitable than the other.

Answer 1

Apple is a company which produces more than one product. Their core products are Macs, iPods, iPhones, and iPads. The release of the iPod was a boon for Mac sales. This is because the iPod was more affordable than Macs, so many people had their first experience of an Apple product via iPods. Subsequently a percentage of these iPod customers became Mac customers. This is known as the halo effect. Other terms which can be used to describe this effect are cross pollination and up selling.

Cost Comparison: iPhones vs. iPads

If you look at an iPad and an iPhone side-by-side it's very easy to tell them apart -- the iPad is several times larger than the iPhone. However, both devices run the same operating system, iOS, and use similar, if not identical, CPUs and GPUs. Both devices have a wide range of overlapping features, but the main differences come from the different use situations related to the iPhone being a Smartphone and the iPad being a tablet.

The chart compares the costs of these devices over two years (the standard length of an iPhone contract, back when most people had contracts) to give you a clearer picture of what owning them will truly cost.

Comparing Costs: iPad Pro vs. iPhone 8 & iPhone X vs. iPod touch

	iPad Pro	iPhone 8	iPhone X	iPod touch
device cost	US$649 - $1,129	$699 - $849	$999 - $1,149	$199 - $299
minimum monthly 4G plan	$10	$60	$60	N/A
maximum monthly 4G plan	$710	$770	$770	N/A
minimum total cost of 2 years of 4G service	$240	$1,440	$1,440	N/A
maximum total cost of 2 years of 4G service	$17,040	$18,480	$18,480	N/A
minimum total cost of device over 2 years	$649*	$2,139	$2,439	$199*
maximum total cost of device over 2 years	$18,169	$19,329	$19,629	$299