a) What are the challenges to profits faced by Apple iOS Inc and Sirius XM Radio? b

a.

Some of the significant challenges to profit faced by Apple and Sirius XM Radio are competition and an increase in budget. As the business grows, it meets new challenges and new competitors with better quality products, meaning that it has to increase its budget for better and quality production, hence increasing its expenses. The business also has to switch to unique and better designs or production and presentation to retain its customers. All these changes focus on their previous project's profit, hence reducing the business's profitability rate.

b.

Sirius XM Radio is likely to have a much higher rate of return because it's a radio station, and it will not use up most of the profits in production compared to Apple. Apple will generate most of its profits by developing new iPhones with better quality and better designs. The Apple type of production and the Sirius XM Radio type of production indicate that Apple will have more expenses and thus fewer profits. Sirius can access new music and develop new programs at low prices.

However, Apple gets more profits compared to Sirius if the profit is calculated without consideration of the profit challenges.

c.

One of the significant challenges to profits that arise due to supply intermediary chain customers is a decline in profits. The longer a supply chain is, the higher the product's price before it reaches the final consumer. At each step of an intermediary, price increases to make sure that the intermediary gains profits. However, the retailer who is considered the last in the supply chain will have reduced profits because the product's price is already too high and cannot be added further to avoid chasing away customers.

Another challenge to profits is an increase in substitutes. This becomes a challenge because most customers will always choose the brand that has the least price or the most affordable price. This reduces the profits gained by a company, especially if its products' prices are high due to the expensive production process and quality.