PESTEL Analysis of Apple

1731 words (7 pages) Essay in Business

18/04/19 Business Reference this

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Introduction

In this assignment I am going to conduct a PESTEL analysis on Apple. Company’s such as Apple are influenced by the environment that they are in and all the different situational factors that determine circumstances each day in the business industry. Due to this organisations like Apple need to constantly keep check and analyse the environment which they run their trade and which the market lays.  PESTEL is a detailed analysis of the macro-environment or the environment as a whole. PESTEL analysis ascertains for the managers and the strategy builds as to where their market currently stands and where it will head off in the future. PESTEL analysis consists of components that influence the business environment and each letter in the acronym stands for a set of factors that affect every industry.

(P)olitical factors affecting Apple

Political factors are all to do with politics in each country and the world and relation to the country. For example, the type of government leadership affects the decisions made by a country, also the tax laws, policies and tariffs a government levies over a trade.

In Apple’s macro-environment, the most significant political factors present a lot of opportunities. The most important political external factors for Apple are improving trade policies and too stable politics in developed countries, these are both opportunities for Apple. Especially with developing countries, over time more free trade policies are created. Apple’s opportunities are increased because they can distribute more of their various different products around the world due to additional free trade policies.

Moreover, opportunities are presented to Apple because of the stability of the political landscape in developed countries. This is because Apple can expect very little if any political issues affecting its business in these countries. Overall in the political part of the PESTEL analysis by taking advantage of the different political opportunities in its marco-enviornment Apple can improve its performance.

According to Abhijeet Pratap, October 2015‘’ it is a lower cost to manufacture products in China and Apple are dependent on this. Manufacturing can be disrupted in china due to political and social unrest and increase manufacturing costs’’.

(E)conomic factors that are important to Apple

Economic factors is to do with all the factors affecting the economy and the condition its in. For example, interest rates, the inflation rates, fiscal policies and imports and exports that are affected by foreign exchange rates. All the above things will determine the direction the economy will move, therefore Businesses like Apple analyse economic factors based on their environment so that they are able to build different strategies that will fall in line if any changed in the economy occur. According to February 2017 ‘’There will be higher purchasing power for customers so therefore more sales for Apple due to better economic performance of the global economy’’.

For Apple opportunities are created by nearly all of the external economic factors in their remote macro-environment. The most significant external economic factors for Apple are rapid growth in developing countries and stable economies in developed countries. Apple are able to extend their business due to the economic stability of developing countries. This is very important for Apple to be able to expand because it will make them a bigger business and will create more revenue. although, the rapid growth of developing countries is more significant. For example, in Asian countries the high economic growth are massive opportunities for Apple to increase sales in these foreign markets. To become more successful Apple must ensure that they can effectively exploit these huge economic opportunities. Speed is very important because Apple’s competitors like Samsung will be looking to target these high growth economies.

(S)ocial/Sociocultural factors influencing Apple’s business environment

No country is the same and every country has a unique mindset. Sales of businesses products and services can be impacted by these different mindsets. To understand the market and consume better businesses like Apple study the cultural implications, the social lifestyles, the gender and connected demographics and the domestic structures.

Social and sociocultural factors are effects that subject Apple’s business. The most significant social or sociocultural factors to Apple are rising the use of mobile access and rising the use of social media, these are two opportunities for Apple. If Apple continue to provide easy to use mobile devices, the trend of increasing mobile popularity of mobile access ins an opportunity. Apple have already pounced on the opportunity by creating the iPhone, iPad and Apple Watch.

Moreover, in today’s world social media is becoming more and more populate so therefore the rising use of social media is also an opportunity for Apple as it will increase the demand for their digital products such as the iPhone or iPad where users are able to download lots of popular social media apps. Therefore, Apple have major opportunities in the social/sociocultural environment they need to stay one step ahead of their competitors.

According to Mintel (2016), there is a behavioural shift in the way customers are using smartphones that is progressively causing tablets to lose their Unique Selling Point (USP)

(T)echnological factors in Apple’s business

In any business technology is a massive influence, especially Apple. Technology is constantly changing to therefore businesses like Apple need to keep up with these changes and need to be able to integrate when needed to. These factors are analysed so the businesses can understand how consumers react to different technological trends and how they use them for their benefit.

Opportunities are created for Apple by the technological external factors in their macro-environment. These technological factors and opportunities for Apple are, the cloud computing trend, technological integration and the growing apps market. Among businesses and individuals could computing is becoming more popular. By offering businesses and individuals cloud-friendly devices and apps, Apple are able to exploit this opportunity. Furthermore, another major trend is technological integration of devices. To take advantage of this opportunity Apple if they continue to provide products that can be easily connected with each other.

Apple has a great opportunity to grow its app store and they have even came up with things like voice recognition and face identification to unlock their phones which keeps them a step ahead of major competitors Samsung. Apple is in a very good condition to exploit the opportunities in the technological business environment and grow as a business. According too Kasi April 2018 ‘’new inventions in technology has most defiantly always been top priority for Apple, to achieve this aim the company needs more advanced knowledge of trends that are changing of basic technology infrastructure level’’

(E)nvironmental factors in Apple

Most of the environmental factors in Apple’s macro-environment provide opportunities. These opportunities are, business sustainability and trend, product energy efficient trend and labor rights trend. Through recycling and related programmed Apple are already addressing the opportunity to maintain business sustainability. Through providing improved batteries, components that emit less heat and professors was steps Apple have taken to improve the energy efficiency of their products. Apple have already started to improve their customers perception by bettering employment practices through its supply chain. Apple are on track to address these environmental factors.

(L)egal factors that limit Apple

The business environment may be affected due to legislative changed that occur from time to time. Legal factors include, equal opportunities, health and safety, advertising standards, product labelling, consumer rights and laws and product safety. Businesses such as Apple need to know what is legal and what isn’t legal in order to trade their products successfully. Every country has its own set of rules and regulations so trading globally can become tricky for Apple. Apple would need to be familiar with the rules and regulations with every country they are trading with.

Furthermore, the most significant legal factors that limit Apple and are therefore threats are the increase in privacy regulations and increasing telecommunications regulations. There are a number or privacy issued connect to digital technology use and governments are realising this. This is resulting in more privacy regulations being imposed on Apple. A reason why this is a threat for Apple is because it will bring different challenges to Apple when they are developing products that involves transmission of private information that they aren’t used to. This can also be turned into an opportunity as they can create features that will protect privacy. Moreover, stricter telecommunications are being imposed by governments, this could potentially limit the usability of Apple products which makes it a threat to Apple.

‘’On August 30, 2016, after a three-year investigation by the EU’s competition commissioner that concluded that Apple received “illegal state aid” from Ireland, the EU ordered Apple to pay 13 billion euros ($14.5 billion), plus interest, in unpaid taxes’’ (Kanter and Scott 2016)

Conclusion

In conclusion to this assignment I have conducted a PESTEL analysis on Apple. This PESTEL analysis shows the different opportunities and threats that might occur in their macro-environment. I also explained how Apple will act on these opportunities and how they will overcome the threats. Apple is probably one of the biggest businesses in their field and always need to stay one step ahead of their competitors.

Bibliography

  • 123WRITING | PESTLE AND SWOT ANALYSIS OF APPLE INC 2016-2017
  • In-text: (123writing.com, 2018)
  • 123writing.com. (2018). 123writing | PESTLE and SWOT analysis of Apple Inc 2016-2017. [online] Available at: https://www.123writing.com/free-sample/pestle-and-swot-analysis-of-apple-inc-2016-2017 [Accessed 7 Aug. 2018].
  • Marketingmixx.com. (2018). Apple Inc. PESTEL Analysis | Marketing Mixx. [online] Available at: http://marketingmixx.com/marketing-basics/pestel-analysis/454-pestel-analysis-of-apple-inc.html [Accessed 7 Aug. 2018].
  • Contributor, P. (2018). Apple Inc. PESTLE Analysis. [online] PESTLE Analysis. Available at: http://pestleanalysis.com/apple-pestle-analysis/ [Accessed 7 Aug. 2018].
  • Pratap, A. (2018). Apple Inc PESTEL/PESTLE/PEST Analysis -Apple’s Macroenvironment. [online] cheshnotes. Available at: https://www.cheshnotes.com/2017/02/apple-pestel-analysis/ [Accessed 7 Aug. 2018].

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