Apple is among the fastest growing company that has made itself a recognizable consumer name for electronics and gadgets. Investors have always looked forward for investing in Apple due to its strong revenue and high return on investment. Started operating as a traditional computer company, it has continuously come up with new ideas and products. Apple now manufactures large range of electronic devices comprising of gadgets, music player, Smartphone’s and other hand-held devices and making itself the most valuable company around the world and giving its competitor a tough time. Apple’s success is based on its various strategy and business plans that help in exploiting the possible opportunities and handling and response threats. The company’s high performance is associated with the way it not only deals with its internal factors, but external (macro-environment) factors too.
PESTEL is interpreted as political, economic, social, technological, ecological and legal factors impacting business organizations. This PESTEL analysis identifies the most significant external factors that Apple must include in addressing its macro-environment. Though Apple is a leading company in the industry, this analysis depicts the advancements and progress that needs focus to maintain its leadership and credibility, and also to formulate strategies accordingly. Effectiveness in addressing these external factors ensures that Apple remains strong despite tough competition in the global market.
Political Factors
This factor shows the governmental factors that can influence the organization. According to the reports, more than half of the sales are generated from countries other than America. And most of the manufacturing of their products is also done in countries like China, Korea, Czech Republic and Ireland. It can be concluded that bad political relation with other countries can have bad outcomes for the company. Tax policy and import restrictions by its manufacturing countries or other countries are also one of the issues for which there need to be a “plan B”. Concentrating on the opportunities, free trade with the developing countries can be beneficial for Apple. The policy can cater Apple with better opportunities for distributing its products in various markets/countries.
Economic Factors
Considering the economic impact on the business, Apple revenues can adversely be influenced by recession and economic crisis to a large extent due to its premium pricing strategy. Increasing rate of inflation in the US, is another factor and can affect company’s amount of cash reserves. Additional range of economic factors that impact Apple growth prospects include unemployment trends, labor cost, stock market trends, interest rates, changes in prices of resources in general. The economic stability of developed countries has a positive impact for the company as they can expand business across the globe. However, the rapid growth of developing countries is more significant. For instance, the high economic growth rates of Asian countries are major opportunities for Apple to increase revenues through sales in these foreign markets and attracting investors from these countries.
Social Factors
Throughout the history, Apple has made changes in the two main factors, which are the design and quality in order to satisfy the consumers and the customers. With the transformation in education level, lifestyles, buying habits and life expectancy, the urge of purchasing expensive products have risen in most to the markets; people have made Apple a status symbol. Apple inc. is defining a individual’s modern lifestyle and the increased demand of Apple’s products has assisted in formulating strategy to open franchises and make investments in developing countries.
Legal Factors
Apple has always being involved in legal proceedings and claims ever since it has started operating. The claims include infringements of Nokia, HTC and Samsung patents. Going through these claims, the company still doesn’t focus on legal issues. Though it is having a firm strategy for anti-trust law and health and safety laws, but copyrights, patent and international property laws are still a threat for the company. Employment and consumer protection laws are few others to name that the company avail as an opportunity for their rationale growth.
Technological Factors
With the recent trend of smartphones and gadgets being the hot commodity, technological factors for Apple’s market has grown subsequently. Being the innovators and always offering unique and advanced technology, Apple needs to focus on the technological aspects of its products i.e. the lifecycle. Though the company spends a lot on the research and development, little efforts need to be made to track down the rate of technology change and the way competitors are competing. The design and new inventions in technology has always being the top priority for Apple, to achieve this aim the company needs more advance knowledge of the changing trends of basic technology infrastructure level.
Environmental Factors
Apple has always taken comprehensive approach to reduce environmental issues and take environmental responsibility very seriously. It has not only reported for carbon footprints but has also managed to reduce the footprints. The firm strategy includes disposing off the waste properly, reduce air and water pollution. Not only this, but it is vigorously working in recycling electronic equipment. With the emerging weather climate changes and laws regulating the pollution associated with these changes, Apple is on track to consume energy from solar, geothermal and hydro sources. The company viable approach to environmental issue is due to its strategy for health consciousness that is being analyzed in legal and socio-cultural impacts.
Conclusion
To conclude, Apple is a well-established firm operating from more than 40 years has a firm grasp on all the aspects discussed in PESTEL analysis. It has always being innovative not only with its products and ideas but also with its market strategies. Only areas that need attention are the legal and political. Discussing the political area, to reduce the operating cost, it has outsourced to various countries. An alternate needs to be planned with the intention of reducing risk associated with outsourcing, import restrictions and trade control. And as for the legal area, Apple is somehow involved in infringements of patent and copyrights. Although they have all the bases covered, a little attention to the threats and opportunities can provide better market position and help sustaining the “Leaders of Technology “label.