PEST Analysis of Apple
The following is an analysis of the external environment of Apple Inc focusing on the political, economic, social and technological factors affecting its operations.
Apple does not only supply its products around the globe, but it is highly dependent on countries that offer low-cost manufacturing like China. Political unrest and social issues are usually responsible for changing market structures. It may specifically lead to increase in production costs in China affecting Apple’s costs of operation. Political unrest in the United States, where Apple Inc. is based, has been on the rise with calls to cut Chinese imports in a bid to grow American manufacturing industry.
Apple is known for its production of higher-end consumer goods to mean the company may be impacted negatively especially now that middle-income earners in the United States and the world across are stagnant. Financial stagnation from users end will make them consider cheaper options to cope with the situation.
A brand image takes a long time to build. Apple’s music iTunes marketing strategy has been bringing good business to Apple but leaving most of the recording celebrities complaining. Now that these celebrities are in the limelight, their cries are reaching far and wide and have raised critics among many members of the public. The only way out is for Apple to please the few celebrities.
Technology is changing faster and companies ought to change as well to stay relevant. Apple is great at adopting new technologies, and so are its competitors. A case in point is how Google has managed to be on the same level with Apple and Samsung. The pride for uniqueness is slipping out of Apple’s hands as all other technological companies are equally maximizing on the opportunities coming with advancements in technology. For example, Apple has a monopoly with having a payment app; Google caught up with it hardly a year down the line offering the market an Android payment app with matching capabilities with Apple.
The taxation question is rising as big companies like Apple with much cash in the banks translating to billions targeted for heavier taxations. If such laws pass, then Apple is bound to be losing a good part of its revenues to taxes.
Type of organization
Apple Inc. is a public limited company. The business has been broken down into units and shareholders own the company in parts. The company is open to the public for ownership. Apple publishes its statements of accounts publicly and at the same time governed by a board of directors. Limited liability is a vital factor as a shareholder can only lose as much as the number of share the units he owns.
Apple Inc.’s organizational structure is divisional. It brings together experts and authorities in different fields, gives them the full mandate to produce and create allowing them to narrow their focus and only having a central unit in place for governance.
Benefits of the structure
The structure allows for the best of experts outsourcing process.
Divisional structure gives room for innovation and creativity thanks to minimal supervision.
The structure allows for focus and attention to details resulting to excellence in production.
The structure allows performance rating and output measurement.
High Consumer Product
Apple is best known for iPhone, a product with unique features and operating system, a higher-end consumer product that is a reserve for the middle and upper class because of its high price in the market. iPhone is promoted by big brands and celebrities in the market with high-end suppliers in the chain of distribution.
Internal Consumer Influence: Perception
IPhone has managed to influence consumers perception as one is led to perceive more value for the product by Apple’s massive investment in advertising and marketing strategies aimed to place it on top. Associating Apple with class and stars in the society has impacted on consumer behaviour as in turn perceptions intended to be created among the middle class has been achieved. Today, the rich associate themselves with Apple’s iPhone. The mobile phone industry is defined already, and perceptions have been built as desired.
External Consumer Influence: Social Class
IPhone as a product is tailored to meet the demand of people who mind their social class and can afford it. Advertisements always channelled to that segment of the society that has money to spend on luxurious and beautiful products. People seeking affluence and fame are prone to buy iPhones to belong and fit in the social class they perceive to be in already. Apple has successfully been able to own the part of the market comprising of the well to do and famous and all who wish to belong there.
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