Apple Inc., is known to be one of the world’s most valuable companies. It is a multi-national company with a worldwide presence; approximately 72,800 employees and total net sales of $156 billion in the year 2012 (Apple annual report, 2012). Steve Jobs and Steve Wozniak, both college dropouts, founded this corporation in 1976 - “Steve Jobs, helped to transform the way in which the computer is used today through his creation of the first computer processing unit and his creative product innovations.” (Gupta and Prinzinger 2013). This paper will analyse the external environment, using the PESTEL model. The external environment incorporates all the factors that a company has no influence over and is only able to adapt to these changes; studying and adapting to these factors are essential for a business to survive.
2. The PESTEL analysis includes 6 sections:
a. Political: Being a multi-national, Apple is strongly affected by political factors. Political factors which include but are not limited to government laws and regulations as well as political stability and security can adversely affect the company performance and results. Whilst contemplating expanding into a new country, Apple Inc would have to take into consideration compliance of safety, employment and financial laws in order to legally and successfully open a new branch. Apple Inc must ensure that government laws are business friendly and favourable towards large corporations.
In addition to government laws and regulations, political stability in the country Apple Inc is contemplating is a key consideration that has to be taken prior to expansion into that market. Apple is an international corporation with a great reliance on the international market; 61.4% of sales were from outside the US and only 38.6% were from inside the US in 2012 (Datamonitor 2012). Therefore this shows the company’s vulnerability to negative “global relations, wars and terrorism” (Hasan 2012).
As Apple’s electronics are made in China (Lamy 2011), any political problems between the US and China would negatively impact Apple.
b. Economic: Sharp economic fluctuations affect all businesses. Economic factors are those that have to do with the general economy of the country or world and its effect on a specific business. For instance the markets’ crisis and eventual crash of 2008 greatly affected Apple results and performance. The market crash directly caused large corporations who saw their income and turnover diving; to turn to lay offs and consequently high unemployment rates had a spiralling direct effect on consumer spending. “Apple slumped almost 18% after RBC and Morgan Stanley analysts downgraded the stock to "neutral" from "buy" saying the consumer spending slowdown will hurt profits” (Twin 2008). Since Apple sells luxury “cool” products, its sales was adversely affected significantly. Apple had no say or influence in this matter and this factor shows truly how external elements are uncontrollable.
c. Social/Cultural: Social factors are important when it comes to the sales of a product - basically how the public views a product. Apple is at a large advantage in this area due to its perceived uniqueness as having “cool” state of the art, smart, simple to use products. This, coupled with an intense marketing campaign to deliver that particular message and along with its impressive reach into global markets, has led Apple to ultimately succeed in establishing its brand linked to the genius and meticulous Steve Jobs approach. Today Apple is seen as a luxurious, high quality brand; it is well known, seen as a strong social symbol and renowned for its unique design no matter what product is being purchased. Due to its strong brand name, Apple receives a lot of sales and becomes the go to Technology Company for luxury seeking consumers.
d. Technological: This is the definition of Apple’s success. Due to the world being in a technological era,...
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