External and Internal Environments: Apple

Introduction

In the modern world, the industry of computer hardware and software and consumer electronics is one of the most competitive industries. Apple Inc. has been operating in this industry from its incorporation in 1976 by Steve Jobs and Steve Wozniak and produces computer software, consumer electronic products, cell phones, and personal computers. In recent years, it has been trending for the production of iPhone, which is very popular currently. By the year 2010, it had its retail stores in 10 countries amounting to 301 stores. The first introduction of the business in 1976 did not go well and, for this reason, they had to re-launch the business in 1980. During this year, an initial public offer of the company was also given that allowed the public to buy shares of the company (Apple, 2015).

The aim of this paper is to analyze how the company operates through analysis of its external and internal environment. In properly analyzing the company, a PEST and SWOT analysis will be used. The financial statements of the organization will also be utilized to determine the direction of Apple Inc. Two segments in the general environment that include economic and technological factors would have the greatest influence on the business operations. Besides, among the five forces of competition, the intensity of rivalry within the industry and threat of substitute products stand out as the most significant for the firm. The influence of the factors to the corporation will be discussed in details later in the paper.

General Environment

In this segment, there are various factors that would significantly influence Apple development and position in the industry. The two factors that would rank the highest are economic and technological factors.

1. Economic Factors

These factors would influence the institution more than any other since the organization has no control over them. Firstly, the purchasing power of the consumers across the globe depends on the status of the world economy. If there is either inflation or depression in the world, it greatly affects sales and profits of the company because consumers do not have the ability to purchase. Consequently, in covering the situation, Apple will increase the price of their products in order to recover the lost profit (Khan, Alam & Alam, 2015). Since only a few can afford the high prices, the company will suffer in sales. With the current situation, the economic conditions are good and the company has been experiencing an increase in its sales and profits. Additionally, the company uses foreign currencies that help caution the firm against losses whenever some parts of the world are affected by depression or inflation (Dong & Zhang, 2016). Therefore, economic factors are very influential to Apple and its operations, and the direction they take determines the sales and profits of the business.

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2. Technological Factors

Across the world, there has been an increase in technology and this has also increased expectations of the consumers. Every time a new device is out, the clients are curious to know the difference in the technology of the previous and the current mobile or computer device. The factor significantly influences the operations of the company as it must meet the expectations of the consumers. However, Apple has been capable of dealing with this factor as it is innovative and has high technology products that meet consumer demands. Additionally, it has sufficiently invested in research and development to ensure that it comes up with the most innovative and efficient products (Khan, Alam & Alam, 2015). Through the research, the enterprise has adequately tackled the issue of technological demands.

Forces of Competition

Competition is always relevant in any industry, and it determines the growth, market share, and direction of the organization. Like any other institution, Apple is influenced by the threat of new entrants and substitute products, the intensity of rivalry within the industry, and bargaining power of suppliers and buyers. Threats of substitute products and intensity of rivalry within the industry are the most significant to Apple in providing guidance. Also, the factors show the abilities of the organization and its impact on the consumers and the market (Johnson, 2014). The main competitors of the firm include Samsung, HTC, Blackberry, and Nokia.

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1. Intensity of Rivalry within the Industry

The force is relevant to competition in the industry and determination of the firm position in the market. Apple Inc. has been in the industry for a considerably long period, and it has developed ample strategies that help it in tackling problems. Throughout their operation, the company has developed quality products that have earned it a large market share. Most importantly, the business has created customer loyalty through maintenance of high-quality goods and services that keep consumers in the company. Producing products that meet the customers’ demands and wishes has also contributed to customer loyalty, which assists in beating the competition in the industry. Due to increase in population and technology, many organizations have come up that seek to reap in the technological industry (Wheelen, Hunger, Hoffman & Bamford, 2015). The increase in organizations in the industry has created a lot of competition. Additionally, the enterprise provides technical support to the customers that have made them loyal to the institution. In most technological companies, when you buy their products, they do not offer technical support when the devices are out of service. The provision of this service has acted as an added advantage against the competitors that have kept Apple in the market. With the increase in types of mobile phones in the industry across the globe, rivalry among companies producing these products has also been on the increase. In cautioning against the intensity of rivalry, Apple has been producing goods and offering them at a low price that ensures that their products are affordable to most people in the world. The strategy assists in promoting sales and beating competition from other companies. Also, the firm produces superior android phones, e-readers, and rival tablets that help in gaining a larger market share as opposed to their rivals (Seabrooke & Wigan, 2014). For this reason, the company has adequately addressed the issue by ensuring they maintain relevance in the industry.

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2. Threat of Substitute Products

In the past years, there have been emergences of technology companies that have been offering their mobile devices at a lower price thus offering great competition to Apple. In this case, if the products offer the same need, then the devices can be substituted that makes this factor very influential. With the rate of innovation increasing and new cell phones emerging in the market, there have been threats of products being substituted. The major factors that determine substitution of a product are performance and price. Change of any of the two factors increases the willingness of the consumer to switch (Abraham, 2013). If the performance of a new product is better with slightly higher price, then the consumer will definitely go for the substitute product. On the other hand, if a company produces a product that serves the same purpose at a lower price, it is possible that the clients will switch for the new device. However, the willingness of the consumer to switch to another product can be reduced through the creation of customer loyalty. Apple has been efficient in the creation of loyalty among its consumers through the production of superior and efficient items. Due to the high performance of the goods and quality service of the business, it has been possible to reduce the rate of customer switching from the company to their rivals. For instance, consumers of iPhones are driven by standard, stability, and apps. Apple has taken these factors into consideration since their iPhones are easy to use and are stable with efficient apps (Porter & Heppelmann, 2014). Through this, the company has been capable of holding their clients and keeps them buying the products thereby eliminating the fear of substitute products.

The corporation has always been innovative in producing quality and superior products. In future, the company will likely improve some of its products to offer a better experience to its customers. In improving the iPhones or mobile phones through sufficient resources, the company will be able to beat their rivals and also prevent customers switching for substitute products. By coming up with a new device, they will produce a product with more applications that will be compatible with laptops ensuring a more interesting and worth experience for the consumers thus ensuring their loyalty.

Opportunities and Threats

In the recent past, there has been an increase in the demand for iPads and iPhones globally and this is a great opportunity for the company. Also, there has been an increase in demand for cloud-based services, and the company can use its financial position to maximize on the opportunity. With the increase in technology, the tablet and smartphone sales have been seen to grow and the firm is well equipped with research and development resources, which it can utilize in taking up the opportunity. However, there have been threats in the industry due to the rapid change in technology. Upon introduction of music players (iTunes) by Apple, other companies such as TunesGo and CopyTrans have increased competition in the industry. To handle the threat, Apple needs to boost its marketing and sales online through ads (Khan, Alam, & Alam, 2015). Through the financial capability, the company can increase its marketing, which will assist in reducing the threat.

Strengths and Weaknesses

The position of the company can be explained by the strong operating performance of Apple globally. For instance, the many retail stores across the world have contributed to easy accessibility of its products by customers. Additionally, the high innovativeness has significantly helped in the creation of a larger market share and strong financial performance. Also, it has maintained a brand reputation, creating customer loyalty and thus maintaining its position in the market. However, constant change in management is one of the weaknesses that the institution needs to handle. With the change in management, it is impossible to understand employees, and that may lead to a reduction in the morale of the workers (Rothaermel, 2016). In preventing this, the company should retain their workers to help in building an understanding and teamwork, thereby increasing performance.

Apple Resources, Capabilities and Competencies

Analyses of the value chain as described by Dudovskiy (2017) are imperative in identifying business activities that create value and enhance competitiveness in an organization. Some of the primary activities that contribute to the efficiency of the company are inbound and outbound logistics, marketing and sales, and operations. Other activities that support the group are human resources, procurement, business infrastructure, and technological development. Through technological development and firm infrastructure that are part of the organization competencies, they have been in the top position in the industry (Dudovskiy, 2017). Besides, through its marketing and sales, it has been able to expand its retail stores globally, making customers focused on emerging products from Apple that has helped in an increase in revenue of the institution.

Conclusion

Conclusively, Apple Inc. is one of the most successful electronics companies in the world. The two factors that have influenced changes in the organization are both the economic and technological. In regard to the economic factors, the company has to be able to manufacture products that are affordable to the consumers since different consumers have different purchasing power. Technological factors seek to satisfy the modern market that has constantly been changing. Competition is normal in any business and in this case, Apple Inc. faces competition from giant companies such as Samsung. Apple Inc. has continued to offer technical support to the customers and this has helped in ensuring loyalty among its customers. The company has vast opportunities in that the demand for the electronics such as iPhones has been on the rise. Its strength is a good global reputation that has enabled it to compete effectively. It also has capabilities in good structures and adequate human resource.

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