PESTLE Analysis essay
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The company incorporates most of its product lines into the company’s mission statement. It indicates that the company has fully evolved into a digital entertainment corporation from the initial computer oriented company. In addition, Apple is right concerning its strategic position and boasts as a leader in the global entertainment industry. This is indicated in the company's annual reports that show i sales figures; the revenue reached a tune of 9.6 billion in the year 2007. By 2005, the company managed to sell more than 3 million songs and the value is still expanding tremendously. However, the music industry loses approximately US$ 4 billion to piracy each year. This number addressed the biggest challenge the company is facing, most consumers are reluctant to pay for songs, and thus, the company lost its competitors who are offering music at reduced prices.
This is evident in the increased number of internet frauds, as well as, the increased piracy and code hackers. In addition, the other problems, as well as, failure to integrate the products with readily available and existing technology are some of the obstacles that the company is experiencing as an organization, but they are not very critical.
PEST analysis is an important tool that helps to determine the current situation of a company. It assists in identifying the potential influences, of the political, economic, social, as well as, technological factors that are significant benefit to the future operation of the company. According to previous studies, the political influences can be attributed to the contribution of the community. Previous studies have reported that in the year 2007 Apple Inc. obtained over 50% of revenues outside the U.S.
The company designs, manufacturers, develop, and market many products as well as service lines. The products are sold to education sectors, consumer’s creative professionals, businesses and government customers. The company seems to display numerous products and conduct business on various segments. Therefore, it is legitimate to wonder what the company is actually perfect at. The company is involved in too much diversity, and this is the main reason that led to the crush f the company during John Scully era. Politically, the firm is also affected by the bad international relations that lead to wars and terrorism. These factors may have greatly affected the operations of Apple Inc. The political influences are not easy to control, according to company’s experts. Moreover, the company manufacturers most of its parts and products in countries such as Ireland, Korea, Czech Republic, Cork, and China. These countries are outside the U.S. Hence political rivalry between these countries and the U.S, and competition may have detrimental impacts to the company.
In the previous decade, Apple has managed to open very many retail stores. These were successful launches that have been potentially beneficial. The Apple stores have been causing a great harm to the resellers and this may detrimentally affect their success. Considering that the company resellers’ account for approximately half of the domestic sales, the company is facing huge risks of cannibalization hence, may deeply suffer. The economic influences also consider the global economic depression as an important economic influence that may affect Apple Inc. The major factors include the increased inflation rates while consumers’ income levels never recorded any significant increases. In addition, unemployment rates increased. The condition has made consumers to spend less on luxury products, as Apple’s products might be viewed. In addition, the U.S dollar may have lost value. However, this is not important factors that influence the performance of the company. The corporation has purchased its foreign currency, in order, to minimize the economic impacts of inflation on the company. As the U.S dollar has been depreciating; hence, greatly affecting the U.S currency as well as revenue in the international market.
Based on this analysis is important to know how Apple Inc. managed to have so much cash. It has been noted that having too much in reserve may have an implication that the company does not understand how to allocate it or there may be risks associated with the future potential business. Moreover, the company is also operating in a global environment. Globalization involves the interaction of people on a global basis. Currently, the world cannot be imagined without the modern technology devices such as mobile phones. Globally, the company is seen as a pioneer in the technology industry, not only because of its wide usage, but also quality and design. Moreover, another important social influence is the music industry. Over the last decade, the company has virtually set itself in the media and cyber space. Apple is a company that has developed itself so much and has become one of the biggest virtual media store. With its iTunes, the company is a head of competition in this direction. However, the piracy in the web might pose significant threat to the company but most governments have legislation to deal with Internet fraud.
Technologically, Apple is among the few companies where the fortunes are considered to be intricately tied to an individual in charge. The star quality as well as, the visionary talents associated with the late CEO has immensely contributed to the company’s success. Many argue that, the death of Jobs caused many succession problems to the future of the company.
The technology market for the computers and the mobile phones has become very huge. This has added more competition in the IT market. Moreover, technology innovations and changes are very fast; hence, making the product life cycle very short. Investments in research and product development have seen Apple ranking high in the market, regarding innovation. This includes believing in work first and other elements such as, competition to follow. This is beneficial because innovation forms a big part of the company’s brand and has shown to pay out.
For a more effective evaluation of the company’s strategy that leads to its success, it is important to examine the industry analysis through the Porter’s five forces analysis. It is vital to define the industry the Apple Inc belongs to. Initially, it just used to be in the personal computers and the software business but presently, the corporation has expanded the business into and entertainment industry that incorporates the MP3 player, online music store, as well as, mobile phones. Although Apple is not specialized in one scope of products, such as, the PC. But the scope of the products and services that company is dealing with is very complicated. Therefore, it is important to consider the corporation's products and services in terms of the PC, MP3 players, the online music services, as well as, the mobile products.
Through a view of Michael Porter’s strategic framework, Apple is a company with several advantages that has made it be seen a long a trajectory of high performance coupled with strong growth and healthy profitability. These factors are attributed to the success of the company. In this analysis, the five forces framework is employed to reinforce the investment recommendation on the company. Moreover, this tool also highlights some areas that should be taken seriously by the investors. This section, offers both hindsight and forward looking analyses in the examination examining the advantages that the company has successfully developed as well as scenarios under which the advantages it has gained can be eroded.