The following report would outline the discussion on the PEST analysis of Apple Inc. The PEST analysis is a strategic tool for analyzing the external environment of the industry in which Apple operates. Apple is the world’s most recognizable consumer electronics brand. The main business operations of Apple are designing and manufacturing the electronic devices that include tablets, smartphones, television sets, music players etc. Apple operates on a unique business model under which the company designs and writes its own propitiatory software and it offers its own designed and manufactured operating system that is IOS software for all its devices. The business model of Apple is very successful as it records revenues of $224.34 billion in the year 30 June, 2015 (Apple Retail, 2019).
There are certain political factors that might affect the working of Apple and its unique business operations. Apple is heavily dependent upon China for manufacturing of low-cost products. But in China, there is growing political unrest and also the US is restricting the Chinese imports as the relations between China and the US are not strong. This is negatively affecting the manufacturing of Apple products (Apple Retail, 2019). Alternative to Chinese manufacturing, the cost of manufacturing in other states would be high for Apple. Thus, political unrest in China can negatively affect the business operations of Apple. In addition to this, with the political administration of Donald’s trump, the government is deciding to put high tariffs on Chinese goods thus discouraging imports from China. This would directly relate to the high manufacturing cost Apple.
The economic instability can put negative pressure on the companies and their business operations. The crises and economic depression are directly related to the low revenues of the companies. For example, in the year 2013, there was an economic recession and the global economy has shown an economic slowdown for the period. The sales of Apple had declined to a great extent in the year 2013 from its previous year in major countries. For example, in the US, the sales of Apple had fallen from 50 per cent to 9 per cent, in Europe, the sales of the Apple had fallen from 31 per cent to 4 per cent and in China, the sales of Apple had fallen from 78 per cent to just 13 per cent. In addition to this, Apple is also affected by other economic conditions such as the high inflation rate in the US. Due to the inflation conditions, Apple was forced to make payments of approximately $137 billion (Apple Retail, 2019). Along with this another economic factor that is negatively affecting the business of Apple is the rising cost of labour in China. According to Forbes, the standard of living of Chinese people are improving and they are demanding high labour for paying their specialized services which is adding up to the cost of manufacturing of Apple.
Paying attention to social factors is very necessary for Apple to conduct its business in an effective and efficient manner. Apple is making efforts to continuously provide the goods and services as per the growing needs and demands of the Apple products among the consumers. For example, Apple has acquired various organizations such as Topsy and Embark Prime Sense and also it has formed a strategic alliance with many organizations such as Philips, Motorola, AT&T and Sony etc. for making the products as per the needs and demands of the consumers in an effective and efficient manner. In addition to this, the growing demand of mobile phones and the increased usage of social media and mobile devices has provided enormous opportunities for the organization to expand and develop its business operations. Apple is constantly looking ways to meet the growing demand of the consumers by launching various products such as iPhone, Apple watch, iPad etc. and other digital devices to satisfy the needs of the consumers (Apple Retail, 2019).
Apple is operating its business operations and devices in the technologically advanced and distinct software. Apple is operating on IOS software which is designed and developed by Apple itself and which makes it different from other smartphone brand software that is Android (Apple Retail, 2019). The technologically advanced IOS software is the major strength of Apple and is evident that it is following Differentiation strategy of Porter’s generic strategy (Thomas, 2007).
So, in the nutshell, it can be concluded that Apple has various threats and opportunities as identified by the external market analysis with PEST analysis. The report covers the explanation of each element of the PEST analysis that is Political, Social, Economic and technology and how these factors are opportunities or threats for Apple and how Apple is exploiting them.
Apple Retail (2019). Official Apple Store U.S. - Mac, Apple Watch, iPhone, and iPad. [online] Apple Retail. Available at: https://www.apple.com/us_kiosk_5000012/shop [Accessed 18 Feb. 2019].
Thomas, H. (2007). An analysis of the environment and competitive dynamics of management education. Journal of Management Development, 26(1), pp.9-21.