Internal and External Environment of Apple - Case Study Example

Apple is an American multi-technology company that has its headquarters in Cupertino, California. It designs, develops and sells consumer electronics, computer software, and another online service. The hardware services produced by this company include iPhone smartphone, iPad tablets and personal computers such as Mac. The consumer software by Apple are macOS, and Safari web browser. The company was founded by Steve Jobs along Steve Wozniak on April 1, 1976. Their initial objective was to sell and to develop personal computers. They incorporated the company like Apple on January 1977. After this, they shifted their focus to producing consumer electronics. Currently, Apple is the largest information technology company in the world.

The objective of this report is to make the company study the power of both internal and external environment. For the company to achieve the top profit rather than making a loss, it has to analyze its internal and external environments critically. As a big profit making company, its key strengths and weaknesses have to be examined based on customer satisfaction. In this case, external factors are those beyond the control of the company. By use of SWOT and Five Forces analysis, we find the strengths and weaknesses of Apple Company. Primarily, the most dangerous threat to the company is the opportunity to win in the competitive market while putting into account various economic, social and other technological factors (Heller, 2001).

Internal environment

In my analysis using SWOT technique, I summarized the core issues from the business environment that are most likely to impact the strategy on entire development. Thus, in this case, strengths and weaknesses are considered as part of company’s internal environment. On the other hand, opportunities and threats forms the external business environment (Kleven, 2007).

Strengths

Since the company has diversified from generating personal computers, it also enjoyed other sales and managed the flow of cash. Because of this, it has been rated as the number one brand by Forbes for having the biggest capital. The company is endorsed as being the brand producer. Because of its high recognition, it is the founder of creativity and innovation. Therefore, it has increased its investment over time. Towards strengthening its revenue, it has branded direct sales branches at locations with high traffic. Because of this, it has enhanced its brand recognition. Moreover, every brand they initiate is user-friendly, and it is easy to use and maintain (Linzmayer & Linzmayer, 2004).

Weaknesses

Being the world’s leading information Technology Company, it has higher responsibilities as well. Like other business entities, Apple is also facing problems within and outside environment. Focusing on the internal analysis, I found that it has a robust strategy for the promotion of direct sales. Despite channeling these sales, they still lack behind. Because of this, so far they only have 13 countries having direct sales. Apparently, one of the weak areas of this company is the dependency on iPhone and iPod. It depends on this because it gives out the overall sales and also dominating in the industry. Another factor that brings Apple down is its hardware products that only supported with iOS that make it difficult to use. Other products competing with Apple use Android that does not have such complicated issues (Lüsted, 2012).

Products by this company are believed to be luxurious and therefore carries premium prices. To the ordinary person, they may prefer spending money on a product that is more productive rather than purchasing Apple product. The loss of the manager brought a bigger gap into the company. Therefore, the new manager has to change the philosophy and the phase of the business suit both the working environments. Another weakness that the company did was to decline the sales rise. Due to this, it caused the market to diminish the intended share (O'Grady, 2009).

External environment

External environment in this analysis can be categorized into categories. In this report, we will focus on political, social economic and technological analysis.

Political analysis

The company is exposed to many political challenges. As a leading company, it has a good number of contracts and suppliers around the world most likely in Asia. Outside the United States, the company has major distribution centers that give it more revenue. Because of this diversity into many countries, any political insurgency may result in exposing the company to great danger. Also, Apple has had a political pressure with its suppliers and workers thus brought suicides against one of the biggest providers. Foxcom in one of Apple Company. According to research, it was recorded to be giving longer working hours thus bringing stress to workers. In May 2010 two workers from Foxconn died and sixteen others injured in an explosion (O'Grady, 2009).

Another research conducted by SOMO Company showed that delta electronics has more than 5000 workers registered in a union. Despite being in the union, they do not see any importance thus making Apple be advocated into more political risk. It is clear that political challenges by Apple are not confined to a broader infect, but it faces legal stress too.

Economic analysis

Being the world’s advanced economies, Apple felt the heat because Countries such as America, Japan, and Europe were recovering from the global recession. Furthermore, the development of world’s economy was reported to be relatively slow in 2012. The growth was expected to have a positive growth the following year. Other crises have affected Apple Company economically. For instance, the change for the sales in America region for the current year was 9 percent in 2012 and 2013 as compared to 2011 and 2012. Another crisis to this company is the fluctuation of Euro due to fiscal problems (Heller, 2001).

Social analysis

Historically, Apple as a company has been initiating series of changes in its products to satisfy and fulfill the expectations of customers. To do so, it has to make more acquisitions. Due to this, the company has established a partnership with other prime electronic companies to enhance its social encounter. It has worked with Sony, Motorola, Philips, and AT&T. The sales were recorded to be higher by percentage in India in 2013 that forced this firm to create franchises and make investments in India. From this, it showed a rationale depending on the growth strategy (Heller, 2001).

Technological analysis

In the past decades, information technology has been rated as the highest earner for the past decades. The earning favored only companies that made and had proper innovation. By broader perspective, Apple is a base setter consumer in the field of electronics and having an aggressive philosophy on innovation. Due to its unique offer in technology advancement, it has retained 49 percent of its customers. Despite retaining, it has converted 20 percent more customers to adopt its technological innovations. In China, Apple cracked a deal that brought 760 mobile subscribers into their circle. Because of this, it gave Apple an immense competitive advantage to the world thus being rated as largest in the growing market (Kleven, 2007).

For Apple to gain more market, it has to invest more and more on R&D. Despite Apple products being unique, it has to focus its attention on the screen size. The idea that makes this product famous is the one floor of software application thus making it being a third party software. Due to this, it brings greater risks to its continuation with the company.

SWOT Analysis – External environment

Opportunities

Apple iPhone has a plentiful of interventions since its implementation. In recent statistics, it shows that iPhone is still the leading in the software and electronic manufacturer. Further contract signed by this company with China has and most definitely will open massive opportunities in the growing market. The company has an ambition of creating a wearable product made up of glass and would be a bigger asset for this endeavor. It would give an impending competition to Samsung because of its unique martial inventory. Apples Goodwill, who is worth 1577 million dollars, is one of the talented core personnel’s that the company has. If another competitor might be having the interest of having him, they may not afford to pull him out of Apple. Therefore, Apple as a management retains this talented human as a resource knowing that in return, they deliver creativity and innovation to the company (Kleven, 2007).

Threats

In any business, the threat is a competitive nature. The majority of the competitors that Apple as a resource face is that they venture into lower supply margins. Because of this, they end up generating lower profits and breaking the negative pricing. Apple company out wins competitors because it has its software and it pricing strategy that is cost effective. Also, many of the competitors come from Asian countries and therefore economic and political challenges causes them to have a shortage in supply hence lowering production cost. Due to continuous innovation, Apple has remained top in the market share and also pricing has been maintained (Kleven, 2007).

For Apple Company to preserve its position as being the best brand, it has critical analysis and strategies that put in place. These strategies are premium pricing, low cost, product segregation, low focus on market share and low shareholder return policy. Being among the most successful brands globally, it has faced a lot of critics on implementing its strategies. The apparently criticized approach is premium pricing. In the product market segment, Apple prices are higher making it harder for the average people to purchase. Unlike, the other main competitors are consistently working on the cost minimization strategy. An example of these competitors is Google and Samsung. Via patents war, Apple is believed to be the setter and cheapest in the marketing strategy (Kleven, 2007).

Conclusion and recommendation

Apple Company has its technique of waiting so as to bring the full package. The package targets the niche market while giving a greater focus to profit margins. In selling their products, it is stressful and in the due process it gains the highest customer satisfaction ratio. The only recurrent problem with this company is that primary consumers are not able to buy their products due to higher prices. Apple Company has faced many confrontations. Most of these are to have the possibility to human turnover, criticism related to governance and other issues such as not being socially corporative. In my recommendation, Apple along other cost-lowering strategies, it has to work on lowering the price of its products. The company has to work on looking forward to Blue Ocean strategy so as to favor maximization of profit and the goal of the enterprise. To reduce the future threat, it has to increase its investments to sufficient funds for both innovation and investment. The company also has to broaden the board of directors to improve corporate governance.