The Internal Environment of Apple Incorporated - Essay Example

?APPLE, INC. Introduction Apple Computer was incorporated by Steve Jobs and Steve Wozniak in 1977, and became listed in the stock exchange in 1980. Today, it continues to be engaged in the design, development, and distribution of personal computers and servers, communications equipment, network solutions, portable digital music players, and their software, support services, and accessories (Datamonitor, 2010). The headquarters of the firm is based in Cupertino, California in the US, but operates internationally and has 34,300 employees. Its products include the Mac computers, the iPods which are now the most popular portable music players, the iPhone mobile handsets, and the iPad portable multimedia devices, and also software products such as iTunes. Apple’s internal environment The internal environment of Apple Inc. is described by its product development process that is part of its marketing management. The innovations development is so centralized because Steve Jobs is known to be a perfectionist and wants all innovations done his way (Finke & Mallin, 2010). “Apple's engineers spend 100% of their time making products planned by a small club of senior managers--and sometimes entirely by Jobs himself” (Manjoo, 2010). Because Jobs insisted on approving of all innovations, backlogs happen in product development. The engineers realized that Job wanted Apple’s products to be consistent with his vision for the company. Apple designs its products for the “high-end mainstream” market. To the innovations team that had built the Mac, they were instructed by Jobs to design the Mac so it would “look like a Porsche.” What he actually meant was that people whom Apple would want to attract to buy the Mac are the type of people who would buy a Porsche (Manjoo, 2010). Another characteristic of Apple’s marketing is that they are less concerned about the difficulties of technical design and more about the user experience their products create. For instance, the iPod is able to store thousands of songs, because the company wanted the user to access any of his favourite songs anytime without carrying a lot of cassette tapes or disks around. So they designed an entire new hard disk which no other portable player had at the time. The Apple slogan says, “Think Different,” which is why the company is capable of developing a cult following among its customers who have become fans. It employs mysteriousness, secrecy, and image building to make its customers feel they members of an exclusive club. The company even uses sensory cues, such as the use of white ear plugs for iPods which has become some sort of standard wear for the youth and adults as well. Together with the MacBook’s back panel and the Mac’s startup sound, these are all symbols that were not at all accidental, but carefully thought out. "Apple's brand is so powerful that for some people it's just like a true religion," according to brand consultant and author Martin Lindstrom (Manjoo, 2010). Apple’s external environment Using the PEST model, the external environment of the company may be described as follows: Political Environment The political environment in most countries, including the U.S., treats big businesses in a negative light because of the point of view that big businesses take advantage of consumers in order to make a profit. This suspicion is sometimes based on reasonable grounds; for instance, in 2007 at about the height of the economic crisis, Apple’s CEO Steve Jobs was implicated in a scandal the Securities and Exchange Commission (SEC) had been investigating, concerning the handling of options grants, which consists of some sort of anomaly in the financial market (Hesseldahl, 2007). The government has also established tighter policies concerning compliance of big business companies and multinationals with standards of sustainability, ecological compliance and the control of pollutants in the environment. Since Apple is one of the largest producers of electronic equipment, it is required to abide by policies on the proper manufacturing processes and disposal of toxic wastes produced by its plants. The political environment of most countries presents also some advantages. Developing countries have long established policies on the development of modern communications and transportation systems in order to improve the chances of economic growth. Policies also include the modernization of the country’s technology and the improvement of educational systems. The products of Apple, Inc. are exactly along these lines. Apple enhances the transfer of information and the lines of communication with the world. There is also a drawback however, in those countries that might not be open to the free flow of information or the interference caused by the Western culture in their own national cultures (Apple Form 10-K Annual Report, 2010). These are all influential in the prospects of Apple products in their countries. Economic Environment The recent global recession affected most businesses and caused them to either close down or reduce their scale of operations. In the case of Apple Inc., though, business remained strong because of the marketing success of the firm’s new developments in its products, the iPhone, the iPod and the iPad. The exceptional design of these products makes it possible for customers to acquire them for a price reasonable for their value. The company requires on its suppliers to be able to deliver quality materials on time, though, and hopefully suppliers will continue to do so and not also fail or downsize in the weak economy. One good thing about being a multinational is that when the economy is weak at the home country, it is possible to offset the potential losses with earnings coming from the sale of its product in other countries. Many of the countries with emerging economies like China and India are very large pools of consumers that are not very much affected by the economic crisis of the West. Apple has the choice of selling some of its products in these areas in order to maintain high sales internationally if local sales are slow. Social Environment The world has become quite small due to the modern means of communication and the development of social networking. There has been a greater demand for electronic communication devices that can link onto the internet because of the great popularity of Twitter and Facebook as a means for people to keep in touch with relatives and friends. Aside from this, the value offered by the new Apple products makes it easier for friends to engage in two-way communications directly through mobile phone technology and personal computers that can transmit images and videos. The use of modern means of communication and image transfer has aided in educating and informing the masses. This is what occurred during the recent uprisings in Arab countries and the popular demonstrations in favor of democracy. In other words, sociological phenomena point to the fact that people have developed the need to keep updated with what is happening in the world. The use of computers has transformed from being merely a word processor or business tool into a tool that helps keep people in touch. This desire will continue to fuel buying into the latest technology, which Apple is well positioned to provide. Technological Environment One of the strong negative factors in the technological environment for Apple and other manufacturers of electronic devices is the rampant presence of pirated technology that copies and duplicates the design of legitimate suppliers without the proper authorization. This occurs in countries where the protection of patents was poorly enforced because of the lack of legislation or treaties between countries. Recently there has been a strong boost in the protection of intellectual property rights, with the signing of the TRIPS (Trade Related Issues on Intellectual Property Rights) Agreement which was agreed to and signed by member countries of the World Trade Organization (WTO). The agreement states that the countries who form part of the WTO agree to observe the standards for the protection of patents and copyrights, even those that have been issued in other countries. This provides an incentive for the continued research and development of technological breakthroughs, and even foreign companies will be encouraged to subcontract jobs to developing countries because they will feel confident that their patents will be protected against pirates. Finally, there is also a need to constantly develop new products that requires continuous cutting edge R&D because of the stiff competition in the industry. This requires a lot of money on the part of the company to invest long term in its R&D effort. Conclusion Apple Inc. began in 1977 with a tradition for innovation, and it still continues today. Its internal environment is dominated by a strong brand image and a reputation for new products. Its external environment is full of risk because of the fast pace of technological change which it must cope with. Because it deals with products that enable people to communicate personally as well as surf the internet, information content plays a huge part of Apple’s product development. This capability may be subject to government standards and regulation. But Apple has lots of opportunities to grow, even during the worst economic recession. Bibliography Apple, Inc. Annual Report 2010. and Apple Form 10-K Annual Report, 2010. Accessed 16 June 2011 from http://files.shareholder.com/downloads/AAPL/1294453792x0xS1193125-10-238044/320193/filing.pdf Datamonitor: “Apple Inc. Apple Computer, Inc. SWOT Analysis”, Datamonitor, May2010, p1-9 Finkle, T & Mallin, M L 2010 “Steve Jobs and Apple, Inc.” Journal of the International Academy for Case Studies, 2010, Vol. 16 Issue 7, p31-40 Hesseldahl, A 2007 “Apple's Sweet Profits and Sour Legal Woes.“ BusinessWeek Online, 4/27/2007 Manjoo, F 2010 “Apple Nation.” Fast Company, 10859241, Jul/Aug 2010, Issue 147 Read More