Apples Technological Software Sector - Essay Example

Apple Inc. PESTEL Analysis of Apple Inc.’s technological software sector Political Factors The company offers the products across five operating segments: Japan, Americas, Europe, Asia Pacific and retail. This implies that Apple Inc. manufactures its software in different parts of the world other than America. Some international issues are beyond the control of the company especially where it operates on diverse geographical areas. This could include war of terrorism, political issues, and geopolitical instabilities, natural and man-made disasters, among others. These reasons can disrupt the operation of particular countries especially where final assembly is done in a different country. There are also problems of transit from country to country caused by manufacturing and logistics of different countries. Economic Factors Economic factors are more inclined in the differences in currency of different countries which manufacture and assemble its technological software sector. After recession, most of the economic conditions of the countries involved improved significantly; however, this came with the increase in the prices of oil and consequently inflation. This inflation hit most global markets reducing the purchasing power of the consumers. As such, most of its technological software was considered a luxury as most of the consumers were unwilling to buy them. Furthermore, USA and Europe which are the major operators of Apple Inc. experience high rates of unemployment recently which reduced the sales of their technological products. The volatility of the currency exchange rate between countries makes the economic condition very unpredictable. Social Factors There is a global call for all the manufacturing companies to produce products which are recyclable if not biodegradable. This move is propelled by many Environmental protection and Health & Safety initiatives and organizations which impose regulations and laws of environmental protection. This has been the fate of many countries where Apple operates and thus it affects its production by raining its production costs. This is unfavorable to the financial conditions of the company. Europe and Canada are some of the most hit areas which have been affected as the regulations require production of recyclable products. Technology Factors Technology is not static and thus requires Apple to be on the lookout for new and improved models. The fast technological changes coupled with the intense competition especially in the smart phone industry causes Apple to spend a lot of money on improving the quality of their products. This involves massive research and developed especially given the short nature of their products life. The production process also requires that Apple to be entirely involved in the production procedures and continual innovation of their technological software especially those in the computer and smart products like iPod and iPhone. More research and development affects the financial performance of the company negatively. Environmental factors Apple sells most of its technological software to many businesses and government customers of the countries involved in the production of its products such as Japan, Americas, Europe and Asia. This leads to massive deployment of the software to the market as it is very compatible with theirs. The reason for deployment other than compatibility has to do with the high quality of the technological software performance, ease of use, high productivity and easy of assimilation into the broader market. Legal factors The legal requirement of the countries the company operates in affects all its operation in varied measures both in the local operations and the international operations. This is because, those regulations and laws affect the activities of the company when it applies to any of its operation ranging from labour laws, ownership of digital content, promotions and advertisements of products, consumer protections, tax, import and export requirements, anti-competition, anti-corruption, health and safety among others. These laws affect the productivity of the company which affects the operations of Apple operations on that country and also in other countries. Ansoff’s Matrix Perspective of Apple Inc. The Ansoff Matrix was developed by Igor Ansoff and published in 1957 in the Harvard Business Review. This matrix was highly regarded in the business community due to its applicability of developing strategies for entry into the market, growth and sustaining the market share. The matrix instill widely used today by major international corporations. It not only applies to company’s which want to penetrate the market but also to those who wish to develop and innovate their products. This matrix aims at providing enterprises with the knowledge and the filed experiences of the market situation which will enable them to develop strategies which are more suitable tot their businesses. The different market scenarios catered for by this matrix are; market penetration, product development, market development, and diversification. Apple has been operating the “Market Penetration” for most of it products so that they can strategically enter the market and survive the stiff competition. Being a manufacturer of technological products, Apple faces stiff competition with the power to oust any new product from the market and especially due to established economies of scale from major brands. However, Apple needs to change this strategy and adopt another stagey that will be effective in pursuing growth and development of their competitive position. At the moment, Apple is facing intense competition from the newly introduced iplayer by Google’s which has reduced significantly the market share of Apple’s products. Thus, Apple needs to change its strategy to product development. This will entail refocusing of their resources and capabilities in product differentiation which will enable them to gain competitive advantage from Google. Since the product by Google has immensely brought a negative effect to the market share of Apple’s products, the most effective strategy to be employed here would be ‘Differentiation without price premium’. The product development scenario will not only enable Apple to reclaim the lost market share, but also to consolidate the market more and be more rigid (Simon & Hitt 2003). Product development should also focus on price decrease in the production of the Apple products. Due to the stiff competition in the market, Apple continues to lose most its market share to rival companies due to price wars. Reducing the prices will only lead to loses and thus, the most effective strategy is to reduce the costs of producing the products so that they can translate lower prices to the market without suffering loses (Simon & Hitt 2003). Another strategy which can help Apple in growth of a strong market share ad competitive position will be formation of strategic alliances. This will help Apple to enjoy the benefits of economies of scale due to merger with the already established firms in the market which are more conversant and can withstand stiff competition without losing their market share. This move will also help Apple to improve its operations due to expertise knowledge, increased capital for production of more products at lower costs of manufacturing. The quality of the products will be high, the channels of distribution will be improved and consequently, the market share will be improved. By implementing these strategies, Apple will be strong to compete in the market and will be in a good position to grow and develop (Simon & Hitt 2003). Value chain Analysis of Apple Inc. Value chain in Apple is a source of its competitive advantage. According to Johnson and Scholes, (2002), “The value chain describes the activities within and around the organization which together create a product or service”. The analysis of the value chain of any company helps to understand the competition level of a company with regard to competition in the market. Apple’s value chain can be pursued by looking at the different types of operations it is involves in and how they are utilized to provide competitive advantage (Porter, 2006). Technology and Product Design Apple specializes in technology in most of its products like the personal pcs and mobile phones. The products are remarkably made in stylish designs which are very attractive to the market globally. The technological operating system of Apple is very reliable compared to other providers because Apple has invested a lot in development and improvement of its technology as the core of is operations. Production The sole involvement of Apple in its operations has given it the natural expansion edge for development of its technology. Apple fore-go the opportunity requested by other companies to own the license of Apple’ operating system and thus, they developed their own hardware a n the software which has propelled them in their production processes. For example, the 64 bit architecture utilized in the production of the iPod improved their performance tremendously. Customer Service Customer Service at Apple has been fundamental in the development and growth. Apple values the role of customer service and there has been reservation of cash reverse which were generated at the time the company made unpredictable profits due to massive growth. This has been done by connecting with their customers globally through creation of virtual liking of the customer base. This has also been contributed to by the introduction of superior and upgraded products such as iPods, Macs & iphones which are very marketable in many parts of the world. Apple has also invested much resources and capabilities in their constant quest to update their technical software and hardware. Bibliography Bright Hub. 2010. Retrieved from http://www.brighthub.com/computing/mac- platform/articles/65346.aspx Business Case Studies. 2012. Retrieved from http://businesscasestudies.co.uk/business- theory/marketing/the-extended-marketing-mix-7ps.html#axzz2IVPDeQ3U Evans, M., 2011. Excellence in Financial Management: Course 12: Competitive Intelligence (Part 2 of 2)’. MacRumors.com. 2008. Retrieved from http://www.macrumors.com/2008/02/14/apple- iphones- ease-of-use-encouraging-mobile-internet-usage/ News: Marketing Magazine. 2005. Retrieved from Marketing Magazine:http://www.marketingmagazine.co.uk/news/469532/Mark-Ritson-branding- Three-telltale-signs-agencys-ineptitude/?DCMP=ILC-SEARCH News: The Economist . 2012. Retrieved from http://www.economist.com/news/world- week/21568775-world-year Porter, M., 2006. The Five Competitive Forces That Shape Strategy. Harvard Business Review. January. pp 23-41 Simon, D. & M. Hitt 2003. Managing resources: linking unique resources, management, and wealth creation in family firms, Entrepreneurship, Theory and Practice, 27, pp. 339-351. Washington Post Economy. 2012. Retrieved from Washington Post:http://www.washingtonpost.com/business/economy/apple-a-history-of-one-of-the- worlds-most-valuable-companies/2012/02/29/gIQA1VFVmR_gallery.html   Read More