Political, Economic, Social, Legal, and Environmental Operating Environments - Apple Company - Case Study Example

EXTERNAL ENVIRONMENT IN THE APPLE COMPANY By Name Class (Course) Instructor (Tutor) Institution The City and State The Date EXTERNAL ENVIRONMENT IN THE APPLE COMPANY The main objective of this essay is to identify the political, economic, social, legal, and environmental operating environments of several business units in the Apple company. These business units to be analyzed are iPad, iPhone, and MacBook. The term operating environment refers to all the conditions, entities, events, and factors surrounding an organization that affects its operations, decision making, and determines its opportunities and risks. Apple Inc. is the best-known company that deals with consumer electronics brands. Apple’s continued success in the world of electronics is directly linked to its effectiveness in addressing the external factors surrounding it (Carlton & Annotations-Kawasaki, 1997: 123). PESTLE Analysis of iPad Political - The term political refers to anything that relates to the government or public affairs of a given country. Apple company has decided to be a monopoly in the development of operating system used in iPads. This means that an iPad cannot use any another operating system besides that which it was designed to use. Being a monopoly Apple has built Apps which cannot be applied anywhere else and it has created a new target market. Apple iPad was used in the political arena when former USA President Obama was campaigning in June 2010. They planned to use iPad apps to interact with voters like providing election news, updates on local events, and even calling the congress representatives (Schneider & Frey, 2009: 168). This idea helped the iPad business unit to gain upper hand with its competitors. Economic - The term economic refers to anything that is related to economics or the economy of a given place. Apple is facing criticism for exploiting its customers with high pricing strategy during these tough economic conditions. The company does not recognize its loyal customers as they are given no special treatment and they face tough pricing decisions as others. The price of an iPad has risen significantly over the past few years. When Apple introduced iPad into the market it was costing $499 but now in some of developing countries like India, it is retailed at $544. Apple iPad being a premium it has to target high-end users but the company faces the challenge of low 3G service in most of the countries which have reduced the total sales (Reganold, 2001: 926). Social - the term social refers to those things that relate to the society or its organization. The way people thought about an iPad has changed since it was introduced into the market. The company with the help of more the 20 million iPad users is changing the lives of many people who are around the iPad. Many users get in touch through social media platforms and also the brand is capable of consuming all types of media which give the users high appeal by the help of sound, touch, and motion. Users are given the opportunity to interact with the banners that are on the editorial side and it is a good strategy to attract lots of publishers. The iPad is used even in the hospitality industry where it is used in rooms to order drinks, food at their convenient time. Airlines schedules are also availed to customers through this platform (Shane, 2003:260). Technological – the term refers to anything that relates to technology or it uses technology. Apple iPad faces a stiff competition in Android from Google and other companies such as Toshiba, LG, and Samsung who have started equipping their brands with IOS operating system which is mostly installed on iPad (Heng, 2005: 46). Apple iPad is ranked the highest in tablet company because it has more than 140,000 apps. This makes and iPad to be the most wanted product even though reports say that many users do not know most of its main features. One sector that Apple iPad has failed terribly is the use of Bluetooth to transfer data together with the multitasking capability (Hitt, 2012: 140). It was hoped that an iPad would replace laptops but that have not been the case and this fact has severely affected the sale of iPads. Apple iPad has really boosted the health sector where data from an electrocardiograph (ECG) will be sent to its destination through the new iPad app called Airstrip Cardiology. Legal – the term legal refers to anything that is based on law or that which is concerned with the law. Apple iPad has been sued by Fujitsu and they are asserting that they started using the word iPad long before the Apple company. Others feature used on the iPad like eBook reading using Amazon Kindle have also faced many court cases as it is claimed that the author is not paid by a user who reads his/her book. Apart from this few discrepancies no other serious issues have risen but only time will tell if iPad will face more legal consequences (Meek, 1995: 560). Environmental – the term environmental refers to anything that relates to the natural world and the effects of human activity on its condition. Apple iPad has done a great job by doing an environmental impact analysis and it uses methods that manage the environment in the design and the production process (Louch, 2009: 127). The company has also done a good decision in choosing the materials that are used in manufacturing and it has also reduced consumption of energy by 80% in the manufacture of iPad. In the manufacture of iPad recyclable materials like aluminum and glass are used. To preserve the environment Apple company is designing iPads with the following features; Arsenic-free display glass, brominated flame retardant-free, PVC-free, mercury-free LED backlight display and recyclable aluminum and glass enclosure (Linzmayer, 2004: 158). PESTLE Analysis of iPhone Political – most of the components used in the production of iPhones are supplied and manufactured by different partners in the US, China, Europe and Asia. The final assembly of iPhones is done majorly in Asia. Transportation or manufacturing in these countries may be disrupted by many reasons political issues being one of them. Issues like war, political uncertainties, and terrorism as a result of poor political decisions may have severe effects on materials used. Delivery delays to the site of manufacture are one of them and this could hurt the iPhone company in the future. Political issues not only do they affect the company but also, they affect the suppliers, customers, vendors and channel partners as they experience terrorist’s attacks and other hostile attacks (Gallagher, 2011: 39). Economic- Apple’s iPhone retail performance is being affected seriously by the global recession. The global economic conditions could have severe effects on the iPhone company’s suppliers and this will jeopardize the ability of the company to obtain components to be used in the manufacture and packaging of iPhones. This makes the company experience supply shortages which will increase the price of many components used. The iPhone business should be prepared to experience a drastic decrease in revenue as there are many new and innovative brands entering the market and are available to customers at reduced cost and deliver greater value. With the US dollar expected to become stronger in the future iPhone unit should be prepared to get reduced profits. Social- the iPhone company requires it to use and keep personally identifiable information (PII) for its business partner, customers, and employees. The information may include tax identification codes, account information, information about what they like, phone and telephone numbers, email addresses, addresses, and their names. The company being able to keep all this information could be made a target through cyber-attacks because of its high profile. Technological- the growth of mobile technology has helped Apple increase the sales of iPhones but it has greatly affected the MacBook sales in return. The smartphone business has seen Google come up with amazing products like Nexus and Pixel (Jarvis, 2011: 120). These products pose a great threat to Apple’s iPhone business unit. Most of the Asian markets is dominated by Google and Samsung because they offer the same technology as Apple at much lower prices (Lüsted, 2012: 156). Generally, most of Apple’s competitors have upped their game in the past years and are taking over the market that was dominated previously by iPhones. Legal- Apple iPhone business unit have been sued by Cisco and they are asserting that they started using the word iPhone long before the Apple company. Controversies like this one could affect the iPhone business unit negatively and it could experience a drop in total sales. The iPhone sector is also subjected to many laws and regulation that affects its domestic and global operations in many countries (Solomon, 2004: 234). These laws and regulations affect the business units in areas of digital content, consumer protection, promotions, product and service quality, intellectual property rights and infringement, tax, health, and advertising (Abril, 2011: 200) Environmental- The disposal of used iPhones and waste generated during the production process is a massive problem to Apple company because these wastes contain harmful chemicals like lead and arsenic. If not well recycled or disposed of these waste products can be very dangerous. The company is therefore forced to invest a huge amount of its capital to discard iPhones that use lithium batteries which only adds the expenses incurred. The iPhone business unit should focus its wealth in the creation of renewable energy so as to reduce the effect manufacturing process on the environment. To ensure this is done the company is planning to add 170 megawatts of solar energy on top of what it had previously. Focusing more on environmental factors can either affect the brand of a company negatively or positively (Vecchiato, 2012: 440). PESTLE Analysis of MacBook Political- political unrest in countries where MacBook has based its operations can severely disrupt the supply chains and total sales. To maximize its profits Apple shifted most part of its manufacturing to china because of the cost of labor and essential raw materials needed to manufacture MacBook are cheaper there. This makes China making a good location to do mass production but the political unrest that is being experienced in recent times is disrupting the manufacturing process. This leads to increased cost of manufacturing. Also, the US government has imposed bans that prevent the importation of Chinese products so as to promote the manufacturing industry in the country (Krasner, 1978: 198). The imposed ban on Chinese imports has hit the MacBook business that is based in the US hard since more local manufacturers of laptops and PCs flooded the market. Any attempts by Apple to establish its base in china will be very costly considering that China may not support foreign investors. The Higher cost of production means the price of MacBook will increase and scare away customers. As a result of growing nationalism in China, an anti-Americanism movement may result reducing the market share. The political environment between China and US will even get worse as Donald Trump has vowed to slap higher tariffs on China and this could force Apple to relocate to the US (Bradsher at el, 2010: 145). Economic- MacBook is well known for its premium prices meaning that it cannot survive the lower end market. Because of the premium prices that MacBook possesses it has been difficult to penetrate the Indian market that is currently dominated by Samsung brands. MacBook total sales are greatly affected by the fact that in the developed world most consumers are very sensitive when it comes to prizes. A country like China where MacBook gets its cheap labor may decide to increase the labor wages in the near future which will translate to increased cost of production and decreased profits (Noe at el, 2006: 200). The level of competition has risen in the past few years as more and more companies are entering the market of electronics. MacBook has lost a large part of the market it was commanding to brands like Lenovo in laptop and PC sales which have affected it greatly. The rising value of US dollar increase the exchange rates which will increase the cost of MacBook. It is very expensive for MacBook to do business in important markets like Europe and China considering the huge difference between the dollar and other currencies. If there is no any increase in the value of US dollar MacBook would announce an annual revenue of $ 52.8 billion but instead, it reports a revenue of $49.6 like it happened in the year 2015. Social- the increase in population growth and urbanization in countries like China and India may be very favorable to MacBook since it means increased market in which to advertise itself. The level of education in most of the African countries has decreased the sales in those areas since people do not have the knowledge of using a complicated brand like MacBook. The buying habits of a particular target market determine the total sales of any product. Good buying habits result in increased sales which translate to increased revenue and profits. Technological- the technology market is becoming bigger and bigger meaning more and more competitors of MacBook. To fight competition companies, innovate much faster meaning that the new technology will dominate the market for a very short time before being ousted by another. For this reason, MacBook is forced to upgrade more often so that it can compete well with other brands. The best example of this case is that MacBook installs its own brand operating system an act that increases the cost of production (Andre, 2003: 145). Legal -MacBook is a global tech giant meaning that it is exposed to many and stiff legal factors and litigation. Any kind of business faces a major challenge in laws and regulations. Laws and regulations are meant to be complied with or the company risks losing a huge chunk of profits through fines. These laws and regulations may be product related, taxes, labor, and even environmental laws. Tech giants like MacBook face the challenge of intellectual property laws and patent-related regulations (Bently & Sherman, 2014: 29). Environmental -the external environmental factors are very important and show a business sustainability and product energy efficiency trends. The manufacturing process of MacBook generates a huge amount of greenhouse gasses. The China initiative to cut the greenhouse effect brought by MacBook activities by limiting the use of fossil fuel will increase the cost of electricity in the country. This eventually will increase the cost of producing MacBook. MacBook is getting more concerned because of the pollution and environmental side effects coming from manufacturing facilities. This is forcing MacBook to put aside a huge chunk of revenue for environmental management which will lead to huge expenses. References Reganold, J.P., Glover, J.D., Andrews, P.K. and Hinman, H.R., 2001. Sustainability of three apple production systems. Nature, 410(6831), pp.926-930. Bently, L. and Sherman, B., 2014. Intellectual property law. Oxford University Press, USA. Schneider, F. and Frey, B.S., 2009. 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