STEEP Analysis of Apple Inc - Case Study Example

STEEP Analysis of Apple Inc Table STEEP analysis of Apple SECTOR CURRENT Social Demographic – Apple’s key target market after its turnaround in the late 90s is Generation Y that is less religious, delays rites of passage into adulthood, driven by instant communication technologies. Socio-economic - Economic prospects of Generation Y are worse than Generation X or baby boomers largely because of the late 2000s recession and current slow economy. Lifestyle – Generation Y are after personal branding through acquisition of cool items / factor.

Income distribution – Apple targets upper and middle class income bracket. The bulk of Apple’s customers are the middle class which is slowly shrinking in the US as income inequality continues to rise. Technological Spreading of and breakthrough in new technology – opening up of new markets and proliferation of mobile computing technologies in Africa Public supported R&D Projects – in the form of development and deployment of apps by the public for Apple’s growing brands such as iPad and iPhone Development in R&D – advancement in new computing paradigms epitomized by the growth of Cloud computing technologies New patents and products – especially in mobile computing Economic Unemployment is on the rise in Europe and the US, the two large markets for Apple.

Private consumption and available income have gone down in both the US and Europe because of a slow economy. Effects of downgrading of US credit rating by Standard & Poor's rating agency could have a myriad of effects on the US economy such as warding off investors from buying U.S. debt which would increase the US’s cost to borrow money, and consumer interest rates on virtually everything (CNN wire staff, 2011, p. 5). Ecological Carbon credits – there is an increased focus by consumers on the overall carbon footprints of a brand across its supply chain.

97 percent of Apple’s carbon footprint is directly related to its product lifecycle while 3 percent is related to its facilities (“Apple - The Story Behind Apple’s Environmental Footprint,” 2011, p. 3) Energy conservation– consumer electronics are expected to have ENERGY STAR qualification for energy efficient products. Political Development in trade and industry politics in the Association of Southeast Asian Nations (ASEAN): these are the emerging markets that portend to be the next large markets.

ASEAN was not devastated by the 2008 financial recession, and has a growing middle class that fits the Apple market segment. Analysis of Table-1above and its implications for the future As consumers increasingly become more powerful due to globalization, increased availability of better technology, and increased competition, organizations have to find ways to create sustainable competitive advantages. Under traditional management systems marketing was product-based and company focused. Apple derived one of its greatest advantages by finding the right mix of being consumer-focused and product-based.

The first major challenge that Apple will have to contend with is the inevitable aging of its core Generation Y (Gen Y) market segment. Apple must begin to devise how it will remain relevant, probably in the next 10 – 15 years. By then there will be a new generation with new needs to satisfy and an aging Gen Y. Brands such as the Nintendo Wii have been successful in capturing a wider demographic market through the adoption of a strategy called “competing against non-consumption” (Scott, 2008, para. 1). The technological sector could arguably offer the largest threat to Apple’s long-term existence.

Technological breakthroughs especially in the mobile computing arena and Cloud computing could be synthesized to come up with products that are highly competitive in terms of pricing, capabilities, size and coolness. Examples of Apple’s threats are: (1) the iPhone is threatened by the partnership between Microsoft and Nokia (watch out for the Nokia N-series) and Google Android and Samsung (watch out for the Samsung Galaxy tab); (2) the MacBook is threatened by Chromebook (Google and Samsung or Google and Acer); and (3) iTunes is threatened by Spotify.

The global economy forecast on the short term does not look favorable. The decrease in number of jobs available especially for the youth under 25 and the tightening of family budgets have led to an overall decrease in private consumption. Nevertheless, Apple has been recording unusually high profits in this tough economy due to its focus on intrapreneurship, innovation and creativity (Gardner, 2009, p. 2). It seems that consumers still appreciate differentiated, cool products and are willing to pay extra for them even in a tough economy.

This trend would likely continue in the near future as consumers moved from looking for cost-based benefits to looking for higher satisfaction (as depicted by Maslow’s hierarchy of needs). Apple could also mitigate the effect of the recession in Europe and US by increasing its presence in the emerging ASEAN markets. When it comes to ecological sector it is evident that most governments and consumers have and continue to vouch for environmental-friendly practices by organizations. This will probably not change much in future and as such organizations such as Apple would have to continue with upgrading their ecological initiatives.

References Apple - The Story behind Apple’s Environmental Footprint. (2011, August 11). Apple.com. Corporate website. Retrieved August 11, 2011, from http://www.apple.com/environment/ CNN wire staff. (2011, August 6). Questions abound after agency downgrades U.S. credit rating. CNN.com. Global News, . Retrieved August 11, 2011, from http://edition.cnn.com/2011/BUSINESS/08/06/global.economy.cnn/index.html Gardner, D. (2009, October 21). Here’s Why Apple (AAPL) Is Doing So Well. iStockAnalyst.com. Retrieved August 11, 2011, from http://www.

istockanalyst.com/article/viewarticle/articleid/3568204 Scott, A. (2008, April 30). Nintendo Wii’s Growing Market of “Nonconsumers.” HBR Blog Network. Retrieved July 5, 2011, from http://blogs.hbr.org/anthony/2008/04/nintendo_marches_on.html