SWOT and PEST Analysis for Apple Inc - Case Study Example

SWOT and PEST analysis and their relevance to the marketing planning process The modern business environment is very dynamic, with a business often being influenced by several factors, both internal and external. The internal and external factors that influence a business may hinder its success, if such factors are not handled accordingly (Mind Tools Ltd., 2014:n.p). On the other hand, when a business takes advantage of such internal and external factors as a platform to prepare and strengthen its competitive position and overcome its areas of weaknesses, the business will eventually be able to capitalize on the opportunities presented by these factors (Thomas et al., 201:112). Thus, there are different tools that a business can apply towards analyzing its internal and external environment, so as to capitalize on the available opportunities and to deal with its weaknesses effectively (Rachid & El Fadel, 2013:588). This discussion seeks to analyze both SWOT analysis and PEST analysis as tools for use by business to assess its environment. SWOT Analysis SWOT Analysis is a business analysis tool that is applied by businesses to assess its internal environment, so that the business can be able to understand its level of competitiveness within the market and the industry that the business serves (Briciu, Căpuşneanu & Topor, 2012:145). Thus, SWOT Analysis enables a business to evaluate its Strengths, Weaknesses, Opportunities and Threats, and as such, it is possible for a business to understand its internal advantages and disadvantages in relation to its operation within the market that it seeks to serve, or any project that such a business seeks to execute (Helms, 1999:1). Thus, SWOT Analysis does not only help a business to assess its internal environment, but also enables a business to assess the advantages and disadvantages that any project that a business would seek to implement has from the internal perspective. This helps to prepare the business capitalize on its advantages, while improving on its areas of weakness, so that it can eventually improve its level competitiveness in the market (Pai, Chu, Wang & Chen, 2013:137). In this respect, SWOT Analysis assess what a business can do and what it cannot do in a very straightforward manner, through considering its resources and abilities by separating the internal (strengths and weaknesses) factors from the external influences (opportunities and threats). This way, the business is then able to determine capabilities and resources available to it that can help the business accomplish its goals, while also determining the obstacles that the business must overcome or at least reduce, so that it is able to accomplish its set objectives (Clark, 2011:292). Relevance of SWOT Analysis to the marketing planning process The relevance of SWOT Analysis to the marketing planning process is that, this tool enables a business to gather information from its immediate environment, and then to separate the information into internal (strengths and weaknesses) and external influences (opportunities and threats) (Pearce, 2007:25). Once the business has done that, it is then better placed to determine how it is going to operate within the market that it seeks to serve, through taking advantage of its strengths and the available opportunities, while improving on its areas of weaknesses, and planning to overcome the possible threats. Secondly, the relevance of SWOT analysis in the marketing planning process is that this tool it helps a business to be realistic in its marketing planning process (Macpherson, et al., 2013:42). This is because, through the application of SWOT Analysis, a business is able to understand where it is weak and the areas in which it is strong, thus enabling the business to set goals that it is able to achieve, rather than engage in setting arbitrary objectives, which the business may not even be able to realize. Further, SWOT Analysis presents a business the opportunity to evaluate its position within a market, Vis a Vis other similar businesses that are serving the same market, considering that SWOT Analysis is a competitive analysis tool, helping a business to understand where it stands, in relation to the other competitors in the market (Al-Araki, 2013:618). Additionally, the relevance of SWOT Analysis to the marketing planning process is that; this environmental analysis tool explores the possibilities for both new efforts and new possibilities, allowing a business to understand what it is required to do to improve its position, while also presenting the business with information regarding new projects that the business can invest in (Pesonen & Horn, 2014:563). Thus, SWOT Analysis does not only assist a business in improving its current situation, but also presents the business with new ideas which enhances its marketing planning for the new project that it might execute. Finally, the relevance of SWOT Analysis to the marketing planning process is that it defines when change is possible. This way, a business is able to know whether it can implement any changes, or whether it has reached a dead end, and thus may require to start its plans all over again (Silva, 2013:n.p.). PEST Analysis The changes in the external business environment can significantly affect a business, through creating great opportunities or posing major threats to the survival of the business. Thus, PEST Analysis is a tool that is applied by businesses to evaluate its external environment, through putting into consideration the Political, Economic, Socio-Cultural, and Technological factors that surround and operate in the business environment (Jurevicius, 2013:n.p.). This way, the business is able to get a glimpse of the big picture of the environment under which it operates, thus enabling the business to take advantage of the favorable external factors that surrounds it, while planning on how to deal with the unfavorable factors in its surroundings, which might threaten to incapacitate the business. PEST Analysis as a tool for business analysis looks at the key external environmental factors at the macroeconomic level, enabling the business to understand the position that it needs to defend against the external environment threats, and the ones the business needs to exploit for benefit (Carruthers, 2009:38). Additionally, PEST Analysis does not only enable the business to understand its current position in relation to the macroeconomic factors that are surrounding it, but also goes ahead to determine the factors that are likely to change in the future, and the direction of change that such factors might take (Mind Tools Ltd., 2014:n.p). This way, it is possible for the business to plan its futuristic operations, based on the current and the predicted future direction that the macroeconomic factors will take. Relevance of PEST Analysis to the marketing planning process PEST Analysis is a very relevant business analysis tool for enhancing the marketing planning process, considering that it is a tool that enables a business to understand which external factors are influencing its performance, so that the business can adjust itself towards the favorable factors, while defending itself against the unfavorable macroeconomic factors (Brooks, 2013:n.p.). The other relevance of PEST Analysis to the marketing planning process is that, it enables the business to plan for the future operations, based on the fact that; PEST Analysis enables a business to determine the future changes in its external environment, and the likely direction that such changes are going to take (Learn Marketing, 2013:n.p.). In this respect, a business can adjust the present operations and activities to suit the likely future changes, such that the business will avoid being interrupted by the future changes when they come. Further, PEST Analysis enables a business to assess the potential for new markets. This is because, through understanding the nature of the external factors that are operating within the business environment, it is possible for a business to determine difficulties that are involved in executing its operations in such markets or even in other potential markets. Where the difficulties are many, the business cannot benefit from operating in such markets, considering that much resources will be consumed in overcoming the difficulties involved, and as a result the profitability of the business will be highly reduced (Hulton, 2012:461). The other relevance of PEST Analysis to the marketing planning process is that; PEST Analysis allows a business to spot available opportunities and threats in advance, just way before such factors influences the performance of the business (Carruthers, 2009:39). This way, it becomes possible for the marketing planning process to take the direction of capitalizing on the future opportunities that have been identified, while also defending against any potential threats that are perceived to operate in the market in future. Most significantly, PEST Analysis enables a business to avoid starting projects that are likely to fail in the future, out of factors that the business will not be able to control (Brooks, 2013:n.p.). The essence of this prior determination is that, PEST Analysis differentiates between what a business can control and what it cannot control, enabling the business to take opportunities which it will have control over their future, while avoiding those opportunities that the business will not be able to control or influence. Finally, PEST Analysis enables a business to break away from unconscious assumptions while seeking to enter into a market, through ensuring that the business is completely aware of the factors operating in the new market, while enabling the business to compare the factors at play in one market with those operating in a different market (Hulton, 2012:459). This way, PEST Analysis is relevant to the marketing planning process, since it enables a business to compare different markets based on how external macroeconomic factors play in the market, and thus the business is able to make a choice on the best market to enter, based on the present and the predicted future market conditions (Mind Tools Ltd., 2014:n.p). SWOT analysis of Apple Inc. Strengths Customer loyalty is one of the strengths that Apple Inc. rides on, considering that the company has a loyal customer base that is highly dependable and is spread throughout the world (Kandasamy, 2013:n.p.). Apple Inc. has been able to enhance its customer loyalty through the provision of superior products, especially when it comes to the area of product interface design. Apple Inc. has been able to ensure that it provides friendly, flexible and easy to learn interface on their computer and gadgets, thus making customers always go back for the Apple Inc. products (Jurevicius, 2013:n.p.). Secondly, the other strength for Apple Inc. is that, it has a good reputation, which is associated with a powerful brand image (Jurevicius, 2013:n.p.). This has been enhanced by the huge investment of the company into research and development, as well as brand image promotion, which serves to ensure that the company remains high in the ranking of best computer manufacturing companies. This brand image, coupled with a highly refined supply chain, serves to ensure that Apple Inc. products are delivered to their customer on demand, thus serving to promote customer loyalty and to boost the image of the company, thus increasing its business through repeat purchase and purchase referrals (Kandasamy, 2013:n.p.). Innovation is yet another strength that Apple Inc. rides on, considering that the company has been able to innovate a variety of products, which have seen it transform from a purely computer manufacturing company, into a company that has ventured into different other fields such as the mobile device gadgets (Jurevicius, 2013:n.p.). The innovation has also meant that the company keeps abreast with developing technologies and incorporates them into their newly developed products. This way, it is always providing its customer base with new products and thus enhancing their loyalty and repeat business (Kandasamy, 2013:n.p.). Weaknesses The weaknesses associated with Apple Inc. include the fact that the company prices its product at such a high price, that it has always been perceived as exploitative (Jurevicius, 2013:n.p.). This has created a negative brand image amongst the low income consumers, who may not afford the products of the company. Another major weakness associated with the company is that it forces users to switch into new products through reducing support for its previous products, thus influencing the consumers negatively (Kandasamy, 2013:n.p.). Further, the company has just few ranges of products, which may then influence the customers to switch to other companies for a variety. Opportunities The major opportunity available for Apple Inc. is the increasing demand for Smartphone and tablets which is increasingly growing by the day (Kandasamy, 2013:n.p.). By tapping into this opportunity, the company will continue to grow. Another opportunity for the company is the increasing demand for cloud based services, icloud and iTV, which the company can invest in, to increase its products range (Jurevicius, 2013:n.p.). Further, the company can enhance its product line through acquisition of small innovative products and companies, such as the communication, messaging and live chat companies. Threats Major companies serving the same market such as Samsung continue to eat into Apple Inc.’s market share, especially through offering similar but cheaper products (Kandasamy, 2013:n.p.). Additionally, the ability to customize products specifically for the company becomes hard, with the development in technology that threatens with counterfeiting products. Finally, the high price for Apple Inc. products is a threatening to reduce its customer base (Jurevicius, 2013:n.p.). PEST Analysis of Apple Inc Political Apple Inc. is highly vulnerable to, and influenced by political factors, considering that over 52% of the company’s market is situated outside the USA, making it unable to control the political factors in the other countries (Hasan, 2012:12). Most especially, the company is negatively influenced by the political negativism of the American war on terror, especially in the Islam predominantly countries. Thus, any conflict between these countries and the USA affects the company’s business negatively (Management of Apple Inc., 2013:n.p.). Economic The economic depression since 2008 may affect Apple Inc’s customer base negatively in the future, considering that it offers its products at a relatively high price, while the incomes for most the consumers have consistently reduced (Hasan, 2012:7). Social-cultural Apple Inc. is a leading innovator in communication products which are the essence of modern society connectivity. In addition, Apple Inc. offers luxury and high class products in design and innovation, thus placing its consumers at the apex of the social class (Management of Apple Inc., 2013:n.p.). This way, the socio-cultural factors are favorable for Apple Inc. Technological Technologically, Apple Inc. has grown over the years especially in computer and mobile devices technological innovations, and thus has improved on its product offering, quality and brand image (Hasan, 2012:3). Thus technological factors are favorable for Apple Inc. References Al-Araki, M. (2013). SWOT analysis revisited through PEAK-framework. Journal Of Intelligent & Fuzzy Systems, 25(3), 615-625. Briciu, S., Căpuşneanu, S., & Topor, D. (2012). Developments on SWOT Analysis for Costing Methods. International Journal Of Academic Research, 4(4), 145-153. Brooks, C. (November 22, 2013). PEST Analysis: Definition, Examples & Templates. Business News Daily. Retrieved March 11, 2014 from http://www.businessnewsdaily.com/5512-pest-analysis-definition-examples-templates.html Clark, A. (2011). Educators vs. entrepreneurs: traits and bias in the teaching of SWOT. Journal Of Further & Higher Education, 35(2), 287-298. Carruthers, H. (2009). Using PEST analysis to improve business performance. In Practice (0263841X), 31(1), 37-39. Hasan, R. (2012). Apple Inc. - A PESTEL analysis. Scholarly Research. 1-20 Helms, M. M. (1999). How to be Successful in China: a Swot Analysis. Competitiveness Review, 9(2), 1. Hulton, M. (2012). Decision-support scheme for an Express Pest Risk Analysis. EPPO Bulletin, 42(3), 457-462. Jurevicius, O. (February 19, 2013). SWOT analysis of Apple. Strategic Market Insight. Retrieved March 11, 2014 from http://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html Jurevicius, O. (February 13, 2013). PEST & PESTEL Analysis. Strategic Market Insight. Retrieved March 11, 2014 from http://www.strategicmanagementinsight.com/tools/pest-pestel-analysis.html Kandasamy, I (2013). SWOT Analysis of Apple. Retrieved March 11, 2014 from http://creately.com/diagram/example/gsv8l5hs3/SWOT+Analysis+of+Apple Learn Marketing (2013). The macro environment & pest analysis. Retrieved March 11, 2014 from http://www.learnmarketing.net/pestanalysis.htm Macpherson, M. et al. (2013). A SWOT Analysis of the Physiotherapy Profession in Kuwait. Physiotherapy Research International, 18(1), 37-46. Management of Apple Inc. (May 6 2013). Category Archives: P.E.S.T Factors. Retrieved March 11, 2014 from http://applemanagement.wordpress.com/category/p-e-s-t-factors/ Mind Tools Ltd. (2014). PEST Analysis: Identifying "Big Picture" Opportunities and Threats. Retrieved March 11, 2014 from http://www.mindtools.com/pages/article/newTMC_09.htm Pai, M., Chu, H., Wang, S., & Chen, Y. (2013). Ontology-based SWOT analysis method for electronic word-of-mouth. Knowledge-Based Systems 50, 134-150. Pearce, C. (2007). Ten steps to carrying out a SWOT analysis. Nursing Management - UK, 14(2), 25. Pesonen, H., & Horn, S. (2014). Evaluating the climate SWOT as a tool for defining climate strategies for business. Journal Of Cleaner Production, 64, 562-571. Rachid, G. G., & El Fadel, M. M. (2013). Comparative SWOT analysis of strategic environmental assessment systems in the Middle East and North Africa region. Journal Of Environmental Management, 12, 585-93. Silva, N. (May 17th, 2013). Importance Of SWOT Analysis In Your Marketing Plan. Retrieved March 11, 2014 from http://tweakyourbiz.com/marketing/2013/05/17/importance-of-swot-analysis-in-your-marketing-plan/ Thomas, S. et al. (2014). A Qualitative Review of Literature on Peer Review of Teaching in Higher Education: An Application of the SWOT Framework. Review Of Educational Research, 84(1), 112-159. Read More