The company is able to gain an understanding of Apples business potential market situation and ways of directed operation through PEST analysis. The political, economic social and technological factors are four main components that will be discussed. These factors are considered to be beyond the direct influence of an individual company. Political factors
War, terrorism geopolitical uncertainties, public health issues are all beyond Apples ability to control, the likelihood of apple suffering from these political factors are ideal. Currently Apples business operations are executed all over the world. Throughout the years it is apparent that Apples products have become the number 1 selling products all over the world. However the uncertainties of political factors have affected Apple such as interest rates. While Apple is exposed to interest rate fluctuations in many of the leading world, changes in interest rates affect the interest earned on the company cash flow. Furthermore the company receives finance in different currency forms, therefore changes in exchange rates will have a huge impact negatively on the company’s net sales and gross margins. Moreover Apple have outsourced its business operations to different companies in order to reduce operating costs, the different companies are then liable for product manufacturing, transportation and logistics management. Apple has taken a big risk factor in order to allow such companies to produce Apple products in order to reduce costs; this is because delays can occur due to political instability or any other events which may delay in product launch and further damaging Apples reputation in the eyes of its customers. Economic factors
Economic conditions of the world is another factor Apple is facing, however the conditions are getting better after recession in previous years, “The UK economy has avoided falling back into a recession after recording faster-than-expected growth in the first three months of the year.” (BBC NEWS). Although the economy has improved, oil prices are relatively high therefore consumer purchasing power has reduced, people in the UK are trying not to spend too much money on Apple products as the prices are high. However Apple has announced a potential launch of a ‘cheap iPhone’ which will be made of plastic, this is good news for some consumers that don’t want to pay a huge amount of sum. Moreover employment rate has increased in the year 2013 “Unemployment Rate in the United Kingdom increased to 7.90 percent in February of 2013 from 7.80 percent in January of 2013 (trading economics). This would initially cause a sharp fall in apple products as unemployed individuals would not be able to cover the cost of an Apple product. Social Factor
An individual often buys a product either of its own accordance or influences from other sources, Families, colleagues and friends influence individuals buying power within the Apple industry. Another factor too look at is peer pressure some individuals tend to buy the iPhone due to trend and or hype. With the help of rigorous branding and media coverage Apple is able to influence individuals in order to help buying process easier. Apple’s product have become a daily use for consumers, social networking sites such as Facebook and Twitter are used daily on the iPhone and the iPad this is so that consumers socially interact with one another. Previous years it was reported that the improper use of the iPod may lead to loss of hearing, however Apple has further innovated on its headphones to suit customer needs and requirements however having purchased the iPhone, people may find that the ear pods don’t fit securely in their ears. Therefore Apple may need to further innovate in its universal headphone to fit every consumer’s needs. Technological Factors:
Fast technology changes with heavy competition mostly affect Apple, in order to further develop and innovate new ideas, Apple would need to...
Lynch, R (2009). Strategic Management . 5th ed. Essex: Pearson Education
Capon, C (2008). Understanding Strategic Management. Essex: Pearson Education
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