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Owing to its uniqueness and innovation in its wide range of products, Apple is regarded as the world’s most
notable and recognizable brand for electronic devices that designs, develops, and sells consumer
electronics, computer software, and online services. This multinational corporation has carved out a niche
for itself ever since its co-founders —two college dropouts Steve Jobs and Steve Wozniak — brought
a revolution in personal computing. Now, Apple is the recognized as the world’s largest information
technology company in terms of revenue, the world’s largest technology company in total assets, and the
world’s largest mobile phone manufacturer with 123,000 employees (last recorded in 2017). In addition to
this, Apple has seemingly dethroned Samsung for the title of the world's largest smartphone maker in Q4,
selling 77.3 million iPhones, against Samsung's 74.4 million handsets.
Website www.apple.com
The study is conducted to assess the relation of Apple’s high performance linked to the external and internal
factors. This study reveals the macro and micro environmental factors that this company must
consider to continue with its success. For the purpose of the study, the data is collected from various
published sources and different case studies conducted on Apple. Two methods of analysis have been
used to review Apple’s business framework — SWOT analysis for internal analysis and PESTLE analysis
to evaluate the factors that affect this company externally.
SWOT Analysis
SWOT is one of the most common strategic management tools that help the managers to assess and
organize ideas during environmental scanning. SWOT is an acronym for,
Strengths
Weaknesses
Threats
Opportunities
The purpose of SWOT analysis is to enhance the organization’s strengths, excludes its weaknesses,
pursue opportunities and avoid potential threats.
Strengths
Apple has witnessed strong sales growth in the year of 2016, and has wisely managed its cash flow,
resulting in the company ending up on top of the Forbes 100 Most Valuable Brands (2016) list with a total
capital of $416.62 billion. The company expecting 38% revenue growth in 12 months (ending march 2017).
In its study, CEB explained that the most effective way of reaching out to the consumer was not through
elaborated and complex websites, but to cater the right information to the customer as to what exactly they
needed. This is what Apple has been doing. It involves simplicity in marketing its products.
For example - Take their Mac Vs PC advertisement. Two guys are standing against a white background,
they are not talking about any lengthy list of features or even the price, no professional voiceover with
emotional background score, not even the information on how to buy MAC; only one point is made: MAC
is better than PC in every way.
Apple’s amazing marketing team goes above and beyond to keep the standards high. The team left no
stone unturned to celebrate the company’s 40 years in 2016. They put up a breathtaking video
chronicling 40 years of the company in 40 seconds, and an Apple Music playlist with songs from its
commercials over those years (/www.forbes.com/).
Apple always follows a magic formula; that is building up customer relations in order to sell more products.
They do it through customer centricity. The customer service of Apple follows few steps to win over the
trust of the consumers
Weaknesses
High Price
A majority of the population criticizes the brand for its sky high product prices, but Apple fans justify the
situation by tagging the brand as a ‘premium’ gadget-maker. They also say it is for those people who can
afford a pony. Apple, in other words is like BMW, not Ford. In 2013, Strategy Analytics found that 88% of
iPhone users would purchase another iPhone compared to 93% in 2012.
Later, a survey published by Morgan Stanley showed that 92 percent of iPhone users would “likely or “most
probably” buy the next edition of Apple iPhone. Moving further, towards the latest researches, Loup
Ventures surveyed a total of 511 people in the United States. Out of these, 226 people currently own an
iPhone. According to the reseach, 22 percent of these iPhone owners are eager to upgrade their device
when Apple announces new models for its iPhone lineup, this fall. The study further states that 20 percent
of the surveyed people intend to purchase iPhone X or iPhone 8 over the coming year (Source:
/www.cnet.com/)
Despite this staggering customer loyalty, Apple loses a considerable amount of customers. This happens
when consumers have access to cheaper products with more or less same features. Samsung, Microsoft,
Asus and many other companies provide low-priced products compared to Apple. Here’s where apple loses
its customer base.
Unsuccessful Anticipation
Apple founder Steve Jobs predicted that ‘No one’s going to buy big phones’. He got it wrong. Apple failed
to predict the future of few brand categories like Phablets. Apple did not launch any larger screen phone
despite having invested in tablets. But Samsung outperformed Apple when it came to Phablets by launching
Samsung Galaxy Note in 2011, and now has a commanding presence in the Phablet market. The demand
of large screen phone is only accelerating.
Incompatibility Of Different OS
Consumers whoever is accustomed with other OS systems do not get a handy experience when they
choose to use iOS or OS X. The reason is if you are switching from a PC to MAC, it can be pretty intimidating
using Apple’s operating system at first. When you are accustomed to using ‘Start’ menu, Apple will force
you to use ‘Finder’ where you will find your apps, documents and other files.
US 38.8% 43.5
Apple had given a statement to the New York Times, confirming manufacturing defects in iPhone 5s. There
was a long list of issues in the device including battery life that iPhone 5s users were facing. Few problems
were also detected in iPhone 6 after its release. The issue(s) was, however, quickly resolved by the
engineers working with Apple.
Opportunities
Period Apple
2012 Q2 16.6%
2013 Q2 12.9%
2014 Q2 11.6%
2015 Q2 13.9%
2016 Q2 11.7%
Threats
Worldwide Smartphone Sales to End Users by Operating System in 2015 2015 Market Share (%) 2016 M
(Thousands of Units)Operating System
Android OS Growth
It poses a serious threat to the company that consumers can switch to Android operating system over iOS
system.
PESTLE Analysis
PESTLE refers to the analysis of external factors which play a vital role while conducting research before
beginning a new project. Managers assess the risks that the identified factors pose and use their knowledge
to take beneficial decisions for the company. PESTLE is mainly an acronym of six factors which are,
Political
Economic
Social
Technological
Legal
Environmental
Unlike SWOT analysis, it concentrates on the external macro environmental factors that might affect the
position of the business in present or near future.
Political Factors
Major sales contribution to Apple Company comes from outside US amounting to more than $113.8
whereas the revenue from the home country is $68.8 billion. So any political insurgence in these countries
can affect the company’s position negatively.
Apple underwent a political pressure as suicides cases were registered against one of the biggest Apple’s
supplier, Foxconn (a Taiwanese company). In May 2010, suicide cases were filed against Foxconn holding
it responsible for forcing the employees to work for long hours; two of the workers committed suicide. In
another incident, 16 others were injured in an explosion in one of Apple’s supplier facilities.
China Labor Watch (CLW) said that Li Ming, 31, jumped to his death from a building in the city of
Zhengzhou, in the east-central Chinese Henan province, where he had been working for Foxconn.
The death has triggered comparisons with a wave of suicides in 2010 and 2011 at Foxconn factories in
China amid concerns over working conditions.
CLW’s claim has the potential to reignite controversy surrounding the working conditions of workers at
Taiwanese firm Foxconn, which is China’s biggest private sector employer with a workforce believed to be
in excess of 1.2 million (/www.telegraph.co.uk/).
Apple is immensely dependant on the low labor cost in China. But the unsettled political environment in
China disrupts its manufacturing now and then. As a result, the manufacturing costs increases. Additionally,
there is also an imposed restriction on Chinese imports in US in order to enhance the manufacturing in
America. The political bonds with the Chinese government have immensely affected this US-based
company. If the company tries to find an alternative for China, it will cost the company more and it will lead
to increased prices for Apple products. Due to growing nationalism in China, Apple could become a potential
target for anti-Americanism in China resulting in reduced market share.
Despite the fact that United Kingdom boasts a stable government, there is always a risk of terrorist attacks.
It can leave a negative impact on the company. The current political challenges in UK that Apple can counter
are the increasing tensions in the ruling coalition and sagging government popularity.
A lawmaker in Russia, who is noted for his harsh approach towards gay propaganda, has made a
suggestion to ban Apple CEO Tim Cook from visiting Russia due to his public acknowledgment of his
homosexuality in October.
Under Mr. Cook’s leadership, Apple’s business in China grew from a fledgling success to an empire with
annual revenues of around $50 billion. Now, with the Trump administration saying on Monday that it will
identify another $200 billion worth of Chinese goods that could face tariffs on top of the $50 billion already
planned, and China having threatened retaliation, Apple is stuck in the middle.
The Trump administration has told Mr. Cook that it would not place tariffs on iPhones, which are assembled
in China, according to a person familiar with the talks who declined to speak on the record for fear of
upsetting negotiations. But Apple is worried China will retaliate in ways that hamstring its business
(/www.nytimes.com/)
Economic Factors
Recessions and economic crises can affect the company’s revenues negatively to a greater extent
compared to other businesses due to the choice of premium pricing policies.
At the time of global recession (2013), Apple had witnessed slow economic growth in 2013 and 2014. Apple
has been affected by global recession immensely.
Europe 31% 4%
A change European economy has directly affected Apple which has resulted in decreased revenue by 16%
in the third quarter of 2012 compared to the same period in the previous year.
At the time of increased rate of inflation in US, the company got affected as it reserved a large amount of
cash. But hedge fund billionaire David Einhorn sued the company to force payments of dividends of $137
billion. The cash was used to dole out the dividend.
Recent figures suggest China's labor costs are rising fast, which could be good news, and could be bad.
Certainly the amount of Chinese people able to rise out of poverty is one of the signature achievements of
the early 21st century, but the prospect of wage inflation could signal bad news for an economy whose key
comparative advantage has until now been low labor costs (Source: /www.forbes.com/).
Due to the rising value of US dollar, the exchange rates are increasing. The increased exchange rates
directly affect the cost of Apple products. The difference of between the US dollar and other currencies like
Euro and Yuan makes it more expensive for Apple to do business in key markets such as Europe and
China. Apple’s revenue could have been 800 points higher. In other words, Apple would report revenue of
$52.8 billion if there is no increase in value of dollars, but it reported acquiring revenue of $49.6 in 2015.
Social Factors
Globalization, the increased usage of the virtual world and the current lifestyle are few factors that leave an
enormous impact on Apple.
Apple is one of the leading companies in the world. It is all about brand, it is the name that people around
the world want to carry. This has got nothing to do with iPhone and iMac. The uniqueness, innovation in
design, simple marketing of the products and high price of the products — these all make the Apple more
desirable to its consumers. It is gradually became a symbol of social status mainly because of its extremely
high prices that only who are higher in class can afford.
Apple can see growth in consumer spending in the coming decades in third world countries like Africa
where people are not aware of Apple products. The company can penetrate the market unexplored market
and can harbor new possibilities of acquiring revenues.
Many would not consider this brand based on the social-conscious ground because it is farming out its
manufacturing operations in China, whereas the company can create some job opportunities in the home
country. It is choosing China for its low-cost labor factor. This could limit the product’s appeal to some
extent.
In order to satisfy and fulfill customer’s needs, this brand has been making some acquisitions such as
Embark Prime Sense and Topsy and alliances with Sony, Motorola, Philips, and AT&T. The social
background of different brands plays a vital role in this company’s operations.
The entire world is turning mobile. The trend of the increasing popularity of mobile access is an opportunity
for Apple to continue providing easy-to-use mobile devices. The firm has already taken steps to exploit this
opportunity, such as through the iPhone, iPad, and Apple Watch. The rising use of social media is also an
opportunity because it increases demand for digital devices like Apple products.
Technological Factors
The stakes of information technology stays higher compared to other industries when it comes to earning
revenues. The companies who innovated with time, earned well and Apple is no doubt one of them.
In 2013, Apple unveiled a deal with China Mobile to bring iPhone to customers in a market dominated by
low-cost android smartphones. The deal gave this company a bigger entry to the Chinese market and China
Mobile’s 760 subscribers. Under the agreement Apple products iPhone 5, iPhone 5S are available at China
Mobile and Apple retail stores in China.
In 2015, Apple reportedly spent $8.07 billion for R&D that accounted for about 3% of the company’s net
sales. These researches are conducted in order to assess the customer mind-set considering the short
product life cycle of the industry.
Preferences To Screen Size
Apple is known for its stunning concept design. It has created some of the finest and most attractive designs
for their products that its contemporaries cannot match. But gradually consumers are giving preferences to
larger screens.
Device Native Resolution (Pixels) UIKit Size (Points) Native Scale factor
Apple’s direct competitors Samsung and Google are now offering the products and services that were once
the signature of Apple. It took Google less than a year to build payment app Google Pay just like Apple Pay
so it is no more a unique product of Apple. Apple’s competitors showed the ability to replicate its products
and services that can threaten Apple brand as a whole.
The number of consumer products Apple can launch is limited. Moreover, these consumer products like
Apple TV has a very restricted customer base.
The increasing number of cyber crimes makes Apple systems vulnerable and less secure for consumers.
It actually takes away the most competitive advantage which is a high reputation for security and safety.
Legal Factors
The company operates globally which makes it vulnerable to many legal factors and litigation.
Apple is going under a legal stress in its homeland, America. As in previous year, the company restored
the imports of some of its parts used in iPhone that was earlier banned by US government.
Apple has introduced financial services through Apple Pay. It recently entered the highly regulated financial
sector that could lead the company to increased level of regulation. The company could face increased
level of litigation for offering financial services.
Breach Of IP Laws:
Apple produces a variety of brands that are covered by intellectual property laws such as software and
music. Software produced by apple consumes a big part of its income that makes the company vulnerable
to both piracy and litigation.
Entering Automobile Industry
Apple is making all preparation to enter automobile industry and pushing its team to begin production of
electric vehicles as soon as 2020. This multinational company has invested $6.04 billion for R&D in the
past year, and CEO Tim Cook is facing immense pressure to return the money to its shareholders. A lawsuit
filed against this company says, ‘Apple has started the campaign of hiring best minds for battery making,
despite a company who is starting from scratch needs more than 10 years to launch its products. Apple is
planning it to launch it as soon as 2020.”
Environmental Factors
Various environmental factors like disposal can influence the company’s revenues and brands.
Apple is countering a massive problem of discarding the electronic junk that is used or is in non-working
position. This company is facing a huge problem of discarding the electronics that has lithium batteries in
it. It would cost the company some huge expenses. Apple is forced to incur the expenses because of the
environmental factor related to it.
The manufacturing facilities in China are a growing concern for the company because of the pollution and
environmental side effects. To minimize the environmental issues in the facilities, the company has to shell
out more money in the future that could lead the company to huge expenses.
China has taken the initiative to reduce greenhouse gasses and limit the fossil fuel use. This attempt of
China could increase the electricity rates in the country. As a result, it could potentially raise the
manufacturing costs for Apple.
Global Warming
Due to increasing rate of global warming, Apple could face the problem of transoceanic shipping that is the
core part of Apple chain supply.
Apple is vulnerable to increased rates of electricity because of its dependence on data centers and other
internet infrastructure. The company has to shell out more expenses in its manufacturing facilities.
Conclusion
After assessing all the factors in SWOT analysis, it is seen that Apple has more opportunities and strengths
compared to threats and weaknesses. Given the company’s current leadership in the industry, Apple is in
a position to enjoy these opportunities. But the company should devise few strategies to address effectively
the threats and weaknesses that it recently developed or has chances of developing.
On the basis of PESTLE analysis, Apple should be able to thrive in electronic device industry in the next
five years in spite of the challenges because it demonstrates an impressive ability to adopt to a challenging
environment. The uniqueness in its design gives the company a competitive advantage which reflects in
their sales and revenues. So it can be said that Apple will continue to be the leader in the electronic industry
in years to come.