Apple (AAPL) is a multinational world’s leading consumer electronics brand. Apple is founded in 1976 by Steve Jobs, Wozniak and Ronald Wayne, which is known for its size and revenue. Investors always prefer Apple for its high return on investment and fast growth.
It has a limited but out class product line and designed with innovative technology. Apple product line consist iPhone, Mac, Apple watch, iPad, Music and TV and different accessories. Apple also designs proprietary software and iOS operating system to cater all its devices.
On April 30, 2017, according to The Wall Street Journal Apple cash reserves reached to $250 billion. The news was also confirmed by Apple officials with accurate figures of $256.8 billion. As on August 2018, Apple became the world largest publicly traded corporation by market capitalization and reached to $1 trillion market value. Apple is ranked number 4 on the Fortune 500 list. You can also check my articles Apple Swot analysis and Competitors Analysis.
Apple Pestle Analysis
In this marketing tutorial, we will discuss Apple pestle analysis. For Apple’s success addressing its external environment factors play a vital role.
How Political Factors Affect Apple
The China-US trade war is an alarming political issue that affects Apple performance and market share in the Chinese market. If the US tariffs rapidly increases on Chinese imports into the US then the Apple products can also face heavily taxes from Chinese government. This political issue can affect Chinese consumers demand for iPhone and other Apple product.
The Ireland Government and Apple resolved the back taxes and interest dispute. In this regard Apple paid more than £15 billion. Apple is a leading tax payer in the world and such political issues can affect its financial performance.
There are many other political factors that can affect Apple’s performance in many countries. Political instability and unrest are one of them that affect Apple sales and supply chain.
India is in the good books of Apple Inc. as it is the third biggest smartphone market in the world. If the Indian government and Bureaucracy favor the Apple premium brand that can be a great success for the company.
The cost associated with finding alternative to Chinese manufacturing could increase price of many apple products in the world.
How Economic Factors Affect Apple
In pestle/pestel analysis, economic external factors mean both positive and negative influences that can affect the business environment and performance of a Apple Inc. Economic growth, inflation, deflation, unemployment rate, wage policies are good examples of economic factors.
The economic stability of many developed countries in world can create opportunities for a tech brand like Apple. It can exploit these opportunities for business expansion. For example the higher growth rates of Asian countries are great opportunities for Apple to increase market share and revenue. Keep in mind the competitors; Apple must exploit such opportunities in the first place.
Increased labor cost in the Apple manufacturing countries can affect Apple products and profitability.
A Strong U.S dollar can negatively affects exchange rate that make it more challenging for Apple to do business operations in countries like China, India, Pakistan.
Apple manufactures premium products that mean it targets high end markets only. Using the premium pricing strategy Apple is unable to penetrate in the Asian market effectively like Samsung and Huawei. Samsung and Huawei both are targeting low and high-end consumers and ruling the smartphones market.
Apple is also facing furious competition from top tech companies like Samsung and Lenovo. These companies offer premium laptops and smartphones on affordable prices.
How Social Factors Affect Apple
The current trends of the increasing popularity of smartphone devices are somewhat a great opportunity for Apple unless they provide easy to use and affordable phones in the market. Increasing social media and mobile trends present both opportunities and challenges to Apple.
Apple has a close connection with China and many customers from North America and Europe can feel offended. If the tension increases between US-China it can affect brand image of Apple.
Another social factors is Urbanization trends in both India and China can be more favorable for the world leading brand Apple.
Africa is another country where consumer spending is growing but still many people are unheard of Apple products.
How Technological Factors Affect Apple
There are many competitors who are providing advance technological products of high value at affordable prices which negatively affected brand image and financial performance of Apple. For example companies like Lenovo maintained its position in the PC market while Apple lost it. It is because of these competitors who are providing technologically advanced products at low prices.
Cloud computing is another technological impact becoming more popular these days. Apple has a great opportunity to exploit it by offering cloud related devices and apps.
These days the Apps market is growing that is another opportunity and challenger for Apple. It should expand it App Store.
Another opportunity for Apple is the trend of the integrating different devices. Apple should exploit this opportunity by providing products that can be easily connected devices and platforms.
How Legal Factors Affect Apple
Legal factors are external environment factors that can create threat to Apple. Compliance is mandatory or Apple can face law suit and fines that will lead to bad brand image.
Privacy issues are another concern for technology users and Governments at the same time. Few months back US Congress was asking Apple and Google to protect users’ privacy. This legal factor is threat to Apple that creates more challenges for those products that deals with private information.
Technology companies like Apple has a strict telecommunication regulation that is an alarming threat to Apple.
Apple is also planning to enter in the automobile industry and also working on electric car project code name “Titan”. Apple is facing immense pressure from investors to launch the car and return their money. This project will further increase regulations and litigation costs.
How Environmental Factors Affect Apple
Apple is manufacturing most of its products in China where pollution and environmental side effects are great concerns for the company that can affect manufacturing cost and regulations.
Apple is also working for new technology solution by providing energy efficient products like batteries and processor and other equipment with less heat emission.
Apple is working on business sustainability program through disposal and recycling nonworking electric devices.
Global warming is creating climate change that can affect Apple supply chain.
Apple is depending on huge internet infrastructure and data center that can lead to increase the electricity cost in the future.