External Analysis

External Analysis

Introduction

Apple Inc. is a manufacturer and designer of mobiles, media and other communication devices such as personal computers, laptops, digital music players, The Company started off with software and then started designing its own hardware. Famous services & products include iPhone®, iPad®, iPod®, iMac®, iTunes®, iCloud®, iOS® and OS X software (Mergent Investor Edge, 2013).

This paper aims to prepare an external analysis of Apple, Inc. For this purpose, the company's external environment would be accessed in context of the PEST and Porter's 5 forces model.

Discussion

PEST Analysis

Political Forces

As reported in 2007, the bulk of Apple's annual revenues were obtained from outside the United States. Deteriorating international stability, America's war on terrorism and political changes in foreign countries are some of the political factors affecting Apple's international sales and market performance. These factors are beyond the company's control.

Also, Apple outsources a considerable portion of its products parts from countries like China, Korea, Ireland, Cork, Czech Republic, therefore political terms between these countries and America should stay favorable for business (Peng & Nunes, 2007).

Economic Forces

The global economy has hit recessionary floors, which are the worst ever since the great depression of the 1930s. Inflation is running high, and income, employment levels are too low, leading to decreasing purchasing power of consumers. In such a scenario, it would take a great deal of efforts to persuade consumers to opt for luxury products - a brand image that Apple has not only established, but retained for itself over the years.

The decreased value of the U.S. dollar poses a threat to the nation but Apple has managed to sustain it by purchasing foreign currency, hence capitalizing intelligently on the depreciation of the dollar as well (Peng & Nunes, 2007).

Social Forces

Apple, Inc has a social image of a technological king within the industry, all thanks to its design, quality, and the user experience that each of its products provide. Social factors impacting performance include the development of the music industry, which has marked its online presence. Apple responded to this factor by establishing its online media store “iTunes”, which is leading the competition. Even though piracy poses a threat, it has been minimized in recent years by strict regulations and retribution. Apple's social image itself contributes to its product performance and success (Peng & Nunes, 2007).

Technological Forces

A host of technological factors come into consideration within the external environment, as technology is the main industry in which ...