Week 6 External and Internal Environments Assignment
Michelle Maenner
Strayer University
BUS499 Business Administration Capstone
Professor Joseph Keller
August 15, 2021
Introduction
Apple Inc. is an international brand that was established in 1976. Steve Jobs and his partners founded the company in 1976, and it has grown exponentially since then. It is one of the leading names in technology today and is believed to be one of the most influential firms along with Microsoft, Google, and Facebook. The company is based in California, United States, and has annual revenue of more than $275 billion. It is an American multinational corporation that researches, designs, and produces electronic products, computer software, and online services. This paper will discuss the impact of the general environment, the five forces model, strengths, weakness opportunities, and threats, and future strategy and tactics of Apple Inc. (Alexander, 2017).
General Environment
Ecological factors
The ecological factors constitute all the factors that are based on the biotic and non-biotic aspects of the environment. These factors are usually not given as much consideration but some events have changed this. One of these events is the outbreak of a global pandemic. The outbreak of the COVID virus in china has changed the whole trajectory of life on planet earth. Every individual and organization is impacted by it. The case of Apple Int. is not different, the company has been facing issues since the outbreak of the virus in December 2019. The company has a major share of its operations in China and the whole country of china went into lockdown as it was the origin point for the virus. Soon the virus reached the whole world and different parts of the world went into partial or complete lockdown. There have been many direct and indirect repercussions for the company. The political, economic, legal, and social domains of life changed drastically and this, in turn, had more consequences for business for every company in general and particularly for Apple Int.
Technological factors
Apple has also benefited from technology changes. For example, through technological innovations, the company has been able to produce high-quality products. Every time Apple introduces new products to the market, they come with new or improved unique features. Advancement in technology has allowed the company to invest in research and development to unfold more in the field. However, Apple is not the only company that has realized the benefits of technology changes. Its rivals, too, have embraced these changes. As a result, competition in the tech industry has become intense as other companies such as Samsung are also striving to produce high-quality products to keep pace with the changing technology. Therefore, Apple faces a lot of competition more than ever and is expected to grow intensely as more companies in the industry embrace technology changes.
Five forces Model:
Rivalry among existing competitors
Competitive rivalry refers to the existing rivalry among the competitor’s brands. Apple is one of the established brands however there are a number of other brands who have established themselves very well and face Apple in a neck-to-neck competition. This is why rivalry among existing competitors is one of the strongest forces among the five forces model. . The intensity of competition is based on a number of factors. These factors include switching cost, differentiation of products, and aggressiveness of the competitive firms. As in this case, the switching cost is low, there is also low differentiation of products because they serve the same purpose and all competitors have an aggressive approach towards market share.
Bargaining power of customers
The bargaining power of buyers or customers refers to the ability of customers to impact the business and revenue. It is determined by the purchase decision, perceptions, and preferences of customers about the business. In the case of Apple Inc., the bargaining power of the customer is dependent on three factors which include buyer information, size of individual buyers, and switching cost. The switching cost is very low hence it is a strong force. Similarly, the buyer’s information is very high which turns into a strong force. The small size of individual buyers makes it a weak force. However overall the bargaining power of customers is quite strong because they can access any information they want and make switching decisions which would directly impact the business of Apple. This has been seen recently when the trade war between the United States and China took an ugly turn and both countries imposed high tariffs and bans on each other’s products. The customer base in both the United States and China was impacted by it and they showed their change of perception through their purchase decisions.
Future Improvements
Based on the changes in the external factor and the strong competitive rivalry and strong purchase buyer of customers. Apple Inc. needs to make a smart decision. The company needs to realize that despite its size and influence, it operates in an external environment and any changes in the external environment are going to impact its functioning. To begin, the company ought to revise its strategy about operations in different countries especially in regard to the ecological factors and customer perception. A better strategy is to take stakeholders on board about the global functioning of the organization. The political factors of trade war can’t be avoided but they can be converted into an opportunity and not a threat. Moreover, the company needs to connect technological advancement with the existing rivalry. Technological advancement ought to be used to create a competitive advantage over the competitors.
Greatest External Threat
Threats originate from the external environment and impact the functioning of businesses. The currently faced threats by Apple Inc. include the outbreak of a global pandemic, disruption in the supply chain, growing competition, tariffs and the trade war between the United States and China, and lawsuits, etc. (Woods, 2021).
Greatest Opportunity
The changing trends and evolving factors in the external environment have produced some opportunities for the company. These opportunities include consistency in the growth of customer base, highly skilled and qualified professionals, skilled workforce, growing distribution network, acceptance of smart and sustainable wearable technology, growth in the artificial intelligence helping innovate the products, expanding music and streaming services, and expansion of the overall product line. These opportunities have their origin in the external environment but they become profitable only when they are supported by internal factors like strong areas of the company. Apple has developed a number of strong areas over the years as mentioned above and these strengths can convert the opportunities into success stories.
Strengths and weaknesses
To begin with, the primary strong areas of the company are its valuable brand name, the most innovative technology, customer’s brand of choice, proficient research and development team at Apple, and expansion of services. The strongest of these is the brand name company has established over the years. No brand could come near Apple Inc. When it comes to brand names.
However, there are some weak areas of the company as well. This includes high prices of products that are out of reach of a large number of potential customers, limited promotion and advertisement, incompatibility of the Apple services with other software and operating systems, allegations and accusations about tracking, accusations of unfair business practices, and lastly company’s involvement in areas where it does not have competency. Some of these weaknesses are based on internal factors while others are completely dependent on the external environment and factors. The strongest of these weaknesses is the extremely high prices which make it accessible to not a particular set of the audience while leaving a major share of customers unattended (Clardy, 2017).
Strategy and Tactics
Apple Inc. has evolved to be one of the most successful companies over the years. However, like every other business, there is always room for improvement. Moreover, only those businesses stay in the competition who introduce change from time to time. Apple Inc. both has a number of strengths and weaknesses. The primary strength of a strong brand name can be used to reach out to an even bigger audience and introduce further depth to the product line. Moreover, the company produces products that target a specific audience. This way the company has limit itself whereas its competitive firm, Samsung produces products for every segment of society. It is high time that Apple Inc. realizes that it can use its strength of brand name to launch a new brand where it can produce products for all segments of customers.
Resources, capabilities, and core competencies
Core competencies refer to those capabilities and resources that are unique to one company. Although all companies require resources and capabilities to produce the products and services when these resources and capabilities become unique to one organization they become core competencies. The core competency of Apple Inc. is its innovative speed. From 2006 to 2008, Apple remained the most innovative company. Even now the specialized software (IOS) of Apple acts as its core competency (Javidan, 2018).
Sources
Alexander, T. (2017). Core Competencies and their impact on organizational success. SAGE journal, 134-145.
Clardy, A. (2017). Strategy, core competencies, and human resource development. Human Resoruce Developemnt Interntaional, 339-349 .
Javidan, M. (2018). Core competence: What does it mean in practice? Long Range Planning, 12-23.
Woods, E. (2021, February 7). Apple SWOT 2021 | SWOT Analysis of Apple. Retrieved from Business Strategy Hub: https://bstrategyhub.com/swot-analysis-of-apple-apple-swot/