Apple’s Macro and Competitive Environments

Consultancy Report on Apple Inc.

Part 1 – Apple’s Macro and Competitive Environments

Apple Inc. is an American multinational corporation which designs and manufactures consumer electronics and software. They have a significant share in the UK market in both of these areas. To encompass and give an overview of the macro environment, market and issues that Apple have to deal with, a PESTLE analysis has been undertaken and is shown below:

Apple PESTLE analysis

Political

Consumer protection, ensuring any product guarantee that might be in place (for example a 12 month manufacturer warrantee) is honoured or risk getting into trouble with Trading Standards. Also the government may require detailed information about a particular product, especially if it is in areas that safety or public health is an issue (for example whether the iPhone emits safe amounts of radiation or not).    

Adhering to taxation and incorporation policy and issuing regular accounts and information to Companies House if need be. Despite being an American company Apple still obviously operate and sell products in the UK thus they will still need to adhere to UK political policies, VAT etc.

A good relationship with the government in giving mutual benefits like tax and employment is a must if Apple wishes to succeed in any foreign market. Employees of the company should also be protected adhering to UK labour laws.

Economic

 Apple like every other company in the world is of course affected by the global economy, seeing as Europe and indeed most of the world is in the midst of a recession currently, obviously the amount of deposable income per capita is considerably less. This potentially can have a negative implication for Apple in terms of sales. A product line of luxury goods and not of necessity ones is of course a risk at times like this, especially as Apple is often held in high regard as a premium and more expensive brand people may consider spending less on cheaper brand products.

Because most of Apples products are produced in the USA, this means that exporting to the UK market is obviously affected by differences in currency, inflation and exchange rates. This can obviously fluctuate and potentially be a positive or negative depending on the economic climate.

Sociological

The UK currently has a very high level of unemployment due to the economic downturn, this sees more people staying at home not earning – which, as aforementioned potentially means less money to spend on electronic goods. It is therefore important to have a range of differently priced products e.g. iTunes is continuing to make Apple revenue, as it is perceived as a relatively cheap way of buying albums and individual songs. Social forecasting and adaptability is key for any large company with a big market share to stay in the black.

The UK has an ageing population, this sees the company potentially paying more in terms of pension payments as their staff are living longer. In terms of product development too, Apple should be aware that they need to reach out to all ages and indeed all cultures, as Britain is an extremely multi-cultural society and this has an impact on demand.

Technological

Obviously being an electronics and software company it is extremely important for Apple to invest heavily in R&D to stay one step ahead in terms of technological innovation. Implementing new technology within their products will also be essential in order to keep ahead or alongside the competition. This also means that they have to safeguard any potentially new technology they create, something they are evidently doing as in 2008 they filed a patent for a holographic display.

Developing in-house or outsourcing technology to use in products is something which needs to be carefully balanced in order to maximise efficiency but also safeguard against competition.

We are a very online orientated society in 2009 and that only stands to continue, developing and maintaining existing and future processes and services stands Apple in good stead to succeed in the technological marketplace for years to come.

Legal

Apple like all other large companies who operate within the UK obviously have to adhere to various employment laws, such as paying their employees at least minimum wage and adopting anti-discriminatory policy about who they hire to work for them and do business with. Redundancy and dismissal issues also have to be adhered to, or risk certain legal implications.

Competition law, not really aimed at protecting a huge multinational company like Apple, but rather making sure that smaller potential competitor companies are not ‘bullied’ by larger firms and ensuring customers are not exploited by firms with a large monopoly in particular sectors.

It is also a legal requirement that health and safety law is adhered to, noting suitable risk assessments etc. This covers all staff members that work for Apple and is in effect across all premises that they own.

Environmental

With so much emphasis on companies becoming ‘Green’ or ‘Greener’, this obviously has implications on how Apple conduct their business. Suitable disposal techniques of hazardous materials for example or developing more energy efficient manufacturing techniques for production of new products.

Recycling certain materials for reuse is also important to retain a ‘Green’ image. Something Apple are all currently doing with their new range of iMacs anyway. Also in effect is the recycling of old electronic products for money off new ones. This can definitely be viewed as a positive as it shows off the company in a responsible light, increasing market foothold. Read about HP competitive advantage

With the internet becoming an ever increasingly easier way to shop, this negates the need for so many outlets held by the company. This will obviously reduce the companies ‘carbon footprint’ and also benefit financially too as the cost of overheads will drop.

Apple’s Competitive Environment

Apple has five main product areas:

Computers – iMac, iBook, Powerbook, Macbook Air

MP3 Players- iPod Classic, iPod Touch, iPod Nano, iPod Shuffle

Mobile Telephones- iPhone, iPhone 3G, iPhone 3GS

Peripherals-Headphones, Chargers, Cases

Software- Logic, Final Cut, Snow Leopard OSX, Aperture, iTunes, iLife

As such a multi-faceted organisation Apple obviously have competition from all areas of the electronics and computing industry. However they have remained a major player in all the product areas they are involved in, whilst they have certainly been at the top of the mp3 player market for the last 8 years since the iPod was introduced in 2001.

Below is a table that shows Apple’s main competitors and the product areas they are in, segments they sell to, size and location of each:

Competitor
Market Segments
Product Areas
Location
Size
Microsoft
Worldwide market, serving both home and business
Software, Peripherals, Video Game Consoles
Washington, USA
93,000 employees in over 100 countries
Dell
Worldwide market, serving both home and business
Computers, Peripherals, Televisions
Texas, USA
76,500
HP
Worldwide market, serving both home and business
Computers, Peripherals, Televisions, Digital Cameras
California, USA
321,000
Sony
Worldwide market, serving both home and business
Computers, Mobile Telephones, MP3 Players, Peripherals, Televisions, Digital Cameras, Electric Components, etc.
Tokyo, Japan
180,500
Nokia
Worldwide market, serving both home and business
Mobile Telephones, Software, Laptops
Espoo, Finland
123,300 in 120 countries
Research in Motion
Worldwide market, serving both home and business
Mobile Telephones (Blackberry), Mobile Services
Ontario, Canada
12,000

In relation to Apple who have the following statistics:

Apple Inc.
Worldwide market, serving both home and business
Computers, Software, MP3 Players, Peripherals, Mobile Telephones, Mobile Services
California, USA
35,000

As you can see in the information provided above there are no other companies who have quite the range of products that Apple does. All the companies listed serve both home and business consumers across the world. It is difficult to scale down the segments they sell to in the market due to the fact that there is such a broad spectrum of consumers.

Apple does indeed have a lot of competition but from a lot of different companies, as they are so diverse within their product range. This means an extremely effective and multi-faceted marketing strategy is required to reach out to consumers all over the globe.

References

Information and facts accessed from:

OXFORDUNIVERSITY PRESS, 2007. PESTEL Analysis of the macro-environment [online]. Available: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm [accessed 4th November 2009]

TECHNOLOGY DEVELOPMENT BLOG, 2008. Apple Patents Holographic Display [online]. Available: http://macsdev.wordpress.com/2008/03/21/apple-patents-holographic-display/ [accessed 4th November 2009]

APPLE INC., 2009. Apple and the Environment [online]. Available: http://www.apple.com/environment/ [accessed 4th November 2009]

Figures for table accessed from:

VARIOUS ARTICLES ON MICROSOFT, DELL, HP, SONY, NOKIA, RESEARCH IN MOTION AND APPLE INC., 2008 – 2009. [online]. Available: http://www.wikipedia.org/ [accessed 4th November 2009]