Assignment 4

Running Head: EXTERNAL AND INTERNAL ENVIRONMENT 1

EXTERNAL AND INTERNAL ENVIRONMENT 7

External and Internal Environment

Teona Goodman

Business Administrator Capstone

Dr. Joseph Keller

February 12, 2020

External and Internal Environment

Introduction

This essay looks at segments of the general environments that rank highest in their influence of Apple. It also analyzes two forces of competition which are most significant for the corporation to choose and how the company has addressed them in the past as well as its ability to address the forces in the near future. Threats and opportunities affecting Apple Corporation will be assessed as well as its greatest strengths and weaknesses. The company’s resources, core competencies, and capabilities will be determined.

General Environment

The general environment of an organization entails the nonspecific element of the surroundings of a firm that can affect its activities. The first ranking segments of the general environment that affect Apple are political and economic factors. The effects of these dimensions in the organization are mostly broad and gradual (Lombardo, 2019).

Political Factors

In most cases, Apple does not have control over the political factors which affect its operations; instead, it is the governments in which they operate. Some of the political factors influencing the activity of Apple in a particular nation include political stability. When countries, especially the developing nations, are experiencing political turmoil, it is tough for businesses to thrive. Hence, the activities of Apple in a country undergoing political instability might be curtailed due to low purchasing power, which leads to low sales. The trade policies of a nation will also affect the operations of an international organization. Lack of promotion of free trade policies by a government can inhibit the setup or growth of Apple in such a country. Trade disputes are also an impediment to business growth and development. For instance, the trade disputes between the U.S. and China have led to slow business in Apple products in China, which is a considerable blow to tap that market. Additionally, runaway corruption, especially in developing nations, also hinders the setup of businesses in such countries (Lombardo, 2019).

Apple is affected by such a state of nations because it can be hard to meet the demands of specific individuals when setting up shop in those regions. Lastly, a poor state of infrastructure will also affect the startup or growth of Apple in a country due to its use of high technological equipment in production.

Economic Factors

There are some markets and conditions in the industry that will affect Apple. The stability of the economy of a nation dictates if Apple will thrive in a particular market or not. A clear opportunity for Apple products is only guaranteed in developed nations. Another factor is the rapid growth of the economy in developing countries. When governments are experiencing slow growth rates economically, the percentage of sales of Apple products is also affected hence less profitability. Lastly, when a nation has high disposable incomes, it forms chances for Apple to sell its relatively expensive technological products to people in the region it operates (Lombardo, 2019).

Five Forces of Competition

Any organization should be geared to understand its close competitors, the quality of their products or services as well as their strategies in marketing. Knowledge of such variables is essential for survival in a specific market. The two most significant forces of competition to Apple are competitive rivalry and the bargaining power of customers.

Competitive Rivalry

Globally, Apple is facing stiff competition from companies such as LG and Samsung. The competitors are also engaged in the innovation and advertising of their products. To address this, Apple decided to be more innovative and creative through the creation of unique features in their products which attract clients. They are also involved in sophisticated advertising and use robust marketing strategies to woo customers. In terms of product differentiation, Apple strives to make sleek products with unique features to beat their competitors. However, many products in the technology industry are similar to fulfill specific purposes (Ferguson, 2019). To deal with low switching costs, Apple has reduced the price of its products, and maintained high quality, increased functionality of its products made them more accessible as well as improved the network of its products.

Bargaining Power of Customers

The bargaining power of clients is robust in affecting the activities of Apple. For instance, the low switching cost is very high because the clients can switch brands due to the price, accessibility, and function of Apple products. To curb this situation, Apple has expanded its market base to ensure its products are easily accessible by clients, as well as reduced prices while maintaining quality to attract more clients. The low switching cost being high compels Apple to ensure clients are satisfied (Ferguson, 2019). There is also the case of high buying information where Apple has availed information in the market concerning its products to empower the potential clients to shift from other brands.

Future Improvements

To reduce competition in the industry, Apple should lower its prices further because its products are considered highly-priced when compared to those of close competitors while maintaining quality. Many potential customers would want to own Apple products, but the prices inhibit ownership. They should also target low-end market segments. In the developing nations, the number of the middle class is growing; hence more information on Apple products is needed. The products also need to be accessible by this growing population segment to enhance the bargaining power of clients, which in turn increases sales.

Greatest External Threat

The biggest threat that faces Apple is competition from close rivalries. There has been fierce competition in the industry due to the aggressiveness of the other competing firms. The competing organizations in the industry are also engaged in the rapid innovation of its products using modern technology. The aggressive competition has had a limiting effect on Apple (Smithson, 2019). To deal with severe competition, Apple should initiate fundamentals for keeping competitive advantages such as pricing, quality, adaptability, and accessibility.

Greatest Opportunity

The most significant opportunity that Apple should grab is to expand its distribution network. Apple should change its limited distribution network to reach other clients in other markets. Having an expanded distribution network will assist Apple makes more sales to clients globally (Smithson, 2019). There is a rise in demand for Apple products; hence expanding the distribution network will cater to this demand.

Strengths and Weaknesses

One of the forces of Apple is that it enjoys a sharp brand image globally. A highly reputable organization has high-profit margins because it attracts more clients. Additionally, Apple has an effective rapid innovation process, which leads to the manufacture of quality products that attract clients. In the case of weaknesses, Apple has a limited network of distribution of its products; hence it does not maximize its potential in availing products to clients. Another weakness is that Apple products are highly-priced compared to those of close competitors. Lastly, Apple depends on sales from high-end market segments only, which limits its selling capacity (Smithson, 2019).

Strategy or Tactic

Apple should take advantage of its excellent brand reputation, high profitability rate, and innovation prowess to penetrate markets to enhance client base and increase customer loyalty. To overcome these weaknesses, Apple should expand its distribution network to cater to all clients, reduce prices while maintaining the quality to attract low-end market segments, which will help increase revenue.

Resources, Capabilities and Core Competencies

Some of the resources and capabilities of Apple include product quality, which has remained unchallenged for long. The quality of products has led to enhanced brand reputation. Apple is also heavily focused on research and innovation, which has helped it maintained the number one position in computing the tech industry. Apple has also sustained global popularity and presence because it operates its business in different geographical regions, which has been to its advantage. Apple has unique marketing strategies that have helped the organization to be distinct and different. Marketing has helped increase sales and engages clients better. Due to the focus on the quality of its products through innovation, Apple has created a considerable customer base and increase client loyalty. Apple has kept a vast global supply chain, which has ensured that the raw material is of good quality, which is key to the production of Apple products (Pratap, 2019).

Sources

Ferguson, E. (2019). Apple Inc. Five Forces Analysis (Porter’s Model). Retrieved from http://panmore.com/apple-inc-five-forces-analysis-porters-model-case-study

Lombardo, J. (2019). Apple Inc. PESTEL/PESTLE Analysis & Recommendations. Retrieved from http://panmore.com/apple-inc-pestel-pestle-analysis-recommendations

Pratap, A. (2019). Apple Resources and Capabilities. Retrieved from https://notesmatic.com/2019/04/apple-resources-and-capabilities/

Smithson, N. (2019). Apple Inc. SWOT Analysis & Recommendations. Retrieved from http://panmore.com/apple-inc-swot-analysis-recommendations