Assignment 2: LASA 1—Preliminary Strategy Audit

External Environment Scan

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Date

a) Economic factors and trends

Apple is an organization that sells to all parts of the world. With this in mind, it is apparent that the company is likely to be affected by the economic factors and trends where it sells its products (Kane et al. 2015). For example, when the economy of a nation in Africa depreciates, it is likely that the dollar will gain strength. Therefore, the local consumer will have to part with more money than there before. As a result, the customers might choose to purchase basic needs and leave the products of Apple, and that will have a negative impact on the profits of the company.

b) Political factors and trends

When the political situation in a nation is intense, the economy of the nation is affected, and that affects the power of purchasing. In such cases, apple is affected because the products are not bought in numerous units as they were brought before (Grant, 2016). When there is a tendency of political instability, the company is affected more because there is no time for the consumers to work and earn to afford the products of the company.

c) Regulatory and legal factors and trends

Regulatory factors such as the ability of an organization to set up a business in a specific nation affect the company. When a lot of capital is needed to establish a business in a specific nation, the company incurs an additional cost, and that affects the profits of the company (Hill et al. 2014). At the same time, when the laws are strict to the investors, the company is limited to doing business thus experiencing delays in its operations.

d) Societal factors and trends

Society factors are associated with the beliefs and trends of the society. When the society embraces and encourages the use of specific products, the company providing or supplying the products is likely to benefit (Hill et al. 2014). However, if the society is against the products, the company suffers a loss. With this in mind, it is apparent if the beliefs of a society in an area where Apple operates are the products of Apple, the company suffers.

e) Technological factors and trends

In the modern day, technology has become part and parcel of people's lives. Therefore, a company like Apple must ensure that it only introduces technologically competitive products to the market (Kane et al. 2015). When the company introduces products which do not meet the technological needs, the company is likely to be negatively affected because many customers choose to buy from the company that is meeting their technological needs.

f) Geographic factors and trends

The market of Europe and the market of Africa defer. Therefore, the geographic region where the products are marketed and sold should be considered (Grant, 2016). When the company establishes an outlet in a region where people are not technologically sensitive and are not even connected to electricity, it is more likely that the sales will be minimal. However, when the company sets up its outlet in a high populated area with a big percentage of people who are technologically sensitive, it is more likely that the company will make huge profits.

g) Porter's five forces that consist of the following aspects:

· Threat of new competition

The entrance of an organization that targets the same customers as Apple is likely to affect the company in one way or another (Kane et al. 2015). Consumers are always enticed by new products. Therefore, when they see an organization in the industry, they start buying from the new organization with the intention of trying to see if the product provided is better than the products they are used to. As a result, the established organization loses some of the customers to the new organization.

· Threat of substitute products or services

Substitutes may come from a new entry or an already established organization. An organization that introduces substitutes in the market is likely to affect the products of apple in one way or another (Kane et al. 2015). The reason behind it is because the company loses some of its customers and that has an effect on its sales and profits.

· Bargaining power of customers (buyers)

Customers are different. There are customers who buy without asking a question about the price, and there are also those who buy after bargaining. In business, bargaining is accepted (Kane et al. 2015). However, when the customers bargain too much to the extent of the company not being able to sell, such a move affects the company. This is because the company either makes minimal profits or is not even able to sell because the quotation of the customer is economically unreasonable.

· Bargaining power of suppliers

When the company manufactures its products, it is apparent that it does so consider that the suppliers might bargain (Grant, 2016). However, some of the suppliers bargain too much. When such a scenario takes place, the company is left with a choice of giving the products at a lower price than earlier intended or targeting the customers in the absence of the suppliers. Whatever decision the company makes has an effect on the units to be sold and the profit to be made.

· Intensity of competitive/industry rivalry

Competition is a norm in the business industry; however, there is a type of competition that can financially drain an organization (Hill et al. 2014). When the competitors give the organization a run for their money by either dominating the market or manufacturing a high-quality products, the company is left with no choice but to try and keep up with the pace. Doing so might call for the allocation of extra finances to departments which were not to be allocated any money. As a result, the finances of the company are negatively affected.

References

Grant, R. M. (2016). Contemporary Strategy Analysis Text Only. John Wiley & Sons.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Kane, G. C., Palmer, D., Phillips, A. N., Kiron, D., & Buckley, N. (2015). Strategy, not technology, drives digital transformation. MIT Sloan Management Review and Deloitte University Press, 14.