Apple Inc.’s high performance is linked to effectiveness in addressing external factors in the company’s remote or macro-environment. The corporation’s success is a result of strategic management that exploits opportunities and protects the business from threats in the consumer electronics and information technology services industries. This PESTEL/PESTLE analysis of Apple Inc. identifies the most significant external factors that the company must strategically address in its industry environment. The PESTEL/PESTLE analysis framework evaluates the political, economic, sociocultural, technological, ecological, and legal factors relevant to the business. These strategic factors are opportunities or threats that impact business performance relative to competitors, such as Google, Microsoft, Amazon, Samsung, IBM, Dell, HP, Sony, Lenovo, Huawei, and LG. While Apple has a leading position, especially in the premium consumer electronics market, this PESTEL/PESTLE analysis shows that the company must continue evolving its strategies to keep its leadership. Effectiveness in addressing these external strategic factors ensures that Apple remains strong despite tough competition in the global market.
The external factors in Apple’s remote or macro-environment indicate the value of strategic management and flexible long-term strategic planning in managing external factors. This PESTEL/PESTLE analysis serves as a guide for strategic formulation processes to address external pressures the technology corporation is experiencing. Apple Inc.’s generic strategy for competitive advantage and intensive strategies for growth are examples of strategic congruence for countering such pressures.
Political Factors Affecting Apple’s Business
The political external factors in Apple’s remote or macro-environment mainly present opportunities. This aspect of the PESTEL/PESTLE analysis model indicates the influence of governments and related organizations on businesses. In Apple’s case, the following are some of the major political external factors:
- Improving free trade policies (opportunity)
- Stable politics in developed countries (opportunity)
- Trade disputes, especially between the U.S. and China (threat)
Better overall free trade policies are created over time. This external strategic factor increases the opportunities for Apple Inc. to distribute more of its products around the world. This PESTEL/PESTLE analysis also identifies the stability of the political landscape of developed countries as an opportunity for Apple to grow, considering the reduced political problems affecting business operations in these countries. In spite of these trends that present opportunities, the political external factor of trade disputes, especially between the United States and China, creates a threat against the company’s potential growth and the global sales revenues of its products, such as consumer electronics. For example, growing China-U.S. tensions could lead China to impose higher tariffs on imported electronic components used in Apple’s product assembly. Based on this part of the PESTEL/PESTLE analysis, Apple can improve its performance by taking advantage of political opportunities in its remote or macro-environment, although caution is needed to ensure stability despite trade disputes.
Economic Factors Important to Apple Inc.
Most of the economic external factors in Apple’s remote or macro-environment create opportunities. This aspect of the PESTEL/PESTLE analysis model indicates market and industry conditions that impact firms. In this external analysis case of Apple Inc., the following economic external factors are the most significant:
- Stable economies of developed countries (opportunity)
- Rapid growth of developing countries (opportunity)
- Increasing disposable incomes among target customers (opportunity)
The economic stability of developed countries creates opportunities for Apple’s expansion. However, the rapid growth of developing countries is a more significant economic external factor in this PESTEL/PESTLE analysis case, in terms of support for growing the technology business. For example, the high economic growth rates of Asian countries are opportunities for Apple to increase its revenues through sales in these foreign markets. In relation, higher disposable incomes create more opportunities to sell the company’s relatively high-priced technology products. In exploiting these economic opportunities, it is essential to consider competitive forces in the international market, as described in the Porter’s Five Forces analysis of Apple Inc. These external strategic factors indicate growth potential for the corporation and its competitors, especially large multinational firms like Samsung. Based on this part of the PESTEL/PESTLE analysis framework, speed and effectiveness are critical in Apple Inc.’s growth and expansion efforts because competitors also target these same economic opportunities.
Social/Sociocultural Factors in Apple’s Industry Environment
Apple’s business is subject to the effects of social or sociocultural trends. This aspect of the PESTEL/PESTLE analysis model points to the social external factors that influence consumer behaviors and expectations. In Apple’s case, the following sociocultural trends are significant in the remote or macro-environment:
- Rising use of mobile access (opportunity)
- Increasing dependence on digital systems (opportunity)
- International anti-Apple sentiments (threat)
The rising use of mobile access is an opportunity to grow Apple Inc.’s revenues. This social external factor relates to the increasing demand for devices like smartphones and tablets. This PESTEL/PESTLE analysis also points to the increasing dependence on digital systems, which is another sociocultural trend that creates opportunities for Apple to sell more of its products based on higher demand. Despite these opportunities, the company faces the social threat of opposition against its business operations. Anti-Apple sentiments are mounting, questioning business practices, such as the company’s lawsuits against third-party repair service providers that repair products like the iPhone and MacBook. In the PESTEL/PESTLE analysis context, these sentiments have the potential to reduce brand image and consumer confidence in the corporation’s technological products. These sociocultural factors emphasize the importance of Apple Inc.’s corporate social responsibility strategy. Such strategy helps satisfy stakeholders, including customers and governments. In addition, Apple Inc.’s corporate culture is a relevant factor because it influences the quality of service provided to customers. The company’s internal cultural approach must align with the sociocultural trends influencing the global market. In this part of the PESTEL/PESTLE analysis of Apple Inc., opportunities for growth, as well as threats against the business, are identified. These strategic concerns require that the company continue improving its policies and practices, as well as its approaches to technological innovation. Also, Apple Inc.’s marketing mix or 4Ps must include strategies that match such social external factors.
Technological Factors in Apple’s Business Environment
The technological external factors in Apple’s remote or macro-environment generally provide opportunities for the enterprise. In this aspect of the PESTEL/PESTLE analysis framework, current technologies and technological trends are evaluated based on their effect on business conditions. In Apple’s external analysis case, the following technological external factors are the most significant:
- Growing cloud computing demand (opportunity)
- Increasing technological integration in businesses (opportunity)
- Growing mobile market (opportunity)
- Growing technological capabilities of other firms (threat)
This PESTEL/PESTLE analysis of Apple Inc. identifies the growing demand for cloud computing as an opportunity to grow the business. The company now offers cloud services, although to a limited extent. In exploiting this opportunity, together with support from Apple Inc.’s corporate structure, developing an expanded cloud infrastructure could maximize the profitability of the business in offering cloud-computing services. In relation, the external strategic factor of increasing technological integration presents the opportunity to enhance the company’s services and grow the business by offering its technological goods and services to more customers, including organizations. Furthermore, this PESTEL/PESTLE analysis includes the growth of the mobile market as an opportunity for Apple Inc. to gain higher revenues, including revenues through the App Store and related digital content distribution platforms. However, the technological advancement of other firms threatens the company, as more new players could enter the market. Thus, to ensure the achievement of Apple Inc.’s corporate vision and mission statements, it is beneficial to reinforce business capabilities to exploit the opportunities and protect the business against the competitive threats shown in this part of the PESTEL/PESTLE analysis.
Ecological/Environmental Factors
The ecological factors in Apple Inc.’s remote or macro-environment provide opportunities for business improvement. This aspect of the PESTEL/PESTLE analysis model highlights ecological trends and their impacts on business. In Apple’s case, the following ecological external factors are the most important:
- Business sustainability trend (opportunity)
- Energy efficiency trend (opportunity)
The business sustainability trend is an ecological factor linked to increasing favor among businesses to adopt sustainable practices, based on concerns about the adverse environmental impact of business operations. In this PESTEL/PESTLE analysis of Apple Inc., such an ecological trend offers the opportunity to strengthen the company’s corporate image. In addition, the energy efficiency trend is an ecological external factor that promotes the adoption of newer and more efficient technologies among businesses and customers. Apple has the opportunity to improve its operational cost efficiencies in this regard, while offering more attractive products to an increasingly environmentally aware customer population. Based on this part of the PESTEL/PESTLE analysis model, Apple addresses these ecological/environmental factors in its remote or macro-environment. The company has strategic measures to adjust its operations and technological products to respond to these ecological trends. Apple Inc.’s operations management also supports business efforts to exploit opportunities on these trends.
Legal Factors that Limit Apple
The legal external factors in Apple’s remote or macro-environment create threats to the business. This aspect of the PESTEL/PESTLE analysis framework indicates the impact of laws or regulations on businesses. In Apple’s case, the following are the most significant legal external factors:
- Increasing privacy regulations (opportunity & threat)
- Legal challenges against Apple’s policies and practices (threat)
Governments’ pressure on privacy in the digital age has resulted in increasing privacy regulations on businesses like Apple Inc. This legal external factor is a threat that could impose costly regulatory compliance requirements and more limits on the technology company. However, this PESTEL/PESTLE analysis identifies the same external factor as a trend that presents the opportunity for Apple to boost its business through enhanced privacy measures. In addition, the company faces legal challenges related to its practices and policies on after-sales service and other areas of the business. For example, in Australia, the European Union, and the United States, among other countries, the company has faced strong criticism and legal battles regarding its policies on third-party repair services. Based on this part of the PESTEL/PESTLE analysis model, Apple must emphasize privacy protection and regulatory compliance in all of its products, and consider adjusting its policies and practices to address current legal pressures on the business.
Apple Inc. PESTEL/PESTLE Analysis – Recommendations
This PESTEL/PESTLE analysis shows that the majority of external factors in Apple’s remote or macro-environment provide opportunities. Given its current industry position, the company can exploit these opportunities to expand its reach in the global information technology goods and services market. However, Apple must develop suitable strategies to effectively address the threats identified, especially those in the legal dimension of its remote or macro-environment. Based on this PESTEL/PESTLE analysis, it is expected that Apple will remain in its strong industry position. Nonetheless, the dynamics of the market and the presence of aggressive competitors could drastically change the company’s strategic position. In this context, it is of critical importance to further improve the strengths identified in the SWOT analysis of Apple Inc.
References
- Apple Inc.’s E-commerce Website.
- Apple Inc. – Environment.
- Apple Inc. – Form 10-K.
- Apple Inc. – Supplier Responsibility.
- Cherney, M. (2018). Apple Fined as Customers Win a Right-to-Repair Fight. The Wall Street Journal.
- Dockalikova, I., & Klozikova, J. (2014, November). MCDM Methods in Practice: Determining the Significance of PESTEL Analysis Criteria. In European Conference on Management, Leadership & Governance (p. 418). Academic Conferences International Limited.
- Jennings, R. (2018). Why These Contractors Had To Help Apple Cut Air Pollution In China. Forbes.
- Murphey, M., & Gause, R. (1974). UCF Research Guides. Business Research–Industry Analysis. PESTLE Analysis. Business Horizons, 17(5), 27-38.
- U.S. Department of Commerce – International Trade Administration – The Media and Entertainment Industry in the United States.
- U.S. Department of Commerce – International Trade Administration – The Semiconductors Industry in the United States.
- U.S. Department of Commerce – International Trade Administration – The Software and Information Technology Services Industry in the United States.
- Wiens, K., & Gordon-Byrne, G. (2017). Why We Must Fight For The Right To Repair Our Electronics. IEEE Spectrum.
- Yuksel, I. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.