With the help of PESTLE model, it is possible to understand Apple's strategic opportunities. The political, economic, socio-cultural, technological, legal and environment factors are the components of the PESTLE model that allow us to evaluate key elements that have a great influence on the company. This model is useful to anticipate future decisions and orientation of the company.
Apple sells its product all over the world with 52% of global sales made outside the US. Wars, terrorism, geo-political tensions, public healthcare issues can damage Apple's business. These events are totally out of control for Apple. Likewise, Apple subcontracts and outsources transportation, logistics, components and product assembling in countries where production costs are very low. Most of these subcontractors are located outside the US, mainly in Asia. For example, the final assembling of products is carried out in Ireland, Korea, Czech Republic and China. Production, logistics and transportation in these countries can be delayed or even stopped by political issues and conflicts. If there is delay in the deliveries, Apple can't ship the product on time and the customers will not be satisfied. This will result in Apple losing its credibility and brand image, which are the two essential values for Apple.
During the financial crisis the economic perspectives were not very encouraging. Many economic factors impede the companies' profit margins like the high price ratings of the oil barrel, depreciation of currencies (USD), fall of purchasing power and unemployment. People consume what is really necessary for them and they abandon consumer electronics, computers, etc postponing the purchase of new equipment. This has resulted in slow elimination of the crisis and customers are beginning to buy products like new cell phones, laptops, mp3 players and computers. So, Apple has to be there, and be prepared with new products to attract the consumers.
Apple strongly relies on its products' federative power. Every iPod and especially Macintosh owner is strongly attached to the Apple brand. There is an Apple Culture that has existed since the creation of the company. The commercial technique of the company has always been to stay as close as possible to its potential clients. The goal is to make customers feel like they are part of this community. To achieve this goal, Steve Jobs frequently organized some meetings where he presented his projects to the Apple community. In this community, we can find developers, clients, but especially the press. The name of this kind of meetings is MacWorld, and they are convened in different strategic cities of the world such as New York, San Francisco or Tokyo. These meetings are always introduced with a video projection (realized with the software Apple Keynote, competitors of Microsoft Excel), presenting the end financial results, and generally the new products.
[...] Market segmentation Apple divides its customers into 5 different segments: - Professionals: people who work in specific businesses like music industry (producing etc), image industry (photography, design, graphics), Advertising, edition and publication. Most of them are artistic-oriented jobs. - Students: we can notice that Apple's market share within students will reach almost 40%1 in the next year. - “Sick of windows” people: former users of Windows and Microsoft which are full of viruses, crashes, difficulties using their PCs, and a product that just works without having to configure things all the time. [...]
[...] Product: Apple products are divided into five categories: - Consumer electronics: iPod, iPhone, LCD displays - Computers: iMacs, MacBook, Mac Pro - Software: Logic studio, Final Cut, Mac OSX, iTunes - Online Music Store: iTunes Store - Accessories: Time capsule, Apple TV, keyboards, magic mouse In Apple's product range, every product is designed for a certain category of consumers. Products are differentiated, unlike other companies in the same business that can have more than 20 models of computers with just very little differences between each. [...]
[...] Micro Environment: Porter's five forces Bargaining power of suppliers - Apple's suppliers don't have much bargaining power over the company because Apple is very vertically integrated. The company owns shares in almost every single supplier of electronic components. Then Apple also manufactures its own components. - The market leader is Intel (micro processors), which dominates market share with and its closest rival, AMD, has Bargaining power of customers - Companies: interested by the compatibility with management software (SAP for example), assistance and services. [...]
[...] So, Apple has to be there, and be prepared with new products to attract the consumers. Socio-cultural factors Apple strongly relies on its products' federative power. Every iPod and especially Macintosh owner is strongly attached to the Apple brand. There is an Apple Culture that has existed since the creation of the company. The commercial technique of the company has always been to stay as close as possible to its potential clients. The goal is to make customers feel like they are part of this community. [...]
[...] We can see this as Apple sells its products apart from the other computers. In every single store where Apple is present, there is an Apple because Apple doesn't want to be presented between a Sony Vaio and a HP laptop. Apple is one of the strongest brands in the computer industry and consumer electronics. It's ranked 20th in best 2009 global brand ranking1, and realizes 54% of its sales outside the US. Apple focuses on creating high technology products which are very accessible for people, they make technology easier and user friendly. [...]
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