Unit 1 Learning Aim C and D
,Unit 1 Learning Aim C and D
Contents
Introduction.......................................................................................................................................3
Synopsis.............................................................................................................................................3
The internal /external environment factors......................................................................................3
External;.........................................................................................................................................3
External;.........................................................................................................................................3
Internal;.........................................................................................................................................4
PESTLE................................................................................................................................................4
Political..........................................................................................................................................4
Economical.....................................................................................................................................4
Social..............................................................................................................................................5
Technological.................................................................................................................................5
Legal...............................................................................................................................................6
Environmental...............................................................................................................................6
Porter's five forces.............................................................................................................................6
Industry Competition.....................................................................................................................6
Bargaining Power of Buyers...........................................................................................................7
Threat of New Entrants to the Marketplace..................................................................................7
Bargaining Power of Suppliers.......................................................................................................7
Threat of Buyers Opting for Substitute Products...........................................................................7
Swot...................................................................................................................................................7
Strength.........................................................................................................................................8
Weakness.......................................................................................................................................8
Opportunity...................................................................................................................................8
Threats...........................................................................................................................................8
Corporate social responsibility..........................................................................................................8
Evaluation on how big of an impact the business environment has on Apple.................................10
Market structure..............................................................................................................................11
,Unit 1 Learning Aim C and D
The effects of the environment on a
business
Introduction
In this report I will be writing about a large business that trades in the EU,
I will include The external environment that effects the business that I
have chosen, the internal environment, the competitive environment,
the influences on the chosen business demand, supply and price and the
different market structures that they operate in and their impact on
pricing and output decisions and how the business reacts to these
changes.
Synopsis
Apple INC is an American multi-national corporation that design and manufactures consumer
electronics, Computer software, and personal computers. The company is best known for making
some of the world's most ubiquitous consumer devices, software, and services: the iPhone, iPad,
iMac and MacBook computers, Apple TV, Apple Watch, iOS, iCloud, iTunes, Apple Music, Apple Pay,
etc. Led by CEO Tim Cook since 2011, Apple is one of the largest technology companies in the world
alongside Microsoft, Google, Amazon, and Facebook. Some of apples aim and objectives are “to
become the leading business in the mobile market”, “To produce hassle free products that provides
service and enjoyment for customer” and “To expand their sales to customers who have not yet own
any Apple’s products”. They operate in the secondary and tertiary sector as they produce and sell
their own products. Also, apple have 506 retail stores in 24 different countries, and they have 132
thousand employees. The reason I chose apple as the business that Is because we had to choose a
large business that operates in the EU and apple is a very successful business.
The internal /external environment factors
External;
Monetary policy consists of the actions of a central bank, currency board or other regulatory
committee that determine the size and rate of growth of the money supply, which in turn affects
interest rates. Monetary policy is maintained through actions such as modifying the interest rate,
buying or selling government bonds, and changing the amount of money banks are required to keep
in the vault (bank reserves).
External;
Fiscal policy involves the government changing the levels of taxation and government spending in
order to influence Aggregate Demand (AD) and the level of economic activity.
,Unit 1 Learning Aim C and D
Internal;
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be
socially accountable — to itself, its stakeholders, and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can be conscious of the kind of impact
they are having on all aspects of society including economic, social, and environmental. To engage in
CSR means that, in the normal course of business, a company is operating in ways that enhance
society and the environment, instead of contributing negatively to it.
PESTLE
Political
Political factors can impact a business by making the market environment more or less friendly for
that business. Typically, governments have a great deal of power over businesses and many times,
there is not much that businesses can do about it.
Apple is a company that currently operates in the EU, however current affairs can have positive and
Negative impact on the phone company. For example, Brexit is the departure of the United Kingdom
from the European Union. Brexit could a positive impact for apple because it gives them a chance to
negotiate a free trade policy, if successful it would mean that they are able to trade with little to
none tax on their products. Which means they would be able make more capital on their product.
Brexit could have a negative effect on the company, because it would hinder the access to the single
market and disrupt the flow of apple products into the UK which could possibly lead to increase
tariffs on the products that they export and import from and to the EU
Economical
Economic factors relate to goods, services, and money. Despite directly affecting businesses, these
variables refer to financial state of the economy on a greater level
whether that be local or global. The reason for this is that the state of the economy can decide many
of the important details that come up in an operating company, including topics such as consumer
demand, taxes and asset value.
The recent economic downturn has plagued the European economy, As the pound has drop in the
value since Brexit. Which has led Apple increased prices 1 on many products in the UK between 5%
and 35%, to reflect changes in the GBP/USD exchange rate. The diagram below shows how much the
price of some apple products has increased for example the iPhone SE Pre-Brexit was £359 and the
post Brexit price is £379, This shows a percentage increase 5.9%. which lead to the price of Apple's
shares to go down by 2.8 percent, from an already low valuation hovering around $96 over the past
week to close at $93.40 today. 2
1
https://www.businessinsider.com/apple-increases-macbook-pro-mac-prices-uk-due-brexit-usd-gbp-
exchange-rate-2016-10?r=UK&IR=T
2
https://appleinsider.com/articles/16/06/24/how-the-uks-brexit-vote-to-leave-europe-affects-apple
,Unit 1 Learning Aim C and D
Social
Social factors are things that affect lifestyle, such as religion, family or wealth. These can change over
time. According to a Mintel study, full screen displays, and larger screens are the major trends
driving prices for smartphones. With the increasing demand for phablets 3 and extended battery life
being a priority to consumers, multitasking attributes and low prices can help drive smartphone sales
since customers are attracted to low cost but high-quality products . Apple’s smartphone rivals like
Samsung and LG have already developed extra-large screen smartphones to capture the growing
market. This affects apple as consumers will be looking for cheaper alternatives to apple products
especially as there has been a drop in the value of the pounds so they would be less inclined to
purchase high price products because it would be more expensive.
However, to appeal to the increasing number of consumers who prefer phablets because of their
multitasking capabilities and the need to provide a more affordable version of iPhone X which
currently retails at £1000, Apple released a new iPhone version, the iPhone XS Max which, at 6.5
inches, has the largest iPhone screen Apple has ever made 4.
Technological
Artificial intelligence is one of the trends revolutionizing the technology industry with nearly half of
the US population finding digital assistants very helpful as they can be used to complete tasks via
voice control 5.Smartphones companies are therefore incorporating advanced AI functionality
through digital assistants by combining voice control with AI and integrating commands with third-
party apps which makes smartphones faster and more effective. At the WWDC 2018 event, apple
announced its new iOS 12 which is powered by Siri, one of the big 3 digital assistants including
Amazons Alexa and Google assistant. Apples Siri makes the operating system faster and highly
3
https://www.idc.com/getdoc.jsp?containerId=prUS43258317
4
https://www.bloomberg.com/news/articles/2018-02-26/apple-is-said-to-plan-giant-high-end-iphone-lower-
priced-model
5
https://hackernoon.com/how-artificial-intelligence-ai-is-transforming-mobile-technology-9f810d734d35
,Unit 1 Learning Aim C and D
personalized as the AI iPhone will understand where you are and where you need to be and bring
suggestions like text “someone that you will be late”, in case you’re not on schedule.
Legal
Many times, businesses face threats from the external environment that come in form of legal
requirements which stipulate new ways of working or new rules and regulations that companies
need to abide by if they are to continue operating legally, Apple has recently entered the highly
regulated financial services sector via Apple Pay. This could increase the level of regulation and
government oversight it faces. Apple depends on a variety of products covered by intellectual
property laws, such as software and music, for much of its income. This leaves the company highly
vulnerable to both piracy and litigation.
Environmental
The biggest environmental issue facing Apple is the disposal of used or nonworking electronic
devices. The expense of disposing of devices, particularly those containing lithium batteries, could be
high. Apple could be forced to undertake the expense because of concerns about such devices in
landfills. Apple are becoming eco-friendlier and they say on the apple site
“We strive to create products that are the best in the world and the best for the world. And we
continue to make progress towards our environmental priorities. Like powering all Apple facilities
worldwide with 100% renewable energy 6. Creating the next innovation in recycling with Daisy, our
newest disassembly robot. And leading the industry in making our materials safer for people and for
the earth. In every product we make, in every innovation we create, our goal is to leave the planet
better than we found it”. Apple is highly vulnerable to increases in electricity costs because of its
dependence on data centres and other Internet infrastructure. They are now talking this claim by
making all their facilities worldwide to be powered entirely by renewable energy to help decrease
their Carbon footprint. Apple claim “By 2020, we’ll procure 4 gigawatts of clean energy in our supply
chain. That’s approximately one-third of our current manufacturing footprint.” So they have
identified that there carbon footprint is high and are making change to benefit the world as much as
they can.
Porter's five forces
Industry Competition
The level of competition among the major companies that compete directly with Apple in the
technology sector is high. Apple is in direct competition 7 with companies such as Google, Inc.,
Samsung Electronics Co. Ltd. and Amazon Inc. All these companies spend significant capital on
research and development and marketing, just like Apple. So, the competitive force within the
industry is strong. One thing that makes the industry so highly competitive is the relatively low
switching cost. It does not require a substantial investment for a consumer to leave Apple's iPad for
a Samsung tablet computers or other. The threat of marketplace competition is a key consideration
for Apple, which it has dealt with mainly through continually developing new and unique products to
increase and strengthen its market share position.
6
https://www.apple.com/uk/environment/
7
https://www.owler.com/company/apple
,Unit 1 Learning Aim C and D
Bargaining Power of Buyers
The element of low switching cost referred to above strengthens the bargaining power of buyers as
a key force for Apple to consider. For Apple, individual bargaining power is a weak force, since the
loss of any one customer represents a negligible amount of revenue for Apple. However, the
collective marketplace bargaining power of customers and the possibility of mass customer
defections to a competitor is a strong force. Apple counters this strong force by continuing to make
substantial capital expenditures in R&D, enabling it to keep developing new and unique products
such as the Air pods which is a current trend with the young people and the Apple Watch 8. By
building significant brand loyalty. Apple has been very successful in this area of competition,
establishing a large customer base that, would not even consider abandoning its iPhones in favour of
another smartphone competitor.
Threat of New Entrants to the Marketplace
The threat of a new entrant to the marketplace that could threaten Apple's market share because it
is relatively low9. This is due to the extremely high cost of establishing a company within the industry
and the additional high cost of establishing brand name recognition. Any new entrant to the
marketplace of personal computing or smartphones needs to have a massive amount of capital just
to spend on R&D and manufacturing to develop and produce its own product portfolio prior to ever
bringing its products to market and beginning to generate revenue. Such an entrant faces the
already identified strong competition within the industry that exists between Apple and its major
competitors, all of which are large, well-established firms
Bargaining Power of Suppliers
The bargaining power of suppliers is a relatively weak force in the marketplace for Apple's products.
The bargaining position of suppliers is weakened by the high number of potential suppliers for Apple
and the ample amount of supply. Apple is free to choose from among many potential suppliers for
component parts for its products. The industries of its parts suppliers, such as the manufacturers of
computer processors, are themselves highly competitive. The switching cost for Apple to exchange
one supplier for another is relatively low and not a significant obstacle. Plus, Apple is a major
customer for most of its parts suppliers, and therefore, one its suppliers are very reluctant to risk
losing. This strengthens Apple's position in negotiating with suppliers, while conversely weakening
their positions. The bargaining power of component parts suppliers is not a major consideration for
either Apple or its major competitors.
Threat of Buyers Opting for Substitute Products
This market force is relatively high for Apple since most possible substitute products have similar
capabilities compared to Apple's products, for example Samsung s9 compared to an iPhone x have
the most of the same capability 10.
Swot
8
https://appleinsider.com/articles/18/09/04/apple-watch-surges-to-top-of-global-wearables-market-with-
market-beating-growth
9
http://gs.statcounter.com/vendor-market-share/mobile
10
https://www.trustedreviews.com/news/galaxy-s9-vs-iphone-x-3402202
,Unit 1 Learning Aim C and D
Strength
Apple is one of the most valuable and strongest brands in the world, So the company can introduce
profitable new products by virtue of its strong brand image. This is a major strength because it
allows them to be on the fore front of the market and they are constantly gaining new customers.
Which intern allow them to have a high profit margin, using their premium pricing strategy 11 and the
volume of demand they have. They can maximise the amount of profit they get. Apple also have an
effective rapid innovation processes, this has been shown throughout the years and it has help them
stay on top of their competitors. For example, one of apple innovation was the creation of the Wi-Fi-
sharing capability introduce on iOS 11 the feature lets you quickly share a Wi-Fi password with
another device, whether it be one of your own or one belonging to someone in your contacts.
Weakness
The High prices of apple products12 is a weakness because it attracts customers from the middle- and
upper-income brackets and these are the minority, while preventing customers form low-income
brackets to easily purchase the company’s products Therefore, it will have affected the sales of their
products because consumer will look to more affordable products. For example, Mac laptops are
roughly £1000-£2000, while a standard PC laptop can cost as low as £200, the average consumer will
purchase the standard pc laptop over Mac laptops 13.
Opportunity
Apple can explore new product lines. Their current product lines are highly successful. However,
with further innovation, the company can develop and introduce new products, like what it has
already achieved with the Apple Watch and Air pods. Developing new product lines can support
business growth in the international market.
If apple can create a more affordable range of phone, they would become more Appealing to a wider
range of consumer. Which intern means that they would be able to use the rising demand for
cheaper smartphones and as a result for creating a product there is demand for the company will
have a higher sales volume based on rising in demand
Threats
Apple faces tough competition in the industry because of the aggressiveness of companies. Apple
competes with companies like Samsung, which also uses rapid innovation. Aggressive competition
has a limiting effect on Apple Inc. Another threat that apple faces is that the Chinese economy
slowing down, which is bad as the majority of apple sale come from china so this has resulted in
apple losing profits. The BBC said “Apple was vulnerable to the effects of the US-China trade spat, in
part due to risk that the tensions could cause Chinese buyers to sour towards US brands” which means
that apple is losing territory to competitor which result in apples share prices dropping in the last few
months14
Corporate social responsibility
11
http://panmore.com/apple-inc-marketing-mix-4ps
12
https://www.businessinsider.com/apple-price-hikes-2018-2018-12?r=US&IR=T
13
https://pestleanalysis.com/swot-analysis-case-study-of-apple/
14
https://www.bbc.co.uk/news/business-46742871
, Unit 1 Learning Aim C and D
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be
socially accountable — to itself, its stakeholders, and the public. By practicing corporate social
responsibility, companies can be conscious of the kind of impact they are having on all aspects of
society including economic, social, and environmental. To engage in CSR means that, in the normal
course of business, a company is operating in ways that enhance society and the environment,
instead of contributing negatively to it.
There are many benefits for a business implementing CSR policies as it can improve your company’s
reputation and position you as an ethical and responsible alternative to your competitors. This will
help to strengthen existing relationships, attract new business/partnerships and ultimately increase
market share. It will also help increase employee retention as by operating responsibly and
sustainably it creates a workplace that people will be proud to be a part of and, this will help the
business to recruit new customer whilst retaining the existing ones.
There are also some drawbacks of a business implementing CSR policies. Such as it increases
expenditure because implementing a CSR is a very expensive thing to do. Also, it shifts the business
form the profit-making objective as the company can forget about it obligations toward it shares
holder that they have to make profits for them and instead engage in CSR and use up the fund for
the shareholder.
One thing that apple has done to meet their Corporate social responsibility is that all their facility
around the world have become 100% powered by renewable source of energy to help reach one of
their environmental priorities to reduce their carbon footprint and do their part to tackle climate
change15. The company says that by 2020 they will procure 4 gigawatts of clean energy in their
supply chain. Which is approximately one- third of their current manufacturing footprint. As result of
this apple has been awarded with a clean energy index of 100% according to Greenpeace’s click
clean energy star guidelines. Apple also started to encourage consumer recycle their old apple
products, so that apple can be reusing the material found on inside the old device and use them to
make new product. They have found innovative way to extract these valuable materials without
damaging them, one way is the introduction of their recycling robot called daisy. They say that daisy
is the most innovative and efficient to recover the value materials for the old products as daisy can
take apart 200 iPhone’s in an hour and removing and sorting the components needed. Apple
ambition with daisy is one day they will not have to extract anything for the earth.
16
Another thing that Apple has done to meet their corporate social responsibility is they have
launched Apple Supplier EHS Academy, which is a 16-month program that aims to improve
15
https://www.apple.com/uk/environment/climate-change/
16
https://www.apple.com/uk/environment/resources/
,Unit 1 Learning Aim C and D
Contents
Introduction.......................................................................................................................................3
Synopsis.............................................................................................................................................3
The internal /external environment factors......................................................................................3
External;.........................................................................................................................................3
External;.........................................................................................................................................3
Internal;.........................................................................................................................................4
PESTLE................................................................................................................................................4
Political..........................................................................................................................................4
Economical.....................................................................................................................................4
Social..............................................................................................................................................5
Technological.................................................................................................................................5
Legal...............................................................................................................................................6
Environmental...............................................................................................................................6
Porter's five forces.............................................................................................................................6
Industry Competition.....................................................................................................................6
Bargaining Power of Buyers...........................................................................................................7
Threat of New Entrants to the Marketplace..................................................................................7
Bargaining Power of Suppliers.......................................................................................................7
Threat of Buyers Opting for Substitute Products...........................................................................7
Swot...................................................................................................................................................7
Strength.........................................................................................................................................8
Weakness.......................................................................................................................................8
Opportunity...................................................................................................................................8
Threats...........................................................................................................................................8
Corporate social responsibility..........................................................................................................8
Evaluation on how big of an impact the business environment has on Apple.................................10
Market structure..............................................................................................................................11
,Unit 1 Learning Aim C and D
The effects of the environment on a
business
Introduction
In this report I will be writing about a large business that trades in the EU,
I will include The external environment that effects the business that I
have chosen, the internal environment, the competitive environment,
the influences on the chosen business demand, supply and price and the
different market structures that they operate in and their impact on
pricing and output decisions and how the business reacts to these
changes.
Synopsis
Apple INC is an American multi-national corporation that design and manufactures consumer
electronics, Computer software, and personal computers. The company is best known for making
some of the world's most ubiquitous consumer devices, software, and services: the iPhone, iPad,
iMac and MacBook computers, Apple TV, Apple Watch, iOS, iCloud, iTunes, Apple Music, Apple Pay,
etc. Led by CEO Tim Cook since 2011, Apple is one of the largest technology companies in the world
alongside Microsoft, Google, Amazon, and Facebook. Some of apples aim and objectives are “to
become the leading business in the mobile market”, “To produce hassle free products that provides
service and enjoyment for customer” and “To expand their sales to customers who have not yet own
any Apple’s products”. They operate in the secondary and tertiary sector as they produce and sell
their own products. Also, apple have 506 retail stores in 24 different countries, and they have 132
thousand employees. The reason I chose apple as the business that Is because we had to choose a
large business that operates in the EU and apple is a very successful business.
The internal /external environment factors
External;
Monetary policy consists of the actions of a central bank, currency board or other regulatory
committee that determine the size and rate of growth of the money supply, which in turn affects
interest rates. Monetary policy is maintained through actions such as modifying the interest rate,
buying or selling government bonds, and changing the amount of money banks are required to keep
in the vault (bank reserves).
External;
Fiscal policy involves the government changing the levels of taxation and government spending in
order to influence Aggregate Demand (AD) and the level of economic activity.
,Unit 1 Learning Aim C and D
Internal;
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be
socially accountable — to itself, its stakeholders, and the public. By practicing corporate social
responsibility, also called corporate citizenship, companies can be conscious of the kind of impact
they are having on all aspects of society including economic, social, and environmental. To engage in
CSR means that, in the normal course of business, a company is operating in ways that enhance
society and the environment, instead of contributing negatively to it.
PESTLE
Political
Political factors can impact a business by making the market environment more or less friendly for
that business. Typically, governments have a great deal of power over businesses and many times,
there is not much that businesses can do about it.
Apple is a company that currently operates in the EU, however current affairs can have positive and
Negative impact on the phone company. For example, Brexit is the departure of the United Kingdom
from the European Union. Brexit could a positive impact for apple because it gives them a chance to
negotiate a free trade policy, if successful it would mean that they are able to trade with little to
none tax on their products. Which means they would be able make more capital on their product.
Brexit could have a negative effect on the company, because it would hinder the access to the single
market and disrupt the flow of apple products into the UK which could possibly lead to increase
tariffs on the products that they export and import from and to the EU
Economical
Economic factors relate to goods, services, and money. Despite directly affecting businesses, these
variables refer to financial state of the economy on a greater level
whether that be local or global. The reason for this is that the state of the economy can decide many
of the important details that come up in an operating company, including topics such as consumer
demand, taxes and asset value.
The recent economic downturn has plagued the European economy, As the pound has drop in the
value since Brexit. Which has led Apple increased prices 1 on many products in the UK between 5%
and 35%, to reflect changes in the GBP/USD exchange rate. The diagram below shows how much the
price of some apple products has increased for example the iPhone SE Pre-Brexit was £359 and the
post Brexit price is £379, This shows a percentage increase 5.9%. which lead to the price of Apple's
shares to go down by 2.8 percent, from an already low valuation hovering around $96 over the past
week to close at $93.40 today. 2
1
https://www.businessinsider.com/apple-increases-macbook-pro-mac-prices-uk-due-brexit-usd-gbp-
exchange-rate-2016-10?r=UK&IR=T
2
https://appleinsider.com/articles/16/06/24/how-the-uks-brexit-vote-to-leave-europe-affects-apple
,Unit 1 Learning Aim C and D
Social
Social factors are things that affect lifestyle, such as religion, family or wealth. These can change over
time. According to a Mintel study, full screen displays, and larger screens are the major trends
driving prices for smartphones. With the increasing demand for phablets 3 and extended battery life
being a priority to consumers, multitasking attributes and low prices can help drive smartphone sales
since customers are attracted to low cost but high-quality products . Apple’s smartphone rivals like
Samsung and LG have already developed extra-large screen smartphones to capture the growing
market. This affects apple as consumers will be looking for cheaper alternatives to apple products
especially as there has been a drop in the value of the pounds so they would be less inclined to
purchase high price products because it would be more expensive.
However, to appeal to the increasing number of consumers who prefer phablets because of their
multitasking capabilities and the need to provide a more affordable version of iPhone X which
currently retails at £1000, Apple released a new iPhone version, the iPhone XS Max which, at 6.5
inches, has the largest iPhone screen Apple has ever made 4.
Technological
Artificial intelligence is one of the trends revolutionizing the technology industry with nearly half of
the US population finding digital assistants very helpful as they can be used to complete tasks via
voice control 5.Smartphones companies are therefore incorporating advanced AI functionality
through digital assistants by combining voice control with AI and integrating commands with third-
party apps which makes smartphones faster and more effective. At the WWDC 2018 event, apple
announced its new iOS 12 which is powered by Siri, one of the big 3 digital assistants including
Amazons Alexa and Google assistant. Apples Siri makes the operating system faster and highly
3
https://www.idc.com/getdoc.jsp?containerId=prUS43258317
4
https://www.bloomberg.com/news/articles/2018-02-26/apple-is-said-to-plan-giant-high-end-iphone-lower-
priced-model
5
https://hackernoon.com/how-artificial-intelligence-ai-is-transforming-mobile-technology-9f810d734d35
,Unit 1 Learning Aim C and D
personalized as the AI iPhone will understand where you are and where you need to be and bring
suggestions like text “someone that you will be late”, in case you’re not on schedule.
Legal
Many times, businesses face threats from the external environment that come in form of legal
requirements which stipulate new ways of working or new rules and regulations that companies
need to abide by if they are to continue operating legally, Apple has recently entered the highly
regulated financial services sector via Apple Pay. This could increase the level of regulation and
government oversight it faces. Apple depends on a variety of products covered by intellectual
property laws, such as software and music, for much of its income. This leaves the company highly
vulnerable to both piracy and litigation.
Environmental
The biggest environmental issue facing Apple is the disposal of used or nonworking electronic
devices. The expense of disposing of devices, particularly those containing lithium batteries, could be
high. Apple could be forced to undertake the expense because of concerns about such devices in
landfills. Apple are becoming eco-friendlier and they say on the apple site
“We strive to create products that are the best in the world and the best for the world. And we
continue to make progress towards our environmental priorities. Like powering all Apple facilities
worldwide with 100% renewable energy 6. Creating the next innovation in recycling with Daisy, our
newest disassembly robot. And leading the industry in making our materials safer for people and for
the earth. In every product we make, in every innovation we create, our goal is to leave the planet
better than we found it”. Apple is highly vulnerable to increases in electricity costs because of its
dependence on data centres and other Internet infrastructure. They are now talking this claim by
making all their facilities worldwide to be powered entirely by renewable energy to help decrease
their Carbon footprint. Apple claim “By 2020, we’ll procure 4 gigawatts of clean energy in our supply
chain. That’s approximately one-third of our current manufacturing footprint.” So they have
identified that there carbon footprint is high and are making change to benefit the world as much as
they can.
Porter's five forces
Industry Competition
The level of competition among the major companies that compete directly with Apple in the
technology sector is high. Apple is in direct competition 7 with companies such as Google, Inc.,
Samsung Electronics Co. Ltd. and Amazon Inc. All these companies spend significant capital on
research and development and marketing, just like Apple. So, the competitive force within the
industry is strong. One thing that makes the industry so highly competitive is the relatively low
switching cost. It does not require a substantial investment for a consumer to leave Apple's iPad for
a Samsung tablet computers or other. The threat of marketplace competition is a key consideration
for Apple, which it has dealt with mainly through continually developing new and unique products to
increase and strengthen its market share position.
6
https://www.apple.com/uk/environment/
7
https://www.owler.com/company/apple
,Unit 1 Learning Aim C and D
Bargaining Power of Buyers
The element of low switching cost referred to above strengthens the bargaining power of buyers as
a key force for Apple to consider. For Apple, individual bargaining power is a weak force, since the
loss of any one customer represents a negligible amount of revenue for Apple. However, the
collective marketplace bargaining power of customers and the possibility of mass customer
defections to a competitor is a strong force. Apple counters this strong force by continuing to make
substantial capital expenditures in R&D, enabling it to keep developing new and unique products
such as the Air pods which is a current trend with the young people and the Apple Watch 8. By
building significant brand loyalty. Apple has been very successful in this area of competition,
establishing a large customer base that, would not even consider abandoning its iPhones in favour of
another smartphone competitor.
Threat of New Entrants to the Marketplace
The threat of a new entrant to the marketplace that could threaten Apple's market share because it
is relatively low9. This is due to the extremely high cost of establishing a company within the industry
and the additional high cost of establishing brand name recognition. Any new entrant to the
marketplace of personal computing or smartphones needs to have a massive amount of capital just
to spend on R&D and manufacturing to develop and produce its own product portfolio prior to ever
bringing its products to market and beginning to generate revenue. Such an entrant faces the
already identified strong competition within the industry that exists between Apple and its major
competitors, all of which are large, well-established firms
Bargaining Power of Suppliers
The bargaining power of suppliers is a relatively weak force in the marketplace for Apple's products.
The bargaining position of suppliers is weakened by the high number of potential suppliers for Apple
and the ample amount of supply. Apple is free to choose from among many potential suppliers for
component parts for its products. The industries of its parts suppliers, such as the manufacturers of
computer processors, are themselves highly competitive. The switching cost for Apple to exchange
one supplier for another is relatively low and not a significant obstacle. Plus, Apple is a major
customer for most of its parts suppliers, and therefore, one its suppliers are very reluctant to risk
losing. This strengthens Apple's position in negotiating with suppliers, while conversely weakening
their positions. The bargaining power of component parts suppliers is not a major consideration for
either Apple or its major competitors.
Threat of Buyers Opting for Substitute Products
This market force is relatively high for Apple since most possible substitute products have similar
capabilities compared to Apple's products, for example Samsung s9 compared to an iPhone x have
the most of the same capability 10.
Swot
8
https://appleinsider.com/articles/18/09/04/apple-watch-surges-to-top-of-global-wearables-market-with-
market-beating-growth
9
http://gs.statcounter.com/vendor-market-share/mobile
10
https://www.trustedreviews.com/news/galaxy-s9-vs-iphone-x-3402202
,Unit 1 Learning Aim C and D
Strength
Apple is one of the most valuable and strongest brands in the world, So the company can introduce
profitable new products by virtue of its strong brand image. This is a major strength because it
allows them to be on the fore front of the market and they are constantly gaining new customers.
Which intern allow them to have a high profit margin, using their premium pricing strategy 11 and the
volume of demand they have. They can maximise the amount of profit they get. Apple also have an
effective rapid innovation processes, this has been shown throughout the years and it has help them
stay on top of their competitors. For example, one of apple innovation was the creation of the Wi-Fi-
sharing capability introduce on iOS 11 the feature lets you quickly share a Wi-Fi password with
another device, whether it be one of your own or one belonging to someone in your contacts.
Weakness
The High prices of apple products12 is a weakness because it attracts customers from the middle- and
upper-income brackets and these are the minority, while preventing customers form low-income
brackets to easily purchase the company’s products Therefore, it will have affected the sales of their
products because consumer will look to more affordable products. For example, Mac laptops are
roughly £1000-£2000, while a standard PC laptop can cost as low as £200, the average consumer will
purchase the standard pc laptop over Mac laptops 13.
Opportunity
Apple can explore new product lines. Their current product lines are highly successful. However,
with further innovation, the company can develop and introduce new products, like what it has
already achieved with the Apple Watch and Air pods. Developing new product lines can support
business growth in the international market.
If apple can create a more affordable range of phone, they would become more Appealing to a wider
range of consumer. Which intern means that they would be able to use the rising demand for
cheaper smartphones and as a result for creating a product there is demand for the company will
have a higher sales volume based on rising in demand
Threats
Apple faces tough competition in the industry because of the aggressiveness of companies. Apple
competes with companies like Samsung, which also uses rapid innovation. Aggressive competition
has a limiting effect on Apple Inc. Another threat that apple faces is that the Chinese economy
slowing down, which is bad as the majority of apple sale come from china so this has resulted in
apple losing profits. The BBC said “Apple was vulnerable to the effects of the US-China trade spat, in
part due to risk that the tensions could cause Chinese buyers to sour towards US brands” which means
that apple is losing territory to competitor which result in apples share prices dropping in the last few
months14
Corporate social responsibility
11
http://panmore.com/apple-inc-marketing-mix-4ps
12
https://www.businessinsider.com/apple-price-hikes-2018-2018-12?r=US&IR=T
13
https://pestleanalysis.com/swot-analysis-case-study-of-apple/
14
https://www.bbc.co.uk/news/business-46742871
, Unit 1 Learning Aim C and D
Corporate social responsibility (CSR) is a self-regulating business model that helps a company be
socially accountable — to itself, its stakeholders, and the public. By practicing corporate social
responsibility, companies can be conscious of the kind of impact they are having on all aspects of
society including economic, social, and environmental. To engage in CSR means that, in the normal
course of business, a company is operating in ways that enhance society and the environment,
instead of contributing negatively to it.
There are many benefits for a business implementing CSR policies as it can improve your company’s
reputation and position you as an ethical and responsible alternative to your competitors. This will
help to strengthen existing relationships, attract new business/partnerships and ultimately increase
market share. It will also help increase employee retention as by operating responsibly and
sustainably it creates a workplace that people will be proud to be a part of and, this will help the
business to recruit new customer whilst retaining the existing ones.
There are also some drawbacks of a business implementing CSR policies. Such as it increases
expenditure because implementing a CSR is a very expensive thing to do. Also, it shifts the business
form the profit-making objective as the company can forget about it obligations toward it shares
holder that they have to make profits for them and instead engage in CSR and use up the fund for
the shareholder.
One thing that apple has done to meet their Corporate social responsibility is that all their facility
around the world have become 100% powered by renewable source of energy to help reach one of
their environmental priorities to reduce their carbon footprint and do their part to tackle climate
change15. The company says that by 2020 they will procure 4 gigawatts of clean energy in their
supply chain. Which is approximately one- third of their current manufacturing footprint. As result of
this apple has been awarded with a clean energy index of 100% according to Greenpeace’s click
clean energy star guidelines. Apple also started to encourage consumer recycle their old apple
products, so that apple can be reusing the material found on inside the old device and use them to
make new product. They have found innovative way to extract these valuable materials without
damaging them, one way is the introduction of their recycling robot called daisy. They say that daisy
is the most innovative and efficient to recover the value materials for the old products as daisy can
take apart 200 iPhone’s in an hour and removing and sorting the components needed. Apple
ambition with daisy is one day they will not have to extract anything for the earth.
16
Another thing that Apple has done to meet their corporate social responsibility is they have
launched Apple Supplier EHS Academy, which is a 16-month program that aims to improve
15
https://www.apple.com/uk/environment/climate-change/
16
https://www.apple.com/uk/environment/resources/
