Apple’s PESTEL, SWOT, Five Forces, VRIO Analyses

Introduction

In this paper, PESTEL, SWOT, Five Forces, and VRIO analyses will be used to evaluate the company Apple Inc. Firm performance will also be evaluated.

PESTEL Analysis

The political factor that influences Apple’s performance is the government’s influence on its business. Political factors provide two opportunities for Apple. First, the company is interested in free trade policies that will allow it to sell its products in different countries, including developed ones. Free trade policies will positively influence the distribution of products to different countries. Furthermore, policy regulations on labor are also crucial, since Apple has dozens of factories around the world. Labor policies will directly influence Apple’s ability to manufacture products and also change the costs (Litzinger 174). Therefore, stable politics are crucial for Apple to continue manufacturing the products.

Economic factors are similar to the Facebook case: economic growth in developed countries can lead to increased rates of sales there; this will increase Apple’s revenues in these markets (for example, Asian markets). Stable economies also encourage consumers to purchase more; Apple can use this advantage to distribute their products.

Social factors also present opportunities. Consumers in first-word and developed countries prefer using mobile internet and smartphones in their everyday life. The company can cover consumers’ needs by selling its products. Furthermore, the popularity of social media is growing, and since most of the products provided by Apple are gadgets, the growing demand for social media is also an opportunity to increase the sales rates.

Technological factors influence the business and mostly positively. Although cloud-computing services are provided by many companies, Apple remains to be one of the most prominent providers of such services (Othman et al. 394). Other providers remain a moderate threat. Other opportunities are the growing demand for mobile phone applications and synchronization between gadgets. Apple successfully exploits both these opportunities today but can provide additional products that will increase customers’ loyalty.

Ecological factors mostly help Apple to develop. For example, the company invests capital in providing more energy-efficient products (tablets and smartphones); it also conducts audits to evaluate labor conditions that are significant for the growing demand for protected labor and human rights. Promotion of recycling is one of the opportunities the company is using today (Apple, Recycling).

However, legal factors present moderate threats. Due to information leaks, the company will be pressured to increase privacy control over the devices. The government might also pass more strict privacy policies that can complicate the business. Telecommunication regulations are also severely controlled and can limit customers’ experience when using Apple’s devices.

Five Forces Analysis

Competition: the competition in the industry is high since Apple has to compete with other major players such as Google, Amazon, Samsung, HP, Dell, Acer, Asus, etc. All of the companies focus on providing customers with unique gadgets that will equal in price and functionality. Samsung’s devices can compete with Apple’s gadgets in functionality, and they are often cheaper. Customers can easily choose different products. Their choices make competitive rivalry more severe.

Bargaining power of buyers: low switching costs pose a great danger to Apple’s ability to gain revenues. The bargaining power of buyers is strong. However, the company is successful in providing new, unique, and highly user-friendly devices that increase customers’ loyalty. The company is not threatened by individual buyers who might choose another device if its devices are still purchased by the mass customer.

Bargaining power of suppliers: the power of suppliers is weak since Apple can choose between them. There are multiple suppliers of similar services and products, and this leads to low switching costs for Apple. Due to Apple’s enormous rates of sales, the company is one of the major and highly valuable customers for its suppliers, which makes their bargaining power weak.

The threat of substitution: although there are various substitutes available, most of them cannot compete with Apple’s devices. Due to their uniqueness and high loyalty to the brand, Apple’s devices are preferred by the mass customer also because of their ability to inspire and encourage them to be creative (Batra et al. 5).

The threat of new entrants: entrance barriers in the industry are extremely high because they demand serious investment. Although Amazon and Google presented their smartphones, they were not able to compete with Apple’s iPhones in popularity and customer loyalty. To spread brand awareness and attract loyal customers, a new company will need investments and experience. Most of the new entrants lack these, and, therefore, are unable to compete.

VRIO

The company’s value is in customer loyalty, brand recognition, and the ability to provide innovative products. Since the brand is recognizable, and customers appreciate Apple devices for their advanced functionality, the value of the company is mostly strengthened via these three domains.

The product’s design is not rare, but innovative technologies are. Although there are many imitations of iPhones and iPads in the market, they are usually unable to compete with original devices due to the lacking technology. Furthermore, original Apple devices are seen as status symbols as well (Mokhlis and Yaakop 205).

Due to the high number of imitations of Apple products in the market, it is reasonable to say that these products are imitable. What is more, some consumers purposely buy imitations because they are similar in functions but are not as costly as original devices. However, Apple devices are based on a particular innovative patented technology; one can hardly copy it. Brand loyalty and recognition are also impossible to imitate.

The company’s organization is its primary competitive advantage since it successfully exploits the resources and capabilities, by providing customers with innovative gadgets that quickly gain recognition and are capable of maintaining the reputation of highly reliable, creative, well-designed devices. The company can quickly change its suppliers, and it makes Apple more valuable for them. Brand recognition, built by Steve Jobs, is successfully sustained by CEO Tim Cook.

SWOT Analysis

The company’s strengths include brand awareness and customers’ demand for Apple devices, direct and indirect distribution channels, brand reputation, and strong profit growth almost every year (Apple, Form 10-K 21).

The company’s weaknesses must be also addressed. The company is dependent on iPhone sales and spends very little on research and development (Apple, Form 10-K 54). Apple’s operating system iOS is incompatible with other OS.

The opportunities are these: the growing need for software and applications can help Apple generate more revenues on subscription-based sales. Wearable gadgets can be advanced and used as a new range of devices to avoid dependency on iPhone sales.

The main threats are rivalries on the market that provide cheaper products and data breaches that the company often fails to address. Apple will find it difficult to resist the flood of cheaper Android devices sponsored by such major rivals as Google and Samsung.

Firm Performance

Although the company relies on its strengths to generate revenues and ensure there is no drop in sales, there is a high chance that overpriced Apple products will eventually lead to serious problems. At the same time, if the company lowers the prices, it will lead to decreased revenues, although, possibly, increased sales. Its performance is satisfactory in all domains (financial, customer satisfaction, social performance, environmental performance, and employee performance) but the increasing power of rivalries might negatively influence it.

Works Cited

Apple. “Form 10-K (Annual Report).” apple, 2015. Web.

—-. “Recycling an Apple Product Should Be as Easy as Using One.” apple, 2017, Web.

Batra, Rajeev, et al. “Brand Love.” Journal of Marketing, vol. 76, no. 2, 2012, pp. 1-16.

Litzinger, Ralph. “The Labor Question in China: Apple and Beyond.” South Atlantic Quarterly, vol. 112, no. 1, 2013, pp. 172-178.

Mokhlis, Safiek, and Azizul Yadi Yaakop. “Consumer Choice Criteria in Mobile Phone Selection: An Investigation of Malaysian University Students.” International Review of Social Sciences and Humanities, vol. 2, no. 2, 2012, pp. 203-212.

Othman, Mazliza, et al. “A Survey of Mobile Cloud Computing Application Models.” IEEE Communications Surveys & Tutorials, vol. 16, no. 1, 2014, pp. 393-413.