Total Length: 6102 words ( 20 double-spaced pages)
Total Sources: 22
Page 1 of 20
Effect of External and Internal Environment
Organizations have both an internal and external environment. To begin with, the forces or circumstances within the borderline of the organization are the components of the internal environment. Notably, the internal environment comprises for the most part of the owners, employees, board of directors, stakeholders, and the corporate culture. On the other hand, factors that are extrinsic to the organization are the components of the external environment. It is imperative to note that these are elements that the organization bears no control of as they impact the entire the industry and therefore the organization cannot influence how such aspects will shape up (Nieuwenhuizen, Badenhorst-Weiss, and Rossouw, 2008). On the other hand, factors within the internal environment are those that the organization can control and have an effect on how they will turn out to be. The external environment is categorized into the general environment and the task environment. On the one hand, the general environment encompasses factors that may have an instantaneous direct impact on operations but nonetheless impact the organization’s activities. On the other hand, the task environment comprises of factors that have a direct impact and are also impacted by the operations of the firm (Nieuwenhuizen, Badenhorst-Weiss, and Rossouw, 2008). The main objective of this paper is to extensively analyze the effect of the internal and external environment on Apple Inc.
Brief Background of the Company
Apple, Inc. is one of the most renowned and successful companies in the markets. The prevalent company with a market capitalization of $656 billion is pervasive. Since its advancement by Steve Jobs, Apple has come to be one of the largest companies in the market and barely needs an introduction. Apple Inc.’s business operations encompasses the manufacturing and retailing of iPhones, iPads, and a sequence of unveiled laptops and desktops such as the Mac and the MacBook and MacAir. In addition, the company also manufactures the software that is employed in the running of these devices and its business also takes into account a variety of media such as movies, music, e-books, in addition to software applications. Most of all, the company has also integrated a cloud storage service in recent ties and an electronic apple payment processing system (Yahoo Finance, 2018).
Pestle analysis is delineated as a tool employed in the analysis and monitoring of the external environment of an organization. It is a framework that facilitates the comprehension of the external influences on an organization. These external factors or influences comprise of political, economic, social, technological, environmental, and legal aspects. Pestle analysis is beneficial in the appraisal practice of the dynamic and competitive business setting. It encompasses an evaluation of each of the fundamental factors, which directly and indirectly have an impact on the business performance (Zanoni, 2011).
The political environment is linked with government policies and engagements. The magnitude to which Apple Inc. is capable of accomplishing its key objective of profit maximization is reliant on a variety of political factors comprising of government stability, corruption, extent of bureaucracy and also freedom. In the contemporary, the most significant political aspect that has influenced Apple’s operations is the company’s encounter with the United States Federal Bureau of Investigations (FBI). In particular, the company’s disagreement with the agency took into account the aspect of whether Apple should have been obligated to hack an iPhone account that has been utilized by one of the terrorists during the 2015 San Bernardino mass shooting. Subsequently, this emanated into a political deliberation splitting the general public into advocates and antagonists of the company (Tibken, 2017). This significantly impacted the company in that it had to incur costs as high as $5.46 million in the last financial year and also the revenue generated by the company declined from $58 billion to $50 billion owing to the decreased number of iPhone sales from $61.2 million to $51.2 million in the similar financial period (BBC News, 2016).
The economic environment takes into account financial performance, the level of demand and supply within the marketplace, levels of employment, and also consumer base levels. It is imperative for organizations to be economically sound in order to prosper. There is an extensive variety of economic factors that impact Apple Inc. both directly and indirectly. One of the key economic factors is the exchange rate in the market. It is imperative to note that Apple generates more than 60 percent of its entire sales from the global markets and for this reason its revenues are adversely impacted by the prevailing inclination of strengthening the dollar.
Stuck Writing Your "How Environment Influences Business" Essay?
In the 2014 financial year, chief executive officer (CEO) of Apple, Tim Cook, espoused an approach of hedging the currency with the main objective of easing the adverse impacts of the dollar becoming stronger. Nonetheless, these practices can solely recompense the losses incurred owing to the exchange rate to a certain extent and therefore it is expected that Apple will continue to face foreign exchange rate risk (Adinolfi, 2015).
Another economic factor impacting the operations of Apple is costs incurred by the company. For a long time now, Apple has instituted its manufacturing facilities in China and outsourcing its operations there in order to attain cost efficiencies in terms of resources and also cheaper labor. However, in recent years, this has come to be considerably more challenging owing to the fact that the wage rates in China have experienced a 64 percent increase in the past five years to $3.60 hourly wage rates. This increase in costs has resulted in a decline in the profits generated by the company.
Nonetheless, not all economic factors negatively impact an organization. Another economic aspect that impacts Apple is the rate of taxation. All corporations are mandated to pay taxes, which diminish the earnings generated. However, in the past years, the tax reforms that were propositioned by President Donald Trump to facilitate the level of competitiveness of the companies in the United States in the international market are beneficial. The main objective of decreasing the mandatory corporate taxation rate from 35 percent to 20 percent is bound to positively impact the profits generated by Apple (Thrush and Rappeport, 2017).
The social factor of the framework takes into account the social impacts on the behavior and expectations of consumers with respect to products, services, and organizations on a whole. One of the key social factors impacting Apple Inc. encompasses the significant and progressively increases in the use of mobile accessibility. In the present day, there is the inclination of the rising popularity of mobile access across the globe, which presents a prospect for Apple to continue with the provision of easy to use mobile devices. It is imperative to note that Apple has already taken substantial measures to capitalize on this prospect through the unveiling of such devices like the iPhone, iPad, MacBook, and Apple Watch. In addition, the company has continued to increase its expansion across the world to reach a more extensive consumer base. Secondly, the major rise and adoption of the internet and social media has and continues to have an impact on Apple. This is a major prospect for the company owing to the reason that it leads to an increase in the demand levels for digital products such as those manufactured and retailed by Apple (Lombardo, 2017).
Advancement in technology has also prompted the growth of the apps market. In the contemporary, there are apps for just about every activity ranging from social connectivity, cooking and fitness, to music, religious, educational and also productivity apps. In this regard, Apple has the prospect of further developing and growing its Apple Store with such apps to increase the number of consumers.….....
Adinolfi, J. (2015). Apple saved $4.1 billion hedging against a rising dollar, says Stifel. Market Watch. Retrieved 7 July, 2018 from: https://www.marketwatch.com/story/apple-saved-41-billion-hedging-against-a-rising-dollar-says-stifel-2015-12-14
BBC News. (2016). Apple revenue falls for first time since 2003. Retrieved 7 July, 2018 from: https://www.bbc.com/news/business-36146336
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. New York: John Wiley & Sons.
Hassan, Y. (2015). Differentiation and cost leadership. Choose of one puts constraints on using the second. Linked In. Retrieved 4 July, 2018 from: https://www.linkedin.com/pulse/differentiation-cost-leadership-choose-one-puts-using-yasser
Investopedia. (2018). Analyzing Apple's Degree of Rivalry Among Competitors (AAPL). Retrieved 4 July, 2018 from: https://www.investopedia.com/university/apple-porters-5-forces-analysis/analyzing-apples-degree-rivalry-among-competitors-aapl.asp
Jinjin, T. A. N. (2013). Strategic Analysis of Apple Computer Inc. & Recommendations for the Future Direction. Management Science and Engineering, 7(2), 94.
Johnson, G. Whittington R & Scholes, K. (2015). Exploring Strategy (10th edition). FT Pearson Prentice Hall.
Katavic, I. (2014). Corporate social responsibility and sustainable competitive advantage: A case study of the cement industry. Northcentral University.
Lombardo, J. (2017). Apple Inc. PESTEL/PESTLE Analysis & Recommendations. Panmore Institute. Retrieved 4 July, 2018 from: http://panmore.com/apple-inc-pestel-pestle-analysis-recommendations
Lynch, R. (2015). Strategic Management, 7th Ed, Upper Saddle River, N.J. Pearson Prentice Hall.
Nichols, S. (2018). Samsung loses (again) to Apple in patent battle (again). This time to the tune of a mere $539m. The Register. Retrieved 4 July, 2018 from: https://www.theregister.co.uk/2018/05/24/samsung_loses_again_to_apple_in_patent_case_again/
Nielson, S. (2014). Why innovation could be the key to Apple's growth. Market Realist. Retrieved 4 July, 2018 from: https://marketrealist.com/2014/01/apple
Nieuwenhuizen, C., Badenhorst-Weiss, H., Rossouw, D. (2008). Business Management: A Contemporary Approach. New York: Springer.
Thrush, G., Rappeport, A. (2017). Trump to Propose Sweeping Tax Cut for Corporations and Individuals. New York Times. Retrieved 4 July, 2018 from: https://www.nytimes.com/2017/09/26/us/politics/trump-tax-cut-corporations-individuals.html
Tibken, S. (2017). Apple vs. FBI one year later: Still stuck in limbo. CNET. Retrieved 4 July 2018 from: https://www.cnet.com/news/apple-vs-fbi-one-year-later-still-stuck-in-limbo/
White, S. K. (2017). Microsoft vs. Apple: Strategies change but the battle continues. CIO. Retrieved 4 July, 2018 from: https://www.cio.com/article/3188853/it-industry/microsoft-vs-apple-strategies-change-but-the-battle-continues.html
Wired. (1997). Apple kills clone market. [Online]. Retrieved from: https://www.wired.com/1997/09/apple-kills-clone-market/
Witcher, B. J., & Chau, V. S. (2010). Strategic management: Principles and practice. NY: Cengage Learning EMEA.
Yahoo Finance. (2018). Summary for Apple Inc. Retrieved 4 July, 2018 from: http://finance.yahoo.com-quote-AAPL
Yoffie, D. B., & Baldwin, E. (2015). Apple Inc. in 2015. Harvard Business School Publishing.
Zanoni, A. B. (2011). Strategic analysis: Processes and tools (Vol. 1). New York: Routledge.