APPLE'S EXTERNAL FACTORS PESTAL ANALYSIS

APPLE'S EXTERNAL FACTORS PESTAL ANALYSIS

1. ECONOMIC

   • Employment
     • If there is a positive economic expansion the circular flow of income also increases. Apple can employ more workers to make new products to increase supply and demand.
     • If an economic collapse occurs Apple will have to dismiss employees from there jobs and if unemployment is high supply fails to meet demand. Which will affect Apple's profits in the long run.
   • Inflation
     • ‘Cost push inflation’ develops because of a number of factors including rise in wages, rent, taxes and subsides, cost of raw materials and import prices used in production.
     • Apple will pass these effects onto consumers because aggregate supply will decrease and inflation will increase.
       • But the real question, is inflation good?
         • Apple products were much cheaper a few years ago than when effects of inflation were lower. For example ‘The iPad Pro will be available to buy in 32GB and 128GB configurations priced at $799 and $949’ (Page, 2015).
           • But the cost of the iPad Air 2 ‘starts at £499 for the 16GB version. If you need 64GB, it's £579, and the flagship 128GB iPad Air 2 costs £659.’ The only thing Apple changed from the last iPad Air to the iPad Air 2 was the ‘Touch ID fingerprint sensor’. (Martin, 2014) The rise in price increased from 5%.
   • Business Cycles
     • Although the growth of the economy can vary, profits will generally increase over time because apple products are in ‘trend’.
   • Consumers
     • Unemployment and inflation levels can effect consumer confidence. If Apple’s consumer market have low confidence people will spend less money buying Apples ‘luxury goods’ because they are classed as a ‘want’ and not a ‘need’.
     • But if consumer confidence is high Apples profits will increase which will also increase the productivity of new products.
   • Interest rates
     • The Interest Rates set by the bank of England would affect Apple’s cost of capital because it effects there consumers. High interest rates will reduce consumer spending on Apple’s ‘luxury goods’.

2. POLITICAL

   • Recycling
   • Taxation
     • A proportion of Apple’s profits goes to the local government so the rate of tax can influence how Apple changes there products so they can maintain a certain amount of profit. This could cause the quality of goods to decrease or the price f the product to increase.
   • National Minimum Wage
     • If the National minimum wage rate increases it can affect Apple’s profits because they may need to increase prices to keep up with labour costs and inflation.

3. ENVIRONMENTAL

   • Waste Management
     • The Government initiates laws and legislations to improve recycling. One problem that effect apple’s electronic goods is disposing the products after there life spam. Apple introduced a ‘free recycling program’ so consumers can safely recycle there old products and even benefit from a free gift card.
   • Laws Regulating Environmental Pollution
     • There are environmental regulations that can affect apple such as minimising there packaging to meet meet environmental standards so they can also be recycled.’we’re partnering with The Conservation Fund to protect and create the type of forests we use in our packaging.’ (Apple, 2014)
   • Carbon Footprints
     • Apple has managed to decrease manufacturing and shipping carbon emissions since 2011. ’We’ve found ways to use energy and materials more efficiently in our facilities, to get energy from cleaner sources, and to design some of the world’s most energy‑efficient electronic products’. (Apple, 2014)
     • TECHNOLOGICAL
       • Research And Development
         • Technology has a short life so Apple needs to invest more money into research and development to upgrade there products and overcome competitors.
       • One key legislation for technology is privacy and data security. Apple enable strong encryption and policy’s to ensure the safekeeping of consumer information. Although there have been a few discrepancy’s with iCloud hacking Apple state that ‘we continue to make improvements.’ (Apple, 2015)
   • Global Warming
     • Apple have taken responsibility to care for the planet while creating new products. ‘we’re building a solar farm in China to offset energy used by our offices and retail stores’. (Apple, 2014)

4. TECHNOLOGICAL

5. SOCIAL

   • Population Growth Rate
     • As the population continues to expand the demand for products increases. If the country’s circular flow of income decreases people can not afford Apple’s luxury goods.
   • Trends
     • Trends are always changing in the society. A popular social trend is smartphones. Social media is gradually growing and so is the demand for Apps. Apple offer complementary goods which adds to the overall value of the product.
   • Age Distribution
     • Online shopping and social networking sites such as Twitter and Instagram have become very popular to younger people. Younger people have increased the demand for Apple products especially phones and computers because of the demand for using Apps.
   • Demographic Factors
     • Disposable income and Age
       • Older people have more buying power than younger people because they have more disposable income. Younger people will mostly buy Apple products with credit cards, over drafts and loans. DISPOSABLE INCOME - Premium products such as the Apple watch which retails from £299 would usually only appeal to consumers with high incomes.
   • Buying Habits
     • Consumers prefer ‘looks over quality’ which means smartphones which look fashionable rather than the quality of the product. ‘This is because people tend to judge each other’s fashion sense based on choice of mobile phone.’ (Makos and JimMakosCon, 2015)
   • Life Expectancy
     • “Apple is estimating one battery will last for 400 charges — probably about two years’ worth of use.” (Snell, 2007) Apple uses a good marketing strategy to make consumers spend more. They use the vulnerability of consumers to sell a less quality product at a higher price so that they return again whether to fix the existing product or to buy a new one.
   • Imported Products and Services
     • Apple products are made by FOXCONN in china. ‘Apple has discovered multiple cases of child labour in its supply chain, including one Chinese company that employed 74 children under the age of 16’. (Garside, 2013)
       • After this occurrence it was not long before a domino effect took hold on Apple’s profits. ‘…Sales were worse than predicted over the Christmas quarter, with 47.8 million iPhones sold, two million short of a forecast 50 million’. (Cahalan, 2013) Although this may have upset a vast number of consumers the company set up a ‘Underage Labour Remediation Programme requires that any supplier found hiring underage workers fund the worker’s safe return home.’ (Apple,2015)

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