Contemporary Business Environment

This report explores the contemporary business environment, focusing on microeconomic concepts and models. It includes an overview of Apple Inc, external audit by SWOT analysis, and discusses the limitations of microeconomics. The report also provides recommendations and a conclusion.

Contemporary Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of company..................................................................................................................1
Business Environment and Micro Economic concepts and models............................................1
2. External Audit..........................................................................................................................8
3. Limitation of Micro Economics...............................................................................................9
RECOMMENDATION.................................................................................................................10
CONCLUSION .............................................................................................................................11
REFERENCERS ...........................................................................................................................12

INTRODUCTION
In present time, the business environment is dynamic and keeps on changing with the
time and nature of different operation occurs within market. Contemporary business environment
is consider to be continuous changing environment that fluctuate due to number of factors like
sudden change in demand and supply, customer preferences and taste, employee engagement
(Aćimović and et.al., 2014). There are some other common components that include suppliers,
rival firms, internal and external factors which have greater impact on performance of firm. To
better recognize the micro-environment, companies need to consider variables like supply and
demand, elasticity and internal auditing, which greatly increases profitability by effective
methods. In this report, Apple Inc is selected which is an international American company that
use to sell number of useful electronic gadgets.
In this report, topic such as supply & demand curve, price-elasticity, internal factors
analysis and PESTEL in context of selected company. Apart from this, report also involves the
external audit by SWOT analysis that enables to understand the strength, weakness, opportunity
and threat of the company.
MAIN BODY
Overview of company
Apple Inc is known to be the world leading electronic company that usually manufacture
and sell several beneficial electronic devices, computer software and other effective online
services. The main founder of the company is Steve Jobs and Steve Wozniak and Ronald Wayne
that is located in California, USA. Apple first business operation is related with producing and
selling of personal computers that grows into different sectors and become the 2nd largest
electronic company in World. Furthermore, company is consider to be the largest IT sectors in
the entire globe in term of revenue generation. Apple have around 500 retail store and total
number of employees are 120000 with a main motive to bring the best personal computing
experience
Business Environment and Micro Economic concepts and models
In modern era, the concept of business environment is related with an increase in external
relation to internal pressures (Darlington, 2017). This mainly includes suppliers, government
operations, consumer expectations, workers, technological development, changes in the
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economy, market forces. As well as cultural trends, strategic planning and competitive landscape
that have enormous influence on the processes of the company.
Demand: The actual quantity that is needed or requested by consumer in order to fulfil
their existing demand and needs in economic term is called demand (Cardoso, 2017). Customer
use to make standard demand according to their requirement and pay specific amount in favour
of item purchased. The connection between quantity demand and price paid is shown with the
support of demand curve which help marketer to set reliable prices in future. This is an crucial
economic principle which states that whenever price rises the demanded quantity will goes
down. On other side when price reduce for a commodity then demand increase for respective
time as for longer time different factors impact price.
The Curve that shows the number of goods purchased on every achievable price is know
as demand curve. In the above represented graph, It has been clearly determined that price and
goods demanded have a adverse relation (Kalitanyi, 2019). Such as in case if price grows then
the request of goods decrease and vice versa.
Supply: This is an economic principle that defines the amount of goods commercially
available. Supply compared to the amount produced by the commodity price shift. In essence,
value and amount generated include a positive relationship, as when price rises, the supply of
goods often improves due to various high market demand. Similarly, in case when price reduces
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the supply of goods will also get lower because of minimum demand in market of respective
good (Cascio, Boudreau and Church, 2017).
Supply curve is helpful in demonstrating the connection of price of good and quantity
supplies in market ion respective time. As the price increase there is a positive upward
movement in supply curve as every business dealer wants to supply the maximum quantity to
earn better benefits (Wang and Bao, 2015). The graph above indicates the good relationship
among price and quantity. At one side, as price rises, the provided amount always tends to
increase. Such as price has risen from 2 to3 and quantity supplied also climbed from 30 to 40.
Elasticity: In economics sense, elasticity is the measuring method used to define the
financial parameter's relative change compared to change in some other component. If a
product's elasticity is greater than 1, than market demand is influenced by price whereas if it is
lower than 1, then elasticity might not get affected by price (Cook, 2017). It is observed that
when the volume adjustment affects the commodity price, the material will be know as elastic.
Where as when the modification in cost may not influence the shift in volume as it will be
considered inelastic There are different kind of elasticity that are discussed below:
 Cross elasticity: Cross cost elasticity is often named in which the graph represents the
interaction among two commodities (Kennedy, 2016). Strong one is demand elasticity
factor of cross-price and it performs adversely in the sense of additional goods. Formula
to calculate cross elasticity:
Cross Price Elasticity of Demand = (Q1X – Q0X) / (Q1X + Q0X) ÷ (P1Y – P0Y) / (P1Y +
P0Y)
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 Price Elasticity: This is an important measurement instrument that help to describe the
relation among the changes in price with change in quantity and is called as Price
elasticity of demand (Kasemsap, 2015). It is calculated by specific formula:
Price Elasticity of Demand = % change in quantity / % change in price
The graph discuss that, if price grew form a specific point such as 50p to 60p then there
will be decrease in quantity such as from 100 to 50. Some of the common example for elastic
goods are luxury goods and substitute available in market.
 Income elasticity: The concept of income elasticity is defined as the relation among
income level of individual and quantity demanded (Fell, Li and Paul, 2014). In general,
when customer have enough income then they use to purchase that particular product.
Formula to calculate is:
Income Elasticity = % Change in the demanded quantity / % Change in Income
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From the above graph it is discussed that modification on income of customer and change
in quantity will give the income elasticity of demand. Such as Q demonstrate the quantity, DD
discuss the income elasticity and Y shows the income level.
Oligopoly: It is a competitive environment with a small number of companies and none
of them affect the company (Pantea, 2015). The total market position is quite high, as there are
few distributors of unique product and services. For instance, in apple the market is oligopoly as
they sell best and unique sell phone which is not offered by any other company. In addition
company is also part of monopoly market when producing and selling computers and various
electronic gadgets.
Internal Audit: This is helpful in determining the total internal conditions of company in
context of employee performance and engagement (Guiso and et.al., 2017). Manager are helpful
with this audit as it support to make better effective policies and make positive improvement in
current situation. Some of its main components are discussed below:
 Productivity: In companies operation manager is responsible to control and manage the
overall productivity by considering the different elements (Geppert and Pastuh, 2017).
That mainly includes large production size, diverse operation, various standards etc.
which help in reaching desired objective. In addition, company also applies the
benchmarking management accounting tool that help in measuring the productivity of
various department in comparison of other companies dealing within same industry. The
important productive measurement segment within company are:
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1. Revenue for every foot2 (such as Apple Store)
2. Production of goods per unit time (Productivity of supply chain management)
3. Milestone per time (Productivity of employees at the time of developing product).
 Business strategy diagrams: In almost each company management decide to follow
effective and valuable business strategy which support to increase the overall business
profit and performance (Jenkins and Williamson, 2015). In Apple, the manager follows
the business strategies like marketing mix, online trading and E-commerce. Essentially,
e-commerce is being used to handle shopping by trimming product prices and allowing
them access on company web pages. Consider upgrading SEO software manager are able
to keep the company information on top as compared to other company which will help
in attracting more customers. Manager of Apple is trying to create their web site more
efficient so that customers can discover everything they really need. Company uses many
web methods to connect directly to customers and be on top of other other rivals. B2B e-
commerce always is used to sell different product to other companies. While B2C is used
to offer iphones, laptops and other goods to large number of customers. Business has a
number of group of customers where they work successfully to meet their needs and
expectations.
The above diagram, shows business strategy that is used by company to generate income
that will also increase the entire profit margin and productivity. There are number of products
which are offered by Apple such as LEDs, Mac book, Iphone and Ipads with different series
which makes them unique in entire universe.
PESTEL analysis:
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 Political: This variable includes bureaucracy, stable politics, unaccountability, market
lobbying, etc. Apple can accomplish its main objectives, including maximizing profit,
and it will rely on the political component of current situations (Malik, 2015). In Apple's
context the organization is constantly rising the expenditure for political lobbying from
many decades to hitting $6.62 million in 2017. In fact, the relevant laws supports that has
a significant impact on Apple overall performance.
 Economical: There are number of factors that have a direct impact on the company
functioning. These economical factors are trade exchange rate, economic cycle, currency
rate and rate of exchange (Fenwick and Wrbka, 2016). The respective mobile company is
leading in different circumstances such as income generation, IT product distributor and
thus may get affected because of change in labour cost of disposable income of people.
Such as increase in cost of labour in chine would consider to be beneficial for Apple that
help to produce more product. In recent time company create 63% at global market.
Thus, changes in rate of currency exchange have a adverse influence on Apple
profitability.
 Social: This variable encompasses the economic or cultural phenomenon that raises the
market appeal of the brand. In Apple's prospect, mobile success has become a major
business threat until they provide inexpensive or simple-to-use devices in market (Nuhu,
Baird and Bala Appuhamilage, 2017). It is also observed that due to urbanization the
countries like India and China have majorly support Apple to continuously supply their
product in respective market. This will directly support to increase the brand value and
profit margin for company in order to reach the desired objective.
 Technological: It is observed that modification in technical factors would defiantly
support company to create interest among customer to buy their product. Company
continuously add some special features that make product look different and give more
satisfaction to customer (Panayides and Song, 2015). In Apple, different technical
innovation keeps on going such strengthening of battery backup, camera quality etch
which makes them more effective in market. In recent times, the Apple market is growing
at a immense pace which provides immense rewards and threats. The biggest chance is
that Apple offers a wide variety of multiple devices which draw interest of large buyers.
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 Environmental: These kind of variable could be a risk to the business as there are
different environmental regulatory requirements that the business need to be consider
while operating different operations. In case of ignorance of these factors they have to
face litigation that have an effect on the reputation of the product. Apple imports almost
all products in Chinese market where air emissions is consider to be major issue. It can
then influence the Apple business in comparison to the cost of production or cost
involved in make process as per new legislation. In turn, the organization works with the
aid of reuse or recycle of non-working electrical devices on environmental projects.
Global warming causes climate change that further impacts Apple supply chain
management.
 Legal: This factor is related with legal laws and standard that is compulsory to follow
while doing different business operations. In case, if company do not follow these
standard then they might to subjected to specific plenty and have to face governance
involvement while functioning (Jenkins and Williamson, 2015). To secure business and
customer information is the major problem for IT companies as once any information is
leaked out overall reputation of company decrease. Thus, the respective company
implement all kind of legal laws and standard of every country where they operate
different functions. Such as manager apply Telecommunication principle which is helpful
in gaining the customer interest and more relay of Apple products. In recent time,
company is also planning to introduce new industry of Auto Mobile by introducing car
named “Titan”. Therefore management team must analyse the legal requirement of Auto
mobile industry and work respectively to make strong customer image for governance
and customer.
2. External Audit
SWOT Analysis:
Strength (Internal) Weakness (Internal)
 Apple is the world's most successful or
have best brand values, earning high
margins compared to its competitors
(SWOT Analysis of Apple Company,
 Apple's greatest weakness is
constrained supply chain, as the
business follows protected policies. For
instance company chooses their dealers
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2019).
 Respective business follows a premium
price policy that delivers a higher profit
margin.
 Strong brand recognition is really the
company's greatest strength which
maximizes income while sales are
minimal.
 Moreover, a standard competitive
approach and an extreme development
strategy can contribute to advancement
and make company to adopt the latest
technology.
wisely. This slower the supply of goods
and more increase storage cost.
 Company need to rely on the elevated-
end market sector due to various their
premium pricing strategy. Thus people
from lower class are unable to buy
goods of Apple.
 Products' high selling value would
reduce their client base which becomes
the firm's weakness.
Opportunity (Weaknesses) Threat (Weaknesses)
 The business in Apple seems to have
the opportunity to strengthen its
distribution system. Opportunity at all
times comes from disadvantage.
 The company must alter its distribution
strategy or boost the market
accessibility of its products.
 Improved marketing approach would
continue to reach more world market
consumers.
 Thanks to the competitive competition,
Apple has also the chance to increase
its revenues and profits.
 Although existing product lines are
quite profitable, thus company has the
chance to expand its line of products.
 For the Apple corporation, strong
competition within market becomes a
problem. Like Samsung, Lenovo, etc.,
are already using accelerated
technology now.
 Business also faces the imitation
challenge that happen due to the
availability of a huge variety of local or
private companies.
 Increased labour costs will affect the
firm's productivity where profit margin
is limited due to high labour costs like
in China (Holden, 2016).
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As well as enter into new industry to
satisfy customer needs.
3. Limitation of Micro Economics
The respective branch of economic that support individual to gain knowledge about
behaviour of businesses and specific people in context of making valuable decision in known as
Macro economics (Phillips and Rumens, 2015). This entire procedure includes the proper
distribution of available resources that help to construct better connection among business entity
and individuals. Some of the main limitation of Micro economical factors are discussed below:
Lower Prices of goods: In present competition, companies in greed to remain at top cut
their prices otherwise other firms might take the advantage (Schaltegger and Burritt, 2017). To
make customer always attached towards product produces by Apple there should be continuous
changes in prices as per the market requirements. They are also required to modify the product as
per customer needs in order to lower the consumption of substitute good which are easily
available in market at different prices. This all required to put more and more cost to reach the
respective results which is a measure limitation of micro-environment.
Breach of a contract: Companies working at internationality have to be bound a contract
with the local company of particular place. In case if any time Apple breach any contract then
they have to bear specific legal fee which might impact the overall profit margin.
Ignorance of governance rule: Governance of every nation make specific laws that is
needed to be followed by companies operation in specific region (Prowle and Lucas, 2016). Thus
any negligence of government laws would make work panic and raise to various issues such as
close down of company, bear to pay heavy plenty etc.
Potential Benefits for the Company:
 Customer are more loyal towards Apple product because of number of unique features
and comfort level they receive while using electronic gadgets.
 With more and more latest and advance update in goods feature attract more customer to
satisfy their needs.
 In order to increase sales company can target each customer segment only by reducing
price to the most specific economic point where cost are covered and minimum profit
are maintained (Thirawat, 2017).
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RECOMMENDATION
 In respect of Apple, there should be more focused on aggressive and rapid innovation.
 Invention in product will cut down the unfavourable influence on revenues.
 With the support of a string distribution system, the organization will collaborate with
even more retailers to increase customer coverage.
CONCLUSION
In end of this report it is founded that the principle of demand and supply is a really
significant economic concept to be understood by an enterprise. Elasticity and it impact on
consumer demand and companies productivity is discussed with all factors by using the diagram.
With the support of Internal audit company is able to determine the business strategy and
productivity in order to reach the desired objectives. PESTEL analysis support in analysing the
factors which have positive and negative impact on company performance. By implementing
SWOT analysis manager are able to recognise favourable element of business and make
effective plans to remove threats.
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REFERENCERS
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Online
SWOT Analysis of Apple Company. 2019. [Online]. Available Through:
<http://panmore.com/apple-inc-swot-analysis-recommendations>.
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