LSC UoS BA Business: Apple Inc. External & Microeconomic Analysis

This academic essay analyzes the business environment of Apple Inc., a leading multinational company in the consumer electronics market. The report begins with an introduction that outlines the scope of the analysis. It then delves into an internal audit, focusing on the company's productivity and strategic objectives. An external audit is conducted using PESTLE and SWOT analyses, examining political, economic, social, technological, legal, and environmental factors, along with Apple's strengths, weaknesses, opportunities, and threats. The essay further explores microeconomic concepts, including demand and supply, and elasticity. The study also examines oligopoly market structures and their relevance to Apple's operations. The analysis concludes with a summary of findings and recommendations for the company to navigate its complex business environment effectively, and improve its performance.

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
INTERNAL AUDIT........................................................................................................................1
EXTERNAL AUDIT ......................................................................................................................1
MICROECONOMICS.....................................................................................................................4
Elasticity......................................................................................................................................6
Oligopoly....................................................................................................................................7
Oligopoly....................................................................................................................................8
LIMITATIONS OF MICROECONOMICS ..................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Environment symbolises the major external and internal factors of a particular
organisation and the impact of these factors on the operation capacity and strategies of the
organisation (Prajogo, 2016). The Apple Inc. has been ruling the consumer electronic marketing
since year 1977 when it was first established. This multinational company is headquarters in
California and deals with electronics, software and other online services. The current report will
analyse the internal and external environment in which the company operates and the various
strategies that need to formulate based on the imp-act of these internal and external analysis. The
report will also analyse the various forces in the micro economics such as demand and supply
and the different micro economics concept will be analysed and evaluated in this report. Lastly,
based on the analysis of different facts, a conclusion summarising the findings of the report will
also be presented at the end of report.
INTERNAL AUDIT
The productivity of any company depends highly on the industry and market in which it
operates and the productivity overall refers to the ability of an organisation to convert the raw
materials of that company with respect to the goods and services that the company plans to sell.
Smart work leads to the increased productivity and this ultimately helps in improving the
performance. In order to improve productivity, an organisation needs to formulate excellent
strategies that can help them in achieving the intended objectives of the company.
EXTERNAL AUDIT
PESTLE Analysis: Pestle analysis helps in analysing the external environment of the company
and the industry analysis is done through which relevant conclusions are drawn (Deasy and et.al,
2016). Pestle Analysis helps in analysing every key aspect and then determining what are the
strategies that can be adopted in the external environment and how these could help in bridging
up the existing gaps. Apple is already an extremely well established company that is ruling the
world with it’s merchandise of consumer electronic brands. The following factors help in
analysing the external environment in which the company operates:
 Political Factors: This American super brand is earning huge profits and the resulting
income inequality has been a major political issue in many countries including UK
(Cardoso, 2017). Additionally the company is heavily dependent for its reduced
manufacturing cost in China and therefore, the ongoing tiff between the two economies
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might lead to reduced sales of the company affecting their operating in other countries as
well where the unrest in the political environment leads to potential loss. Additionally,
after Brexit, the political stability in the UK is also questionable but Apple being a
reliable international brand might not get affected by this unrest in British economy.
 Economic Factors: The economic position of UK’s economy is fairly strong and well
settled i.e. there are no major fluctuations and the income earning is also fairly well
(Gardere, Sharir and Maman, 2018). However, the middle class which is the main
targeted consumer segment of the company in various economies is not experiencing
much increase in their earning capacity and therefore, the stagnating income earning
capacity is leading to reduction in the sales volume of the company in various markets
and economies spread all over the world. However, the best strategy that the company
can adopt in the present context is to delve into the markets with newer strategies and the
marketing campaign needs to be restructured making the brand attractive again.
 Social Factors: The society of the people living in United Kingdom represent lavishness
and class where the residents consider themselves a part of aristocracy and the lifestyle
choices are frequently attached with the kind of class that they belong to. Apple Inc. is an
extremely well established luxurious company that has easy control over the trust and
preference of these class of consumers. They refer to Apple as the most superior brand
especially in the mobile phone segment and no other company has been able to beat the
image that they have created in the minds of their consumers (SHTAL and et.al., 2018).
Therefore, the company needs to ensure that the strategies that they have adopted in the
past are complied with in future as well so that the image they have created in the society
is not compromised with.
 Technological Factors: In terms of technological development and innovation, the
company cannot be questioned since it is leading the world with its unique and highly
user friendly technologies regarding the consumer electronics that the company
manufactures. Similarly, the UK has a great taste and scope for the advanced technology
and they themselves are very ahead in the field of technological growth. Therefore, the
company does not needs to formulate separate strategy in this context since they are well
ahead and established in this aspect and the goodwill that they have earned is also a huge
contributor.
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 Legal Factors: The legal compliance is a necessary part which every company must
comply with and when the company is operating on a global level such as Apple, they
need to ensure that while operating in different countries and economies they comply
with the legal system of different economies (Khan, Alam and Alam, 2015). Therefore
the regulation compliance is an important aspect and therefore, the company is familiar
with the different rules to which they have to comply sine they have been trading in the
economy of UK for a long time period.
 Environmental Factors: The Company has been long engaged in the CSR activities that
they perform which are extensive and expensive and addresses different aspects at a
single time. The different aspects like carbon footprints, energy exploitation, and
electricity consumption are some of the added features that the company has to comply
with and therefore, it is vulnerable as well to the costs that increase due to heavy
electricity consumption. However, in U, the processes have remained stable and the
company has earned huge goodwill in respect to the CSR activities that they perform.
SWOT ANALYSIS
Strengths- Apple has always been innovative in its product line and had presented the hit
products which is counted as the main strength of the company. It is considered as the leading
company across the globe in relation to the generation of the revenue. It is counted as second
largest manufacturer of the smart phone and positioned as first in US by crossing the value of
700 billion dollars. The brand value of Apple is also seen as number 1 among all companies
within the world. It provides for a unique design and the technology and is always seen as
fantastic brand name with respect to its design and features. Apple mainly has over 470 stores
around the 17 countries (Sammut‐Bonnici and Galea, 2015). Along with these stores , the
company sold through the trade partners, retail stores and the online channels. In addition to this,
Apple had launched genius bar hat directly resolve for the customer issues in its retail stores.
Thus, concentration of the Apple on their service and the sales distribution is been seen as
legendary. The core benefit of the Apple as an organization is that it earns higher profit margins
through selling of its products. Being as the technological leader with its top brand, Apple keeps
for the hefty margin
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Weaknesses- Company seems to be weak in respect of meeting with the customer
expectation as people are expecting great things from the Apple as the passage of the year and in
maintaining such level of expectation is tended to be a challenging task for Apple. The main
issue in the Apple company relates to its products that are incompatible with the third person
accessories or software. In comparison to its competitors that is Google and Microsoft, Apple is
having very less number of the product range. Thus, dependency of the Apple on each and every
product seems to be very high.
Opportunities- Apple Inc. is having an opportunity for expanding its distribution network
and exploring towards the new product range. Apple company could look into more and more
technological advancements by developing advanced MacBooks, Ipads, Iphones and the
Iwatches. The corporation is running its business operations in the growing market and attained a
high growth. This plays an important role in rising the GDP of the developing countries and by
increasing the consumption of such a premium brand. Apple needs to focus on its two main
products that could increases its presence worldwide aiming at future for creating a well known
digital presence at the global level.
Threats-The company is facing high level of competition from the other brands which in
turn acted as the key threat for the firm in respect of downfall in its prices and the market share.
The major threat of Apple company is it faces market penetration by the other companies in the
overall smartphone market (Swot analysis of Apple, 2018). In the field of Laptop also, it faces
increased competition over years as Dell had also introduced for some of the beautiful models
involving an Alienware model. Although Apple is the brand that is been loved by each and
everyone but MacBook contains stiff competition from other competitors.
MICROECONOMICS
Microeconomics is a branch of the economics which used to defines the behaviour of
individual and firms in making the different decision regarding the allocation of scarce resources
and the interaction among these individual and firms. In simple words it can be said that
microeconomics used to study the choice which can people can made and the different factor
which used to influence the impact of decision making in company (Sakuma and et.al., 2019).
Demand and Supply
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Demand: Demand of the product generally means that the amount or the quantity of the
product which consumer in the market willing to purchase on the price level on which the
product of the company is being offered. It simply means that if the demand of the organizational
product is high in the market then the consumer is generally liking the product of the company in
the market. Price and demand is inversely related to each other in the market (Azevedo and
Leshno, 2016). The reason behind the same is that when the price of the product is high in the
market the demand of the product generally goes down as consumer look not to purchase the
product where as when the price of the product is low the demand of the product go high as
consumer look to purchase the product.
Figure 1
(Source: Demand curve and shift, 2019)
Supply: Supply of the product refers to the amount of the good available in the market to
be offered to the consumer for the purpose of the consumption. Supply and Price of the product
is positively related to each other (Tao and et.al., 2017). As when the price of the product used to
increase producer in the market used to produce the larger amount of the product in the market
so that the consumer can purchase the same. This is better understand with the help of the same
diagram.(Tao and et.al., 2017)
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Figure 2
(Source: Supply. 2019)
Elasticity
Elasticity is the measurement of the change in one economic variable due to the change
in the other economic variable in the market. Generally, it shows that how easy it is for the
supplier and the consumer to change their behaviour and substitute the another good. The
elasticity of variable has been defined in three different variable that are as follows:
Price Elasticity of demand: It is defined as the responsiveness of the quantity of demand of the
goods and services due to the change in the price of the product used to increase and decrease in
the market (Guerrero-López, Unar-Munguía and Colchero, 2017). Price elasticity of the
demand is also defined as a percentage change in the quantity of the demand when there is a
percentage change in the price of the product. Price elasticity of demand can be calculated with
the help of the following formula:
% change in quantity
% change in price
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Oligopoly
Figure 3
(Source: Elastic demand. 2016)
Income elasticity of demand: Income elasticity of the demand is measured as a relation which
is shared in the quantity demand of the good and services and the change in the income of the
consumer in the market (Larivière, Haustein and Mongeon, 2015). Income elasticity of demand
is calculated with the help of the following formulas:
% change in quantity
% change in income
OligopolyFigure 4
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(Source: Income elasticity of demand: definition and types with examples, 2018)
Cross Elasticity of Demand: Cross elasticity of the demand is the measurement of the
relationship between the quantity demand for a good to a change in the price of the another good.
(Head and Spencer, 2017). Cross Elasticity of Demand can be calculated with the help of the
following formula:
% change in quantity
% change in income
Figure 5
(Source: cross elasticity of demand, 2019)(Source: Elastic demand.
Oligopoly
Oligopoly is the form of the market in which the amount of the competition in the market
is very limited. As there are only few producer in the market which used to rule the market as
they are the one who used to enjoy the majority of the market share and produces the
homogeneous good. This is the market which used to open up the good scope of the partnership
and collaboration in the market as all the organization used to produce the same and similar
product in the market. There are many few new comers who used to come into the market as the
entry is restricted due to the maintenance of strong network of distribution by well establish
organization (Tao and et.al., 2017).
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The reason behind the same is always examine that the oligopoly organization used to
earn the super normal profit which help them in building the variety of the obstacles for the
organization who is entering into the market. Most commonly created barrier by the company
operating in the oligopoly market are used to exert the power of monopoly over the raw material,
patents and many others. Some of the biggest example of the oligopoly market is the Apple iOS
as company is the only organization who used to sell the phone with the iOS software in the
market. Also windows and apple are the two firms which used to rule the market of the computer
operating system.
LIMITATIONS OF MICROECONOMICS
Microeconomics is referred as the branch of economics which studies behaviour of an
individual and the company in making the decisions in relation to allocation of the scarce
resources and an interactions among the firms and an individuals. It covers exchange, prices,
demand, profits, competition and the losses that arises when a person voluntarily associates them
with other persons for achieving separate ends (Iossa and Martimort, 2015). In this sense,
microeconomic is counted as the best thought as of the branch of the deductive logics, curves
and the models are simply counted as manifestations of the such deductive insights. It reflects the
ways in which the people makes decisions at the small scale level and at their individual part in
terms of demand and supply decisions.
Individual analysis- It explains only the small units of an individual of an economic
activity. This is considered as partial and an incomplete analysis as for making national
economic assessment, aggregate output and an income is required, aggregate expenditure and the
production level shows an economic level of the country. All these subjects are not been counted
in the microeconomics so it is been regarded as an incomplete matter.
Impractical assumptions- Many of the models and the theories of the microeconomics
are been derived on the basis of some assumptions. For instance- all the other things remains
constant, full employment, rationality concept etc. On a real base scenario, it is impossible to
fulfil such assumptions. In the routine activity, there are several variable factors along with the
time and the changes in the variables results to the changes in behaviour of an individual which
impacts a microeconomic activity. In similar way, it is impossible to be as full employment in
the economy.
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Wrong concept- Microeconomics belief on concept of the Laissez fair economy reflects
that there need not be any interference in the market economy by the government (Provencher
and Ramnarain, 2019). It is been stated that in the market condition or life, government should
have its interference for their smooth activities. In the event of great depression, economy had
made the failure towards this concept of the Laissez faire.
Ignores Macro-level activity- The real economic mirror of the country are considered as
income, price level, policy impact, employment, output, implementation and the foreign trade.
However, microeconomic do not analyses all these subjects.
Thus, theories of the microeconomics are seen as abstract and static that runs on the basis of
unrealistically assumptions and analyses only the part and not an entire economic system. It
couldn't explain the functioning of an economy at the large. Microeconomic misleads at the time
when an individual tries for generalizing from an individual behaviour and unrealistically deals
with the macroeconomic system by assuming for the full employment level.
CONCLUSION
After going through the report it has been summarized that the external position of Apple
is at good and the sound side as SWOT analysis shows that the strength and the opportunities of
the company is good enough to overcome the threat and weakness present for the organization.
After that the report has summarized that the internal audit of the company is also in the favour
of the company as PESTLE analysis shows that the company is able to survive the different
factor. After that the report has summarized the Micro economics and different element of the
same. In the end the report has summarized the limitation of the Microeconomics in the market.
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