5T4Z0001 - PEST Framework: Analyzing Apple Inc.'s Business Environment

This essay provides a PEST analysis of Apple Inc., examining the political, economic, social, and technological factors that influence its business environment. It highlights the impact of political issues like labor disputes and US-China relations, economic factors such as stagnating middle-class incomes and rising labor costs in China, social factors including the appeal of trendy lifestyles and concerns about social responsibility, and technological advancements and cybercrime. The analysis emphasizes the importance of technology for Apple's innovation and competitive advantage, noting the company's significant investment in R&D. The essay concludes that the PEST framework is a valuable tool for understanding the external dynamics affecting Apple's strategic direction and future success. Desklib provides this essay and many more to aid students in their studies.

Running Head: INTERNATIONAL BUSINESS 0
DYNAMIC BUSINESS
ENVIRONMENT

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PEST
Today’s business environment is highly competitive that can form great opportunities for an
enterprise or can cause a substantial threat to their business. For instance, opportunities can
come with new technologies that can benefit the business enterprise to connect with
customers in a new way and on the other hand, threats can be includes intensified
competition, change in government policies, rise in interest rates and so on (Chesbrough,
2010). There are also various sub environments i.e. demographics and global in case of
external business environment and each of these develops a unique set of opportunities and
challenges for business firms. To best attain the opportunities, the company use their skills
and resources to develop goods and services that will fulfil current and prospective
consumers. However, the external environment situations that impact the business are
generally beyond the management control and also changes constantly. Hence, to best
compete in the market, it is important for business owners and managers to continuously
explore the environment and adapt the business accordingly.
PEST Analysis is a widely accepted framework help in identifying such opportunities and
threats in the complex and dynamic business environment and help management to
understand the “big picture” forces of change (Gupta, 2013). It also reveals the change
direction inside company business environment and thus can benefit corporation by giving
break from unconscious assumptions when they plan for entering into a new market segment,
region or country to develop new business model as per the new environment. This
framework is also done to assess the potential of new market so that the firm may decide not
to be involved in any activity in that market (Frynas and Mellahi, 2015). To better understand
the implications of this framework, it has been applied to Apple incorporation that has
managed to create significant value in highly competitive market and it is premium service.
Apple Corporation is one of the leading American enterprise known for its designing and
maintaining various segments of products and services. Their revenue was identified to about
$53.3 billion at the last quarter of 2018 (apple.com, 2018). The company belongs to hardware
and software industry where the competition is very high and external dynamics are complex
and blurred. In order to gain competitive advantage, it is important for Apple to match all its
internal variables and capabilities to the external sources. The external business environment
of Apple can effectively be analyzed with the help of PEST framework stands for political,

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economic, social and technological. However, the key focus will be on the technological
force as how it impacts Apple in its success, growth and development.
In relation with political factors, Apple has its operations in various countries (total number
of countries i.e. 24) outside the US. The major portion of their sales comes from outside and
Apple has displayed quarterly revenue of $62.9 billion, an upsurge of 20 percent from the
year-ago quarter and global sales accounted for 61 percent of the quarter’s profits (apple.com,
2018). Hence, there can be negative impact of any political disorder in any of its operating
nation. For instance, several cases were being registered in relation with workers suicide in
one of the major suppliers, Foxconn. This causes high pressure for Apple and it was stated
that employees were forced to work for greater working hours (Chan and Pun, 2010). Other
than this, the company also faces political disturbance in China that directly impacts on the
manufacturing costs of the company. China being a labour-intensive company, the company
highly dependent for its operation in China. However, due to troubling political scenario
(political bonds between US and China), Apple used to seek a substitute to manufacturing in
China resulting in increasing the production cost and also directly the prices of Apple
products.
In the same way, Apple also influenced by economic issues and crises and as in comparison
with the other corporations, Apple can be influenced because of its premium pricing. In
addition, middle class incomes are stagnating in the U.S. and other developed nations and the
highest income earners (the top 10 percent) are earning more than ever. Stagnating salaries
might convert into sluggish product sales of Apple in the U.S. and its related labor
marketplace with identical attributes. In addition, increasing worth and worth of the US dollar
also influence Apple with rise in exchange rates. It indirectly increasing the cost of products
of Apple. In economic forces, the other factor also includes rising labour costs in China. It
has created several issues for Apple for sure as the company depend on China for its
manufacturing of Apple products but after deciding minimum wages by the government of
China, the labour costs have been raised. It also depends on the area as like Northern Hebei
Province extents viewed 22% rise in wages in earlier year, while Southern Guangdong City
had 5% to 17 % wage increases (Koty, 2018). Increasing wages lead to increasing price of the
Apple products and thus also costs a fortune to the company.
Considering social factors, highly increase in the attractiveness of trendy lifestyle, usage of
virtual world and global status has impacted very much on purchase of Apple products. One

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of the major reason behind purchase of Apple products is the status lifestyle of an individual
as everyone believes Apple as a premium brand as Apple has positioned itself at a unique
position full-filling desirable and wishes of customers with its unique selling proportion,
innovative products and symbol of status (Paharia et al , 2010). Almost all of their products
are affordable to high class of the society. However, some part of population states that the
company lacks social responsibility and consciousness while carrying out its production
procedure in China as it can also be a job maker in its own home-based country but the
company has gone for China to gain low-cost labour for operations and production of the
products. Hence, this sort of factors may limit its appeal to some individuals. Besides this,
many Americans initiated to change their attitude that may negatively impact the sales of
Apple. Minimalism impact how a growing number of Americans spend their cash while
supporting emaciates and frugality unbridled consumerism. It is a rising trend that has
individual requiring fewer and fewer possessions to survive.
Gambardella and McGahan (2010) stated that technological breakthroughs can create new
industries with creation of competitive advantage. With technology, a company can change
the way while making the products, distribute and market it in the continuous changing
demographic segment. Technological force also influences entry barriers, minimum efficient
production levels and in-sourcing and out-sourcing considerations. With regards to this, it
also affects the quality and costs of products and services mainly leading to innovation. Chu
and Majumdar (2012) also stated that technological advancement can enhance internal
efficiency and role and integration of technology in firms is rising year over year. This trend
will endure as R&D pushes new innovations. Technology is the last force of PEST
framework and has a shorter lifetime. In consideration with Apple, the company is one of
those increasing industries who has developed with time. The company has demonstrated to
the other industry also that any organization who needs to earn good image requires
innovating time to time. Technology is also changing rapidly and Apple still has its
popularity in terms of personal computer. However, tablets and smartphones are getting
advanced and better and that might influence with translating into diminishing personal
computer sales. In addition, cybercrime also gets more sophisticated as in 2016 also, a third
party cracked an iPhone as per request by F.B.I and too without the assistance and support of
Apple engineers (Selyukh, 2016). This has confused consumers as they initiated to ask that if
Apple technologies are as secure as formerly supposed. Hence, cybercrime remains one of
the worrying ecological aspects in case of Apple.

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In relation with Technological force, recognizing evolving technologies help Apple to
optimize internal efficiency with creating of disruptive innovations in the industry embracing
various opportunities. For example and considering Apple software applications,
Decentralized apps are open-source applications constructed atop blockchain technology that
encourage participation and lack a central owner. These apps have the potential to contest the
integrated app platforms offered by Apple and Android and to provision new cooperative
economies globally. Apple also invests hugely in its R & D division to gain various insights
in relation with technological trends in the industry. For instance, Apple’s development and
research expenditure amplified from $1 billion in 2009 to $13 billion in 2019 (Leswing,
2019). With regards to this, it has identified that Apple is capitalizing heavily in development
of new products and various patents express that the company is functioning on technologies
in wearable’s, health and fitness targeting young and professionals people. Though Apple
expends much on research and development, slight efforts are also needed to make to monitor
the rate of change in technology and the manner rivals are competing. It was found that the
past decade has seen prompt technological variations, which have significantly reformed
marketplace dynamics. It was identified that Apple is on the edge of mislaying its place to
Google in the Fortune list of world’s most valuable brands. In addition, increase in number of
competitors requires Apple to provide more technological value at lower prices and thus
maintained the market position economically.
Considering, it can be assumed that how technological aspects can straightly influence
corporate and change the course of whole business scenario. In case of Apple, technology
immensely directs the way many things are being undertaken, in firm or otherwise. In
addition, being the innovators and continuously offering advanced and unique technology,
Apple is required to emphasis on the technical aspects of its various products i.e. the
lifecycle. New inventions and design in technology has always been the top importance for
Apple and to attain this goal, the organisation needs more advanced knowledge in relation
with changing trends with the basic technology infrastructure level.
With the help of PEST framework, it is a unique and useful framework to comprehend the
dynamics of external business environment of a country or business in order to ensure its
growth and sustainability. In addition, it also helps in reviewing the direct or indirect impact
of these forces and their potential impact in relation to various factors. In case of Apple, it
proposes an organized basis for assessing the business strategic direction while seeing future
primacies. The study key focus is on the Technological aspect of PEST where it is known

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that information technology stakes are greater than any other sectors in case of Apple.
Technological factors are one of key external aspects that can affect firm and are an essential
part of PEST framework. They can be well-stated as factors which associate to the existence
and development of technology on both local and international level. There are various
diverse examples of technical aspects, which impact business, observable in businesses from
Apple to Microsoft.
To include it can be said that, the changing technological trends and landscape in the social
force every company to undertake innovation or change their business model to meet
technical requirements in order to gain competitive advantage in a particular country or
marketplace. Apple is known to be one of the most innovative business firms around the
world and has received various awards for the same while recognizing globally.
Technological force is one of the major reason behind its growth and success. Towards future
perspectives, Apple has pledged to deploy and integrate new technology with their products.
It will help Apple to become one of the most valuable brands all over the globe.

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References
apple.com. (2018) Apple Reports Fourth Quarter Results [ONLINE] Available from:
https://www.apple.com/in/newsroom/2018/11/apple-reports-fourth-quarter-results/ [Accessed
16/06/2019].
Chan, J. and Pun, N. (2010) Suicide as protest for the new generation of Chinese migrant
workers: Foxconn, global capital, and the state. The Asia-Pacific Journal, 37(2), pp.1-50.
Chesbrough, H. (2010) Business model innovation: opportunities and barriers. Long range
planning, 43(2-3), pp.354-363.
Chu, S. and Majumdar, A. (2012) Opportunities and challenges for a sustainable energy
future. nature, 488(7411), p.294.
Frynas, J.G. and Mellahi, K. (2015) Global strategic management. USA: Oxford University
Press.
Gambardella, A. and McGahan, A.M. (2010) Business-model innovation: General purpose
technologies and their implications for industry structure. Long range planning, 43(2-3),
pp.262-271.
Gupta, A. (2013) Environment & PEST analysis: an approach to the external business
environment. International Journal of Modern Social Sciences, 2(1), pp.34-43.
Koty, A. (2018) Guangdong’s Minimum Wages to Increase July 1 [ONLINE] Available
from: https://www.china-briefing.com/news/guangdongs-minimum-wages-rise-july-1/
[Accessed 16/06/2019].
Leswing, K. (2019) Everybody complains Apple isn’t innovating, but R&D spending and
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https://www.cnbc.com/2019/05/17/apple-research-development-spending.html [Accessed
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Paharia, N., Keinan, A., Avery, J. and Schor, J.B. (2010) The underdog effect: The marketing
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Research, 37(5), pp.775-790.

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Selyukh, A. (2016) The FBI Has Successfully Unlocked The iPhone Without Apple's Help
[ONLINE] Available from:
https://www.npr.org/sections/thetwo-way/2016/03/28/472192080/the-fbi-has-successfully-
unlocked-the-iphone-without-apples-help [Accessed 16/06/2019].