Impact of PEST and Porter's Five Forces on Apple's Strategic Planning

This report provides a comprehensive analysis of Apple's business operations, focusing on the impact of political, economic, social, and technological factors (PEST) and the competitive landscape using Porter's Five Forces. The analysis examines the challenges and opportunities faced by Apple, particularly concerning its iPhone product. The report highlights the company's dependence on Chinese manufacturing, economic factors like labor costs and currency fluctuations, social concerns related to ethical manufacturing, and technological advancements by competitors. Furthermore, it assesses the intensity of competitive rivalry, the threat of new entrants and substitutes, and the power of suppliers and buyers. Based on these findings, the report proposes a six-step strategic planning process, including setting strategic intent, defining mission statements, analyzing the current situation, setting objectives, formulating strategies (cost leadership), and implementing and monitoring the strategy. The report concludes by emphasizing the importance of cost leadership and effective management to achieve strategic goals.

Running head: SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP
Small Business Management and Entrepreneurship
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Author Note

1SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP
The increasing level of the business competition is one of the crucial factor
responsible for influencing the business organizations in incorporating the innovative
solutions in the products and the services that they offer to their customers. The application of
the modern technology and innovation in the products of the organization enables the
organizations in achieving the preferences of the customers and the requirements of the
customers in an efficient manner. The paper is focused in the elaboration of the Political,
Economic, Social, and Technological impact on the business operations of a chosen
organization, Apple and on their products such as I phone. Apart from this, the paper
conducts an environmental analysis with the application of the Porter’s five forces tool ad
depending on the findings of the above mentioned tools, a 6 step strategic planning is
introduced in the paper.
PEST Analysis:
Political:
The company is significantly dependent on China for their manufacturing as the
nation offers the scope of low cost manufacturing. The company is significantly affected with
the urge of the United States government in reducing the Chinese import for promoting
American manufacturing (Pokharel, et al., 2015). Hence it will be a major menace for the
selected organization in finding the alternatives that suits the costing of China. The
diplomatic position and the political relationship between the nations such as China, US and
Japan is considered to be a major concern for the selected organization.
Economic:
The increasing labour and employment charges in China has the potential of reducing
the cost advantage that the chosen organization experiences in introducing the products such
as I-phone. Apart from this, the increment in the strength of the US dollars has the potential

2SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP
of increasing the exchange rates and that can lead the organization to such a state where the
organization will be forced to increase he prices of the products such as I-phone in European
or Chinese market.
Social:
The company is expected to achieve the biggest market growth in consumer spending
in recent years in the African region as the familiarization of the people with the products of
the selected company, is notably increasing.
Adding to this, the increased ethical concerns that the selected company faced in
Chinese manufacturing is one of the major factor that is reducing the appeal of the products
to the socially concerned customers.
Technological:
The products and the services of the selected company lacks the incorporation of the
technology in making the products unique for the customers and that is pretty evident with
the fact that the organizations such as Google is able to introduce the duplicate of the Apple
pay within a significantly limited time (Google.com, 2019). Apart from this, the selected
organization is seen to use an operating system that notably limits the variety of the
applications available for the customers in their smartphone. Hence the incorporation of the
technological advancement is much needed in the improvement of the operating system.
Adding to this, the chosen organization is in need to improve the strength of their security in
order to protect their users from the threat of increasing cyber-crimes.
Porter’s Five Forces:
The selected organization is observed to face tough competition from the part of the
organizations such as HTC, Samsung, Sony and Nokia. The selected product of the company

3SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP
that is the I-phone is facing an intense competition in the market from the products HTC One,
Nokia Lumia Series, Samsung S3 and S4 along with Sony Xperia Z (Samsung.com. 2019).
Hence the intensity of the competitive rivalry that the selected organization and the product is
subjected to, is notably high.
The threat of the new entries in industry is observed to be limited as the competition
has the potential to force the new organizations towards the allocation of significant amount
of investment for the establishment of the infrastructure in order to meet the desired quality
and the specifications.
Apart from this, chosen company is experiencing apt services of their suppliers such
as 3M Company, AAC Technologies Holdings Incorporated, Advanced Semiconductor
Engineering Incorporated, Alps Electric Company Limited, AMS AG and Boyd Corporation
(AAC Technologies, 2019). The company experiences the services of considerable number of
supplier organizations with the qualities such as the on time supply, supply of the accurate
quantity at a reasonable prices.
With a precise focus on rival organizations and their significant market share, it is
pretty evident that the selected organization with their product of I-phone, is subjected to
significant amount of competition in various aspects such as the sped of the processor, quality
of the products and the pricing of the products. Hence it is visible that the organization faces
high threat of substitution. With a precise focus on the increasing number of organizations
available in the market capable of producing equivalent products through matching the
quality standards and providing the products at a comparatively cheaper prices, the buyers are
expected to have considerable number of options to choose from.
Six Step Sequential Process of Strategic Planning:

4SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP
One of the prime concern for the chosen organization is the premium pricing policy
which is seen to put a strong obstacle for the selected organization in penetrating the low
income groups. The strategic intent from the part of the organization is to introduce the
products at cheaper rates. Considering the second step in the sequence, the company’s
mission statement is of great significance in explaining the company’s intention of becoming
the leaders in the consumer electronics and telecommunications electronics. Under such
situation, the introduction of the products at cheaper rates will be crucial for the organization
in improving their status for reaching their desired position of becoming the number one in
the consumer electronics market. From the findings of the PEST and Porter Analysis, it is
pretty evident that the selected organization is facing considerable amount of challenges from
the part of the organizations that have introduced low pricing strategy and improved their
operating system (Apple.com, 2019). Hence the primary target for the selected organization
in the fourth stage of the sequence will be to introduce the products at 2% lesser that the
average pricing of their competitors in order to make sure that they be able to target the low
income groups and at the same time, they be able to capture the market of the competitor
organizations. The strategy that the company is expected to undertake is cost leadership
strategy and the company is in need to make sure that they be able to improve the skills and
competencies of their employees in order to limit the operational cost of the organization.
Apart from this, the organization needs to put strong emphasis on the effective management
of the supply of the raw materials and in sourcing materials at a comparatively lesser prices.
With a precise focus on the implementation of the strategy, the senior level management of
the organization is expected to monitor the progress of the implementation as well.

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References:
AAC Technologies. (2019). Retrieved from https://www.aactechnologies.com/en/
Apple.com. (2019). Home. [Online]. Retrieved from https://www.apple.com
Google.com. (2019). Home. [Online]. Retrieved from https://pay.google.com/
Pokharel, R., Marahatta, S. P., Handoo, Z. A., & Chitwood, D. J. (2015). Nematode
community structures in different deciduous tree fruits and grape in Colorado, USA
and impact of organic peach and apple production practices. European journal of soil
biology, 67, 59-68.
Samsung.com (2019). Home. [Online]. Retrieved from https://www.samsung.com/uk