Corporate Venturing: External Analysis Report for Apple Inc. - IBU5COV

This report provides an external environmental analysis of Apple Inc., focusing on the eight-domain framework to evaluate its market position. It begins with a company overview, highlighting Apple's foundation and current market standing. The analysis then delves into the technological, economic, competitive, labor, resource, customer, legal and regulatory, and global environments, providing a concise overview of each domain. The report acknowledges Apple's strengths, such as its resources and customer base, while also addressing controversies like labor issues. Key opportunities and threats are identified, followed by an overall summary and suggestions for further research. The report is a comprehensive assessment of Apple's external environment, providing valuable insights into its strategic position and challenges.

External Analysis Report for [APPLE, INC]
Assignment 1 IBU5COV Corporate Venturing
[Pick the date]
La Trobe University
Author names
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Executive Summary
The main objective of the report was to provide an external environmental analysis of Apple,
Inc. by using the eight-domain framework. The report started with the company overview
where Apple’s foundation and its current market situation had been included. The eight
domains that included technological, economic, competitive, labour, resource, legal and
regulatory, customer and global environment - were then elaborated concisely. Apple, Inc.
being one of the giants in the tech industry possesses abundant resources and has a great
customer base. However, as with other companies, it too had to face certain controversies like
the death of workers in one of its factories in China. These facts had also been incorporated in
the report. Further, the report had also mentioned the main opportunities and threats faced by
Apple in the present day. The report concluded with an overall summary of the entire analysis
and suggestions for further research and reading.
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1. Table of Contents
2. INTRODUCTION AND COMPANY OVERVIEW.................................................................4
2.1 Company overview....................................................................................................................................4
3. EXTERNAL ENVIRONMENT ANALYSIS.............................................................................. 4
3.1 Technological Environment.....................................................................................................................4
3.2 Economic Environment............................................................................................................................5
3.3 Competitive Environment........................................................................................................................5
3.4 Labour Environment................................................................................................................................6
3.5 Resource Environment.............................................................................................................................6
3.6 Customer Environment............................................................................................................................7
3.7 Legal and Regulatory Environment........................................................................................................7
3.8 Global Environment.................................................................................................................................7
4. INTERPRETATION AND DISCUSSION................................................................................ 8
4.1 Main Opportunities...................................................................................................................................8
4.2 Main Threats.............................................................................................................................................8
5. CONCLUSION............................................................................................................................ 9
REFERENCES.................................................................................................................................. 10
APPENDICES.................................................................................................................................. 12
Appendix A: Title.................................................................................................................................................12
Appendix B: Title.................................................................................................................................................13
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1.Introduction and Company Overview
External environmental analysis is performed by organizations to evaluate their
position in the market and to measure the success of their policies and strategies. The present
report provides a detailed analysis of the eight domains that define the external environment
of a company. The company chosen for the report is Apple Inc. It needs mentioning that the
external environment analysis that the report proposes to do is not the usual PESTEL
analysis. The eight-domain framework has been chosen for analysing the external
environment. These eight domains include technological, economic, competitive, labour,
resource, customer, legal and regulatory and global environment. Further, the report tries to
identify the main opportunities and threats concerning the company (Khan, Alam & Alam,
2015).
1.1 Company overview
Apple, Inc. operates from California, USA and spans across the globe having units in
almost each country. It is one of world’s most recognized brands dealing with technological
solutions, computer and mobile peripherals and other gadgets. The late Steve Jobs and Steve
Wozniak founded the company. The total market share of the company at present is 19.2% in
smart phone sale and its revenues for the year 2017 went up to around 3.5 billion dollars.
However, the company is facing stiff competition in the smart phone segment from its
biggest rival, Samsung. In the segments concerning personal computers and laptops, Apple
holds a strong position (Fortune.com., 2018).
2. External Environment Analysis
2.1 Technological Environment
The technological environment of Apple presents itself as a great opportunity for the
company as it deals in technology only. The new trends in technology like cloud computing,
growth in apps market and technological integration have provided great opportunities for the
company to expand its business into new geographic and demographic areas. Cloud
computing is gradually becoming popular amongst organizations and individuals (Lee, Chan
& McNabb, 2017). Apple has realized the potential of this emerging technology. The
company invests millions in cloud services provided by Google. Furthermore, with the
growing market for apps, apple has the capacity to expand its market and broaden its App
Store. In addition, the integration of technology has provided a great platform for companies
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like Apple to produce products that can effortlessly be connected to other devices
(Forbes.com., 2018). The company has been able to establish a concrete ground from which it
could diversify into other markets that promote and encourage technology. The technological
environment for Apple hence can be stated to be positive and filled with opportunities.
2.2 Economic Environment
The Gross Domestic Product (GDP) of the concerned country in which it has its
headquarters measures a company’s economic environment. Apart from that, the growth of
economy in countries where the company has operations also decides its economic
environment. Apple is headquartered in the US and its economic environment is affected by
the status of economy in the country. It is a positive sign for Apple that the GDP of US is on
the rise and showing great trends over the past few decades (Wheelen et al., 2017). Growing
at 2% per annum, the GDP of US is likely to provide continuous boost to Apple. In addition,
the stable economies of other developed nations where Apple operates also prove to be an
opportunity. Further, the trend of fast economic growth in developing nations especially Asia,
provides great opportunity for apple in the future (Apple.com., 2018). Although a fall of 14%
was recorded in Apple’s China market, it still has shown growth in other Asian nations. With
the rise of new competitions every day, Apple is looking to be as innovative as possible.
2.3 Competitive Environment
In the world of advanced technology, companies like Apple are bound to face intense
competition from rapidly evolving tech companies. Among its toughest competition is
Samsung, the South Korean giant, which is at present leading in the race of smart phone
shipments from Apple. However, Apple leads on overall performance. During the 2012-2013
period, Samsung nearly surpassed Apple on mobile phones revenues. In 2013, the gross
revenue of Samsung Mobile Communications stood was 128.2 billion dollars, ahead by 2.3
billion dollars from Apple. The controversial issue of Note 7 batteries overheating and
exploding however contributed to the company’s decline in the consequent years (Lockamy,
2017).
Apart from Samsung, Apple faces stiff competition from companies like BlackBerry,
Nokia – that is looking to regain its lost position in the mobile phone market and the recently
emerging Xiaomi smart phones. In the field of tablets, Apple faces tough competition from
Google’s Alphabet Inc. and Microsoft. Both Google and Microsoft are the giants in this field
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with Google being the one slowly making a mark in this field. Google is also a competition
for Apple in the entertainment media and applications segment. The Apple iOS on iPhones,
iPods, and the iTunes app on Google Play Store are examples of the competition. In the arena
of mobile payments, Apple has started to make quick inroads although it has the daunting
challenge to beat the traditional players like PayPal (Mann, Medves & Vandenkerkhof,
2015).
2.4 Labour Environment
Apple’s labour environment varies from country to country and from department to
department. The countries that manufacture Apple products include China, Philippines,
Czech Republic, South Korea and Singapore. China however houses the main factory of
Apple known as Foxconn. A look at the recent cases of workers’ death while manufacturing
Apple products in China has bring forth a concerning picture for Apple’s labour environment.
During the end of 2016, news of the death of workers working on Apple’s new device in
China proved to be bigger news than Samsung’s battery disaster. The more disturbing part
about the news was the cause of the deaths. The workers were reported to have taken their
own lives owing to unbearable stress (Pun et al., 2016).
Apart from that, no news of worker death has been reported in other countries.
Further, the HR department of Apple is very active and promotes quality and equality of
labour. The rise in the number of employees tells the fact that Apple does attract huge
workforce each year. The total labour force of apple in 2017 was 123, 000 that is an increase
of seven thousand from the previous year.
2.5 Resource Environment
Apple being the leading company in tech solutions and devices has abundant
resources. The biggest and one of the most important resources, which is capital, is Apple’s
biggest strength. Apart from that, other resources like raw materials, production facilities and
machineries are easily available owing to the huge capital the company has. In addition to
that, Apple also boasts of a highly motivated staff that comprises technically brilliant minds
along with good strategic planners and advisors. The one important aspect gives Apple the
reputation it enjoys – its human resource. One of the unique features of Apple is that it has
human resources that span from the young generation to the extreme older generation.
Maintaining this range of human resources if tough but Apple has been able to provide
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benefits that suit every employee (Giachetti, 2018). In one of its recent endeavours, the
company updated its benefits for employees that included longer leave on parental grounds,
reimbursements for educational classes taken by employees, expansion of programs like
donation-matching, subsidised student loan and so on. The plan proved to be a great one as is
evident from the employee turnover in 2017.
2.6 Customer Environment
Apple’s customers are diverse and possess mostly the younger generation. The
consumers of Apple mainly belong to the high income premium range. The teens are the
primary target market for Apple and they are attracted by the premium product offerings of
the company including iPods, Macs and iPhones. The customers who have purchased the
iPhone for once become loyal to the company as they are impressed by the performance of
the products. Apple has a loyal and almost blind customer base who simply buy the products
due to the value related to the brand (Brockmann, Stieglitz & Cvetkovic, 2015). Apple is a
brand that falls in the premium category and the customers of the company also have
premium levels of income. The most suitable customers of the company are wealthier and
younger. The millennials or the premium group of people tend to be the next best target
segment for the organization (Qiu & Wan, 2015). The users of Apple spend much more on
travel related facilities as compared to the consumers of the other organizations. The people
who own the products of Apple are found to be from a more urban area and they also follow
the news related to technology on a regular basis.
2.7 Legal and Regulatory Environment
Apple has entered the sector of financial services with the help if Apple Pay. The levels
of the government oversight and regulations that will be faced by Apple can increase due to
this step. The offering of financial services of Apple can further increase the issues related to
litigation that is faced by the company. Apple is dependent on many products which are
related to music, software for the most part of its income. The sale of the various products is
related to many laws and regulations which are covered by the laws of intellectual property.
This makes the organization vulnerable to the activities including litigation and piracy (Piao
& Kleiner, 2015).
2.8 Global Environment
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Apple was established in the year 1976 and the highly volatile technological industry has
evolved a lot since the inception of the organization. The organization has been neglecting
the trends in the market and always a targeting a niche market for the promotion and
marketing of their products. This has made the company to lose its share in the market after
many years of its establishments. The external environment of Apple has an influence on the
sales and revenue of the company (Khan, Alam & Alam, 2015). Apple needs to adhere to the
policies related to tax, restrictions related to imports and the laws related to competition in the
country where it operates. The global spectrum of Apple influences business related
operations of the company. The issues related to global compliance needs to dealt with in an
effective manner. Apple has been famous in the industry globally as the technological
innovator and the company has further tried to remain relevant in the market and keep their
operations ahead of the competitors. Apple has been operating in the industry is a profitable
since its inception and the major reason behind this being the loyal customer base of the
company (Dong & Zhang, 2016).
3. Interpretation and Discussion
3.1 Main Opportunities
The market potential of the smartphones and their huge craze in the market is a huge
opportunity for Apple to flourish their operations. The smartphone market is growing with a
fast pace and this huge potential can help Apple in growing their revenues and profitability.
The advancement of technological environment is another major opportunity for Apple to
increase the market growth. Apple has been launching unique products from the time of its
inception and the consumers therefore expect highly innovative products from the company.
The people have started becoming much more dependent and addicted towards technology
and the power of spending among the consumers has also increased (Chuang, Morgan &
Robson, 2015). This will act as a major boom to the market growth of Apple. Another major
opportunity for the organization is related to the geographic expansion of the operations of
Apple. The market is likely to grow in the future and this will provide huge opportunities for
Apple in the industry. The market of accessories related to mobile phones is also growing
quite fast and Apple can encash its opportunities in this market and increase its revenues
(Chen et al., 2015).
3.2 Main Threats
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The biggest threat related to the growth of the market of Apple iPhone is mainly the
growth of the operating systems of smartphones based on Android. The mobile operating has
been taken by storm by the launch of the Android in the market by Google. Major threat to
the market expansion and growth of Apple is the competition that is provided by Samsung.
The power of android based phones has been depicted to the world by the phones launched
by Samsung. The products that have been launched by Apple in the past few years have been
lacking in the innovation related features (Gandomi & Haider, 2015). The high expectations
of the consumers related to innovative products of the company have put immense pressure
on the revenues of the company. This is a major threat to the growth of the company in the
future and the ways by which they can increase their profitability. The brand has been losing
its shine since the last few years after the death of Steve Jobs and the change of CEO. The
changes that have occurred in the leadership of the organization has affected the innovation
levels of Apple. The launch of a single product which is innovative in nature will help in
improving the brand value of Apple (Lustgarten, 2015).
4. Conclusion
The report can be concluded by stating that the factors related to external changes in the
environment have caused many changes in the operations of Apple. The changes in the
mobile technologies in the global world have led to changes in the products and the offerings
of the company. The demands of the customers have also changed with the fast growth in the
smartphone market. The threats related to the revenues and the growth of the company has
also increased in the last few years after the death of the CEO of the company Steve Jobs.
The levels of innovations have decreased which has led to the loss in the customers of the
organization. Apple therefore needs to increase the innovation levels of their products so that
they can gain competitive advantage in the market.
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Chuang, F. M., Morgan, R. E., & Robson, M. J. (2015). Customer and competitor insights,
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Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external
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Appendices
Appendix A: Title
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