Strategic Management

Submitted to:
Dr Sajjad
Submitted By:
Muhammad Asim
M.com ( weekend)
4th Semester Roll # 009
Internal & External Environment Of Apple Inc.

Internal Environment:

Forces or conditions or surroundings within the boundary of the Apple are the elements of the
internal environment of the Apple. The internal environment generally consists of those
elements that exist within or inside the Apple inc such as physical resources, financial
resources, human resources, information resources, technological resources, organization’s
goodwill, corporate culture and the like. The internal environment includes everything within
the boundaries of the Apple Inc.

Vision Mission And Values

Management Changes
Organizational change refers to the actions in which a company or business alters a major
component of its organization, such as its culture, the underlying technologies or
infrastructure it uses to operate, or its internal processes. Organizational change
management is the method of leveraging change to bring about a successful resolution, and it
typically includes three major phases: Preparation, implementation, and follow-through.

Financial Changes Or Issues

External Environment:
Political Analysis
Apple Inc. is exposed to many political problems, as company had a decent number of
contract suppliers in world especially in Asia (CNET 2012). Also major sales contribution for
Apple is from outside US (Apple 10-K). Any political insurgence for sure leaves Apple to
danger. Furthermore, Apple recently was in political pressure and its supplier worker issues,
suicides cases were registered against one of its biggest supplier, Foxconn, long working
hours brings stress to workers and in May 2010 two of workers lost their life and sixteen
were injured during an explosive in one of Apple’s supplier facility (Torres et al 2012).
Survey conducted by SOMO shows, Delta Electronics a facility of Apple Inc. had about 5000
workers registered in union although they aren’t having any significance clashes with
management but still Apple is espoused to political risk (Green Beagle 2011). Apple’s
political problems are not just confined to abroad infect. Apple is facing legal stress
domestically also. Previous year, it restored imports of some of its parts used in iphone which
ever earlier banned by US government. America’s toughing labor and environmental laws are
also making it difficult to compete in highly competitive environment (Apple 10-k).

Economic Analysis
Apple felt the heat, as the world advanced economies i.e. America, Japan and Europe were
and are but recovering from global recession (IMF 2013). Further, the growth of world’s
economy was also very slow in 2012 and was expected to be same in 2013-14 as obvious.
Apple has been affected by crisis .i.e. the change in American region sales for current year
was 9% in 2012-13 compared to 50% of 2011-12, in Europe 4% in comparison to 31% and in
greater China 13% in comparison to 78% (Apple10-K). Unemployment rate in US was 7.9
during 2012- 13, 4.1 in China and 4.6 in Japan, was one of the significant causes of downturn
in sales growth (Trading Economics). Euro crisis, US fiscal problems and hard landing of
large developing countries will likely to continue in coming couple of years leading Apple to
more toughen economic situations (IMF 2013). Moreover, stringing dollars had also source
of problem for Apple product prices, transportation cost and profit margins (Apple 10-K).

Social Analysis
Throughout its history, Apple has been making a series of changes in its products to satisfy
and fulfill what its customers expect. In order to do so, it has been making many acquisitions
such as Embark, Prime Sense, and Topsy and many alliances e.g., Sony, Motorola, Phillips,
and AT&T (Business Insider). Sales of Apple products increased by a good percentage in
India in 2013, which forced the firm to open franchises and make investments in India, which
is clear evidence of Apple showing a rationale as her growth strategy.

Technological Analysis
Information technology is highest earner for past a decade but only those companies have
earned well who had innovated. Apple is a trend setter in consumer electronics business and
had aggressive philosophy on innovation. It by offering unique and advanced technology
retained 49% of its customers and convert 20% to iOS in year 2012-13 (Frobes 2013). The
cracked deal with China Mobile had also brought 760 China Mobile subscribers into their
circle, giving Apple and immense competitive advantage in world largest growing market
(Frobes 2013). Along with above mentioned positive technology industry related points for
Apple Inc. there are some risk factors also present. Apple needs to invest more and more in
R&D as of competitive and short product life cycle nature of industry (Apple 10-K). Apple
designs are unique but consumers are also giving preferences to screen size. Moreover, its
famous for its one floor software application offering which is third party software, bringing
risk to its continuation of contract with the Apple (Apple 10-K).
SWOT Analysis
Strengths
Strength analysis showed that Apple is endorsed by a large brand; company has a strong
recognition because of its aggressive nature of founder towards creativity and innovation. As
the existence of innovative culture it had increased investment in R&D i.e. $4.5 billion in
2013, $3.4 billion in 2012 and $2.4 billion in 2011(Apple’s 10K).It also had elevated sales as
of practiced and skilled sales personals (Apple’s 10K).It had positioned its direct sales
branches at high traffic locations which contributes towards strengthen company’s
revenues(Apple’s 10K).It had significantly controlled its supply chain and publishes its
supplier codes of conduct report annually which further enhances brand recognition. Further
strength of Apple is implausible trade name trustworthiness; Customer can stand whole
freezing night (Guenette, 2012)to be the first one to get new Iphone. Philosophy of ease to
use is also plus point for company. Every product that they produced is user friendly and easy
to understand.

Weaknesses
To be world’s biggest information technology company brings higher responsibilities as well.
Apple like other entities is also facing problems in some of its areas. Based on internal
analysis of Apple, it was found that it had a strong strategy for promotion of direct sales
channels but unfortunately they are still lacking behind. As they only had direct sales
locations in just 13 countries (Apple 10-K). In addition, one of the weak area is the Apple’s
dependency on IPhone and iPod, as their contribution towards overall sales is dominant
(Biddle 2014).As well, it’s hardware products are only supported with iOS, which makes it
difficult to use, whereas competitors’ products are android which doesn’t have such issues. It
is also researched that its products are luxury products as carries a premium price. Ordinary
man would prefer to spend dollars on more productive places rather than to buy (Nair 2014).
Since Apple had a well-recognized manager, Steve Jobs whose death is a big loss for
company. More important there is a change of philosophy for iphone between Cooks and
Jobs. Another weakness in Apple is the declining sales growth causing diminishing market
share (Apple 10-K)

Opportunities
Apples IPhone has plentiful result since its invention; recent statistics shows that IPhone still
is Hercules (Apple 10-k). IPhone 6 introduction will rewrap market for Apple. Further
contract signed last year with China Mobile has and will open up abnormal opportunities in
growing market. Rumors of Apples wearable made up of bending glass material if offered in
early 2015 would be an asset for company, as it would be closest substitute to Samsung’s
wearable and with unique material. Apples goodwill worth $1577 million, one of key cause is
talented personals; competitor’s attractive offering may pull them which Apple can’t afford
i.e. to lose human resource. Opportunity for Apple is if management retained talented human
resource which in return connects company to creativity and innovation.
Threats
The competitive nature of business sector in which Apple Inc. operates brings many potential
threats for them. Majority of the competitor’s ample resource brings a threat that they go for
low profit margins, break even or even negative pricing (Apple 10-K).One of the reasons of
intensive competition among rivals is Apples competitors in order to be cost effective also
don’t have their own software. Moreover, Apple’s majority suppliers are from Asian
countries. Any economic or political problem may cause shortage of supplies or increase in
production cost (Apple 10-K).Apple would be consistently losing market share if they wasn’t
able to innovate continuously or rather reduce price.