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Global economic Development within the Scope of Apple Inc.

Term Paper (Advanced seminar) 2011 21 Pages

Business economics - Business Management, Corporate Governance

Excerpt

TABLE OF CONTENTS

I. PRINCIPLES OF A BUSINESS ENVIRONMENTAL ANALYSIS
Concept of PESTEL Analysis
Concept of SWOT Analysis

II. APPLE INC. - WIND OF CHANGE
Apple Inc. Genesis
Fields of activity and product portfolio
Steve Jobs Role within the Company

III. GLOBAL ECONOMICAL DEVELOPMENTS
Recent changes within the world economy & politics
Impact on Apple Inc
PESTEL Analysis for Apple Inc

IV. NEW PATH FOR APPLE INC
SWOT Analysis
Apple & Corporate Social Responsibility
New Markets & Potential for Apple Inc

V. FORECAST & RÉSUMÉ

VI. LIST OF REFERENCE.

I. PRINCIPLES OF A BUSINESS ENVIRONMENTAL ANALYSIS

An organization's accomplishments are determined by factors within its internal and external environment. A business can increase its success by implementing strategies which influence these factors to its advantage.

A successful organization will not only be aware of these existing factors but also anticipate change and evaluate likely effects, so that it can benefit from changes within the environment in which it operates and apply growth strategies. Understand today, shape tomorrow - would be an accurate summary in this correlation.

Environmental analysis will facilitate understanding what is happening both inside and outside a company or branch while this knowledge is exploited to ensure economic success. In order to execute an environmental analysis, one must systematically understand how organizational environments are structured. An organization's environment can be divided into three distinct levels: internal environment, operating environment and general environment. This division will help to grasp a company's situation. Micro-environmental factors are internal conditions the organization can control, external factor are complex to manipulate.

In the following, two of the most common environmental analyses will be carried out and explained, the first being the PESTEL Analysis, and second tool for an external factor analysis is the SWOT analysis. Both will be elaborated in the following chapters.

Concept of PESTEL Analysis

PESTEL Factors are exterior forces influencing a company of which the organization does not directly control. PESTEL is an acronym for: Political, Economic, Social, Technological, Ecological and Legal.

Political factors influence organizations in numerous ways. On the one hand, they can create advantages and opportunities for business. On the other hand, they can impose obligations and duties on organizations. Some of these include:

- Legislation such as the minimum wage or anti-discrimination laws
- Voluntary codes & practices
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies & tax breaks
- Type of government regime - state-directed economies, capitalism & dictatorship

Not following legislative obligations can lead to sanctions such as fines, adverse publicity, imprisonment and forced pullback for a company.

Secondly, the PESTEL analysis involves a revision of national and global economic factors. National and global interest rates and fiscal policy will be set based on economic conditions. The economic climate determines how consumers, suppliers and other organizational stakeholders such as suppliers and creditors perform within society.

An economy experiencing recession will have high unemployment, low spending power and low stakeholder confidence. A flourishing or rising economy, on the other hand, will have low unemployment, high spending power and high stakeholder confidence.

Most companies will respond to economic conditions and stakeholder behavior and will review the impact economic conditions are having on their competitors and then respond accordingly. Due to the globalized business world, firms are affected by global factors and not just by events and policies in the countries in which they are based or operate from.

For instance, cheaper labor in developing countries affects the competitiveness of products from developed countries. Global businesses have to be aware of economic circumstances across all borders and need to ensure that they implement strategies which both shield and promote their business under every possible economic condition at the global level.

Another field considered by the PESTEL analysis concerns influence of society (family, friends, colleagues, neighbors, media). Those social forces concern people's attitudes, interest as well as opinions and shape who we are as a person, the way we behave and eventually what we purchase. Wii Fit, for example, was introduced on the market as a reaction on society's concern about the low amount of exercise children engage in.

Changes in the demographic changes also have a direct impact which will affect the supply and demand for goods and services within an economy. For example, falling birth rates in Western countries result in a decreased demand and larger competition as the amount of consumers for certain products shrinks. Likewise, an increase in the global population and predictions of food shortages could be leading to greater investment in food production.

In a nutshell, firms must be able to offer products that endeavor to complement and benefit people's lifestyles and behavior. If organizations do not react to alterations in society they will lose market share and demand for their products.

The fourth component of PESTEL is technology. This element had a huge impact in recent years on the manner in which businesses operate.

The technological revolution has produced a society which expects immediate results and has increased the speed at which information is exchanged among stakeholders. This development of fast information transfer can benefit businesses since they are able to respond quickly to changes within their working environment.

Yet quick reactions also generate extra pressure as businesses are expected to deliver on their promises within ever shrinking timescales. Current developments in the stock market show that speed confuses and endangers trading and the world economy.

Another example is the speed at the internet is working with and its heavy impact on the marketing mix strategy of companies. Consumers can now shop 24/7 from the comfort of their own homes as well as at work, via Smartphone and tablet computer. This permanent access and the ability to "always be online" not only allow permanent consumption, but can also cause professional life to encroach on people's personal time outside work.

The pace of technological change is so fast that the average life of a computer chip is only six months. Technology is utilized by all age groups and will continue to evolve and influence consumer habits and expectations. Companies which ignore these facts face extinction.

Legal factors are essential as companies have to work within legislative frameworks. Legislation can get in the way of a firm's development by placing restrictive obligations on them. However, legislation can also create market settings from which they can benefit.

Environmental points comprise ecological and environmental aspects such as weather, climate and climate change, which may particularly impinge on industries such as tourism, farming, and insurance. Additionally, growing awareness of climate change is having an impact on how companies operate. This aspect can create new markets but also diminish existing ones.[1]

Concept of SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunity and Threats and is an instrument for strategic planning, development and determining a company's position in the market. The analytic tool with military origin is used to evaluate the strengths, weaknesses, opportunities and threats involved in an organization or in a business venture. SWOT enables the identification of internal and external factors which might help or hinder the reaching of a certain goal.

- Strengths - characteristics of the business which represent advantages vis-à-vis its competitors
- What is your strongest business asset?
- What makes your business stand out from the rest?
- What unique resources do you have?

- Weaknesses - characteristics which may put the company at a disadvantage vis-à-vis its competitors

- What can be improved?
- What areas do your competitors succeed in?
- What competences is your business lacking?

- Opportunities - external factors in the environment which help increase sales & profits

- What trends do you anticipate?
- Which influence the business?
- What external changes present opportunities?

- Threats - external elements in the environment causing problems for the business

- What obstacles does the company face?
- What challenges can be turned into opportunities?
- What is the competition doing which the company is not?

Both analytic tools will be applied to Apple Inc. This analysis should be particularly interesting, since it was announced recently that Apple is the most valuable company in the world, but it was also revealed that its CEO Steve Jobs has had to resign.[2]

[...]


[1] Macharzina K., Wolf J. - Unternehmensführung; S.18ff

[2] Macharzina K., Wolf J. - Unternehmensführung; S.342ff

Details

Pages
21
Year
2011
ISBN (eBook)
9783656353508
ISBN (Book)
9783656354062
File size
486 KB
Language
English
Catalog Number
v207971
Institution / College
Berlin School of Economics and Law – Institut of Management Berlin
Grade
1,2
Tags
global development scope apple

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Title: Global economic Development within the Scope of Apple Inc.