PESTLE Analysis of Apple (iPhone). Apple is a famous US tech multinational corporation. Consumer electronics, smartphones, digital services like Apple stores, software, and computers are some of the main products of Apple.
Steve Jobs, Ronal Wayne, and Steve Wozniak are the founding fathers of Apple and they established the company on April 01, 1976. The headquarter of Apple is situated in Cupertino, California.
Whether we talk about market share, brand value, net profit, brand worth, or customer retention ratio; Apple is always at the top of the list. In 2018, the market share of the brand reached the figure of 1 trillion US dollars. Although it lasted a very short time, Apple did become a trillionaire. iPhone is one such product of Apple that turns out to be a cash cow to Apple in the real sense. The company is milking it in terms of profit for decades and plans to do so in the upcoming years as well.
Some of the unique selling points of Apple are that the company is a pioneer in the tech industry. The brand has maintained the status of being a large corporation over the years with market capital, annual revenue, and customer market. Now Apple stands alongside some of the world’s top and best companies like Google, Facebook, Amazon, and Microsoft.
Mission statement plays a very important role, that’s why it significant to discuss the mission statement of Apple and that is:
“to bringing the best user experience to its customers through innovative hardware, software, and services.”
The vision of Apple is:
“We believe that we’re on the face of the earth to make great products and that’s not changing.”
The annual revenue of Apple in 2020 was 274.515 billion dollars, and out of which, the net profit of the brand after excluding all the expenses was 57.411 billion dollars. The worth of the company’s total assets in 2019 was 338.516 billion dollars.
In the pestle analysis of Apple, we’ll discuss macro-environmental factors in detail one by one. If you wan to learn about the internal factors of the world’s top tech brand, check out the swot analysis of Apple. Here’s the pestle analysis of Apple as follows;
Political Conflict b/w China & the US
The tension and conflict between the US and the Chinese government are not hidden from anyone. We also know that Apple employs Chinese labor to manufacture its products. The growing tension between the two governments results in the form of strict trade regulation and increased taxes.
For instance, the Trump administration is working on passing laws and regulations to limit Chinese imports. One of the best ways they have found is to increase the taxes, and they’ve set a 25% tariff on Chinese imports. It’s the highest tariff ever.
According to some reports, 420 billion dollars worth of goods traded between the two countries in 2018. Trump administration enforces the companies to pay 25% tariff on 250 billion dollars imports.
Workforce Visa Issues
The software engineers and tech developers have to go back and forth between the manufacturing unit plants in China and the headquarter in California. It seems like not a big deal in normal circumstances. But when the political tension rises between the two governments, it becomes very difficult for Apple’s employees to get US and Chinese work visa from the immigration department. They have to follow the clear instruction of the government and monitor everything.
The other impact of political tension between the US and China is that it increases a sense of nationalism among the public. It could be anti-china in the US and anti-American in China. Since Apple has trade relations and business dealings with China. The potential growing sense of nationalism could jeopardize the growth of the company.
Favoritism in other Markets
Apple sells the majority of its products in other countries outside of the US. Political factors like nationalism and conflicts could hurt the market share and sale of Apple’s products. For instance, Samsung is a domestic brand in Asian countries, and people would tend to favor Samsung over Apple. That’s how Apple is facing tough competition in the international market.
COVID-19 & Global Economic Crisis
COVID-19 pandemic broke out from China at the end of 2019 and it spread across the world like a ghost. Countries had no choice but to shut down everything to stop the virus. Closing down of all the businesses and companies cause a global economic crisis. It impacted all big businesses like tourism, airlines, distribution, transportation, and many others.
We’re still going through the phase of pandemic and lockdown. Some countries have lifted the lockdown and others have not. Post pandemic effects are yet to come. Economists are predicting the recession in the upcoming years because pandemic hurts the businesses very badly. When it happens, then it would impact the sale and market share of Apple.
Fluctuation in Exchange Rate
The exchange rate of US dollars in the foreign market is very high. It makes it very difficult and costly for people to buy Apple’s products and services. That’s where the role of counterfeit products and dealers come into play; they manipulate the minds of people and make them buy counterfeit products.
Increasing Labor Cost in China
The Chinese government has launched labor and wage reforms in the constitution due to international pressure. It’s a great step by the Chinese government for its people. It would mean that businesses and companies have to pay higher wages to their employees. Apple has to follow the same rule of having a manufacturing unit in china. More salaries would mean that less profit for the company.
Image of a Valuable & Expensive Brand
The public perceives the image of Apple as a valuable brand. It has good and bad sides to it. It’s good for rich people to show off their wealth and status. But the majority of the people aren’t rich. They see it as an expensive brand. Therefore, such perception has created a sense of backlash for the company and it could hurt the reputation of the company.
Customer Behavior Marketing
Customers, investors, executives, and employees have got a very high expectation of Apple. The company has to stay one step ahead in the market to meet the expectation of various parties. Therefore, the brand follows psychological marketing to earn more profit.
Apple has manufacturing relations in China. It shows that the company has loyalty to the dictatorial regime of the Chinese communist government. Whether it is true or not, but some people see it that. If such rumors start floating around, it could jeopardize the brand image of the company in Europe and America.
Less Loyalty with the Younger Generation
Apple has been in the tech market for a very long time and elderly people have got great ties and loyalty with Apple. But this loyalty doesn’t seem to pass on to the younger generation. They’re less interested in the company’s products.
Best Designed Tools
Apple has designed some of the best tools over years for the customers and businesses as well. It’s one of the main reasons that the brand remained in the top position for a very long time.
Continuous focus on Innovation
Staying at the position looks good. But you have to pay a very heavy price in terms of the increasing expectation of customers and investors. At the end of the day, it puts great press on developers and software engineers to produce something new and come up with a unique idea over and over again.
A strong security system is one of the major characteristics of Apple. But the cyber infiltration attacks of 2014 on the operating system of mobile phones and Mac have made it clear that Apple is also vulnerable to cyber-attacks. Even though the company resolved the issue later on by releasing iOS, but it raised a question on the security of Apple iPhones.
When it comes to solving problems and launching successful products, then Apple hasn’t been successful in all of its projects. It’s because there is a list of projects that couldn’t work out for the company like Apple Maps, Apple Tv, MobileMe, etc. These projects of Apple couldn’t capture the expected market share, because the company provided limited options.
Various Regulations due to Global Brand
Apple is offering its products/services worldwide. Although it has increased the market share of the company, it has also exposed the company to comply with the rules and regulations of many countries. If the company doesn’t comply with the local laws of any country, it would result in the expulsion of the company’s product from the concerned country.
Privacy & Customers’ Data
The privacy of customers’ data is one such issue that the users and government have a clear interest in it. Even the US Congress has asked Apple to protect the privacy of the users’ data. Violation of such issues could put the company at serious risks.
Most of the products and services of Apple fall under the category of intellectual copyrights like software, applications, and music. These services are the main sources of the company’s revenue stream. Apple has faced 100s of copyrights and patent lawsuits over the years. Such litigations can put the brand into serious trouble by costing billions of dollars.
Recycling & Less Carbon waste
Environmental issues have becomes a serious issue in recent times. Now people ask questions like how the company would dispose of million of lithium batteries and used products. If Apple is recycling the products, then what technology the company would be using. The cost of disposing and recycling are some of the serious questions that Apple and other tech companies have to answer.
According to an estimate, Apple said in 2019 that the brand has decreased 35% of its carbon footprint over 3 years. The company is planned to reduce it more in the upcoming years.
Apple has taken an appreciating concept by using renewable energy in all the manufacturing plants and location points of the company. Apple has saved approximately 1 million acres of jungle in China with its consistent efforts.
Newer ways to develop Eco-Friendly Products
Apple is working on the development of technology to find better ways to manufacture eco-friendly products. If the company succeeds in it, it would provide a unique competitive edge.
Apple has a robot by the name of Daisy to disassemble the used phones and make their parts reusable. The company also uses wood fiber, a recyclable material, for the packaging of its products.
After a careful study of the pestle analysis of Apple, we have concluded that the company is making great progress even after facing such macro-environmental. But the competitive market and legal issues could pose a real danger to the company. Hopefully, Apple would come out of it successfully being a market leader.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.