Apple Inc. PESTLE Analysis: Apple Inc. (NASDAQ: AAPL) Is One of The World's Most Visible and Recognizable Consumer

Apple Inc.
PESTLE Analysis
Apple Inc. (NASDAQ: AAPL) is one of the world’s most visible and recognizable consumer
electronics brands. Apple has long been an investor favorite because of its strong revenue growth
and high return on investment.
Even though it started as a traditional computer company, Apple now designs and manufactures
a wide variety of electronic devices, including Smartphone’s, tablets, music players and
television sets. Apple has a very unique business model in which it writes and designs
proprietary software and offers its own operating system for all of its devices.
n recent years, Apple has branched out into entertainment and information services. It is now one
of the world’s largest online retailers of music, streaming video and software solutions, including
Smartphone applications.
Despite its uniqueness, Apple’s business model has been very successful. It reported revenues of
$224.34 billion on June 30, 2015. Apple also reported sales of $50.77 billion for the second
quarter of 2015 and estimated sales of $233.02 billion for the current fiscal year. It was also able
to achieve a profit margin of 21.52% for the second quarter of 2015.
Contents
 Potential Impact of Political Factors on Apple
 Potential Impact of Economic Factors on Apple
 Potential Impact of Social Factors on Apple
 Potential impact on legal factors on Apple
 Potential impact on environmental factors on Apple
Potential Impact of Political Factors on Apple

 Apple is one of a number of American technology companies that has accumulated a
large amount of cash. It had $34.7 billion in the bank on June 30, 2015. This is generating
calls for higher corporate taxation in the United States, where income inequality has
become a major political issue.
 Apple is heavily dependent on lower cost manufacturing in China. Social and political
unrest in China could disrupt manufacturing or increase manufacturing costs in that
country. There have been also been calls to restrict Chinese imports in the United States in
an effort to boost American manufacturing.
 The cost of finding alternatives to Chinese manufacturing could be high for Apple. This
could lead to increased prices for Apple products.
 Apple’s dependence on Chinese manufacturing and markets makes it vulnerable to
political unrest in that country.
 Apple could become the target of growing nationalism and anti-Americanism in China,
which could reduce its market share.
 Apple’s close association with China could become a political issue in countries like the
United States and Japan if China were to be perceived as a threat.
 Apple’s dominant position in fields like music could lead to antitrust concerns and
political pressure to break the company up or limit its market share.
Potential Impact of Economic Factors on Apple
 Increased labor costs in China could take away the cost advantage of some Apple
products.
 Stagnating middle-class incomes in some developed countries, including the United
States, could shrink the potential market for higher-end consumer goods such as those
marketed by Apple.
 A strong U.S. dollar could increase exchange rates, making it more expensive for Apple
to do business in key markets like Europe and China.
Potential Impact of Social Factors on Apple

 The biggest growth in consumer spending in coming decades will be in areas of the world
such as Africa where people are unfamiliar with Apple products.
 Consumers in those markets and younger people in Apple’s established markets, such as
the United States, lack the strong emotional attachment to Apple products that drive sales.
 There is a backlash against expensive and stylish products among some customers in the
United States and Europe.
 Ethical concerns about Apple’s manufacturing in China could limit its products’ appeal
among socially-conscious consumers.
 Apple’s close association with China could offend some potential customers in other
regions, such as North America and Europe, particularly if tensions with China rise.
 Apple’s music marketing strategy has created resentment and led to public criticism from
major recording stars that could tarnish the brand’s image.
Potential Impact of Technological Factors on Apple

 Competitors such as Google and Samsung have demonstrated a strong ability to duplicate
Apple’s products and services. It took less than a year for Google to roll out a payment
app; Android Pay, with the same capabilities as Apple Pay. This means that many of
Apple’s signature services and products are no longer unique.
 The number of new consumer products Apple can bring out is limited. Many of its new
offerings, such as Apple TV, will have a limited market.
 Growing use of Smartphone’s and tablets will lower demand for Apple’s popular
personal computers.
 Apple’s proprietary operating system can limit the variety of applications available to
Smartphone users.
 The growing capabilities of cyber criminals make Apple’s systems less secure and take
away one of its strongest competitive advantages: its reputation for high levels of security
and safety.
Potential Impact of Legal Factors on Apple

 Apple has recently entered the highly regulated financial services sector via Apple Pay.
This could increase the level of regulation and government oversight it faces.[2]
 By offering financial services, Apple could face increased levels of litigation.
 News reports indicate that Apple is planning to enter another highly-regulated sector:
automobile manufacturing.[3] Entering the auto business could increase regulatory,
insurance and litigation costs at Apple.
 Apple depends on a variety of products covered by intellectual property laws, such as
software and music, for much of its income. This leaves the company highly vulnerable to
both piracy and litigation.
Potential Impact of Environmental Factors on Apple

 The biggest environmental issue facing Apple is the disposal of used or nonworking
electronic devices. The expense of disposing of devices, particularly those containing
lithium batteries, could be high. Apple could be forced to assume that expense because of
concerns about such devices in landfills.
 Pollution and other environmental side effects from manufacturing facilities in China are
a growing concern. This could lead to increased regulation and higher manufacturing costs
at some point in the future.
 China’s efforts to cut greenhouse gases and limit fossil fuel use could increase electricity
rates and manufacturing costs for Apple in that country.
 Climate change created by global warming could disrupt transoceanic shipping and
Apple’s supply chain.
 Concern about energy use and other side effects from data centers could lead to increased
regulation and costs.
 Apple is highly vulnerable to increases in electricity costs because of its dependence on
data centers and other Internet infrastructure.
Apple should be able to thrive in spite of these challenges because it has demonstrated an
impressive ability to adapt to a changing environment. In particular, Apple’s research and design
capabilities give it an advantage that should propel its revenue growth for decades to come.

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Apple Inc.

Potential Impact of Political Factors on Apple

Potential Impact of Social Factors on Apple

Potential Impact of Technological Factors on Apple

Potential Impact of Legal Factors on Apple

Potential Impact of Environmental Factors on Apple

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