apple-pestel-analysis

Apple PESTEL Analysis

Background

Apple is a company that has fundamentally changed aspects of the way we communicate with each other.

Founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple now has a line of innovative technology products including the iPhone, Mac, Apple Watch, and iPad. It also has a long list of propriety software and hardware to support its numerous devices.

Understanding the Apple PESTLE analysis

Political

Apple has a much-publicized cash balance, with recent reports putting the figure at $195.57 billion.

In the United States, this has stimulated discussion over corporate tax legislation. Worsening income inequality as a result of the coronavirus pandemic has also exacerbated this issue for the company.

Apple is also heavily dependent on China for manufacturing. The continuing conflict between the U.S. and China has resulted in import restrictions and a general focus on renewing the American manufacturing industry.

Economic

With an emerging middle class numbering in the hundreds of millions, Chinese manufacturing also represents an economic threat to Apple. The Chinese middle class is demanding higher wages, which has the potential to erode the cost advantage of manufacturing Apple products.

Stagnating wage growth in the United States also means consumer purchasing power is on the decline. This is reducing revenue in lucrative key markets.

Social

Few social trends have been as significant as the uptake of smartphones among consumers. Once a consumer owns a smartphone, there is now a societal expectation that it will be upgraded in 1-2 years. 

However, the tendency to upgrade a device for social status is fading. Younger generations are becoming more discerning consumers, with a need for both affordability and functionality. Inevitably, Apple will need to reduce its dependence on the iPhone which accounts for almost half of its sales.

Technological

Apple faces strong competition from Google and Samsung for technologically advanced products. Many of Apple’s signature products such as Apple Pay have been easily replicated.

This problem was exacerbated by the death of Steve Jobs, who was unmatched in his ability to innovate. Current CEO Tim Cook is a logistics and optimization specialist. His modus operandi is to extract money from consumers with high-margin accessories such as dongles, cables, and adaptors. While effective, this strategy is not unique.

Legal

Like many similar companies, Apple has entered the highly lucrative (but also highly regulated) financial services industry.

Reports suggest it is also planning to enter automobile manufacturing – which is also heavily regulated. Both industries have the potential to increase insurance and compliance costs for Apple.

The company is also reliant on intellectual property laws to maintain its product range integrity. Piracy and associated litigation expenses are a constant concern

Environmental

Apple faces several environmental issues going forward. The safe disposal of its devices is perhaps the most significant.

Pollution from manufacturing facilities in China is also likely to become increasingly regulated as China tightens emissions laws.

Rising energy costs also mean the company is having to spend more money on maintaining data centers and other infrastructure.

Key takeaways

  • Apple has fundamentally changed how consumers communicate and access information. But to some extent, it is a victim of its own success.
  • Reliance on Chinese manufacturing is problematic on a couple of fronts. Rising labor costs associated with the emerging Chinese middle-class impact company profit margins. Increased environmental regulation in the country might also impact manufacturing operations.
  • Apple’s ability to innovate in the wake of Steve Jobs has been diminished. Once unique technology is being easily replicated by competitors such as Google and Samsung.

Related to Apple PESTEL Analysis

apple-business-model
Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, and $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.
apple-value-proposition
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.
how-much-is-apple-worth
In 2022, Apple is worth two and a half trillion dollars. Apple generated over $191 billion from iPhone sales, in 2021, which accounted for over 52% of its net sales. Followed by services revenues at $68.4 billion, wearables and accessories at $38.3 billion, Mac sales at $35.2 billion, and iPad sales at $31.86 billion. 
apple-mission-statement-vision-statement
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
how much profit does apple make per iphone
It costs Apple $570 to make an iPhone 13 Pro, and the company sells it at a base price of $999 to $1499.

Read Also: Apple Business Model, Apple Business Strategy.

Read Next: Pestel Analysis, SWOT Analysis, Porter’s Five Forces, STEEP Analysis, SOAR Analysis, BCG Matrix, Ansoff Matrix.

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