PESTEL analysis of Apple
This is a detailed PESTEL analysis of Apple. It examines how Apple Inc. deals with different macro-environmental factors. Apple Inc. is one of the largest companies in the world and a household name. It has fundamentally changed the idea of communications with its smartphones, computers, and other devices.
Political factors affecting Apple
Apple’s products and services are now available in many countries. Particularly, the App store is available in 175 countries and territories. For some products and services, Apple’s market is geographically segmented as Africa, Asia-Pacific, Europe, Latin America and the Caribbean, Middle East, and Oceania (Apple, 2023). This shows that Apple may face a wide range of political forces because of its global presence.
For instance, political crisis and wars in Europe are causing disruptions. Recent lockdowns in China have also affected Apple’s performance (Gurman, 2022). Similarly, rising tensions between the USA and China may also become damaging for its performance.
Apple has removed an app called HKmap.live that violated Hong Kong law. This shows that it must abide by rules and regulations. However, many US politicians have accused it of doing so at the behest of the Chinese government.
Economic factors affecting Apple
A major area of discussion in the PESTEL analysis of Apple is the economic environment. There are many economic factors such as interest rates, inflation, unemployment, and economic growth that may turn out to be costly for Apple. This is because these factors can have a direct impact on its financial performance, as they can affect the demand for its products and services.
For example, if there is an increase in interest rates, this could lead to a decrease in demand for Apple’s products and services. Similarly, if there is an increase in inflation, this could also lead to an increase in the cost of its products and services, which could lead to a decrease in demand for its products and services.
If the economy is doing well, this could lead to an increase in demand for Apple’s products and services. This is because people may have more money to spend on its products and services.
On the other hand, if there is a decrease in economic growth, it can affect Apple as well. For instance, China is the world’s biggest smartphone market. However, a slowing Chinese economy in the recent years badly impacted on the sales of iPhones.
Increased labour cost in China is likely to increase the production cost of Apple’s devices in coming years. It should be noted that economic instabilities caused by lockdowns in countries such as the USA, the UK, and many EU nations have affected the sales of luxury tech devices.
Leswing (2022) reports that Apple faces increasing costs from global logistics and soaring employee salaries. It also faces the possibility that many customers may decide not to upgrade their iPhones due to declining purchasing power, and other economic difficulties.
Social factors affecting Apple
Social factors include things such as consumer attitudes, trends, and preferences. These factors can have a direct impact on Apple’s financial performance, as they can affect the demand for its products and services.
Many youngsters love tech devices and consider them part and parcel of their lives. This is surely a good thing for Apple. However, it is also true that there are now many people in the USA and some other countries who are concerned about the growing powers of tech companies. This may impact on their buying decisions.
A recent report published by Daily Mail UK reveals that many young adults are turning their backs on high-tech smartphones in favour of old models. This is mostly because they would like to take a break from today’s screen-dominated world (Daily Mail, 2022). While it is good for them, it is bad news for Apple and other smartphone companies.
Apple made a lot of money in China by attracting middle-class customers with luxury products; however, it is now challenged by local players such as Huawei and Xiaomi who are eating into its market share by offering tech devices that are lot cheaper than its products.
Technological factors affecting Apple
Technology is the next element to address in the PESTEL analysis of Apple. Needless to say that Apple has revolutionised the global technology industry and created an ‘app economy’. However, it is now locked in tech battles with a number of competitors. Its competitors have the capabilities and technologies to duplicate its products and services.
It is also interesting to see that though Apple is a tech giant, it has come up with a limited number of new products in recent years (e.g. Apple Watch and Apple Music). As the competition is extremely high, it should explore the potentials of introducing fundamentally new products and services into the market.
Environmental factors affecting Apple
Many environmentalists argue that Apple is contributing to the damage of natural environment. Making smartphones is harmful to the environment as it requires dangerous mining practices. Likewise, it requires the use of hazardous chemicals with no proper recycling system.
Therefore, many customers are now sticking with old iPhones rather than buying new ones. However, Apple has announced that its products are going to be carbon neutral by 2030.
According to the Ohio State University (2023) there are many raw materials e.g. gold from Peru, copper from Chile, and rare earth materials from Mongolia that go into the production of Apple products. Without these materials, Apple cannot simply produce its products.
However, the mining of these materials destroys animal habitats, and contributes to deforestation. In addition, less than 1% of rare earth minerals used in iPhones are recycled as they are thrown away after the phone’s life has expired.
Legal factors affecting Apple
Legal environment is the last part of examination in this PESTEL analysis of Apple. One of the legal factors that can affect Apple Inc is new laws or regulations. For example, if the U.S. government passes a law that prevents Apple from accessing the data on an iPhone, then this could negatively impact Apple Inc.
Another legal factor that can affect Apple Inc is lawsuits from various groups. DGCCRF (a French watchdog) has fined Apple 25 million euros (£21m, $27m) for deliberately slowing down older iPhone models to push customers to buy its new devices. French antitrust authorities also ordered it to pay a fine of 1.1 billion euro ($1.23 billion) for anti-competitive behaviour.
The examples above clearly demonstrate the consequences of not abiding by rules and regulations. It should be mentioned that Apple has recently agreed to pay $30.5 million to settle a nearly decade-old lawsuit concerning its failure to pay employees for the time spent in mandatory security checks after their shifts (Wiessner, 2022).
Summary of PESTEL analysis of Apple
Certainly, the tech industry is brutally competitive. Companies must therefore devise strategies that can address the new threats and opportunities presented by the digital economy. Failure to do so can be fatal. As shown able, Apple has implemented different strategies and techniques in line with the changes in the macro environment.
As seen from the analysis above, there are many factors that affect Apple, including economic, political, social, technological, legal, environmental, and competitive factors. These factors can have a direct impact on its financial performance, both positively and negatively.
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Last update: 28 February 2023
Apple (2023) Apple Services now available in more countries around the world, available at: https://www.apple.com/newsroom/2020/04/apple-services-now-available-in-more-countries-around-the-world/ (accessed 28 February 2023)
Daily Mail Online (2022) Teenagers are turning to ‘dumb’ phone models from the 1990s due to a desire to switch off, say experts, available at: https://www.dailymail.co.uk/news/article-10656227/Teenagers-turning-dumb-phone-models-desire-switch-say-experts.html (accessed 28 February 2023)
Gurman, M. (2022) Apple expects supply shortages to slash sales by up to $8 billion, available at: https://www.bloomberg.com/news/articles/2022-04-28/apple-sales-top-estimates-on-strong-iphone-and-services-demand (accessed 28 February 2023)
Leswing, K. (2022) How inflation will affect Apple, available at: https://www.cnbc.com/2022/07/01/wealthy-customers-will-help-apple-resist-the-effects-of-inflation.html (accessed 28 February 2023)
The Ohio State University (2023) Extraction of raw materials, available at: https://u.osu.edu/iphonecommoditychainproject/extraction-of-raw-materials/ (accessed 28 February 2023)
Wiessner, D. (2022) Apple’s $30 mln settlement over employee bag checks gets court approval, available at: https://www.reuters.com/legal/apples-30-mln-settlement-over-employee-bag-checks-gets-court-approval-2022-08-15/ (accessed 27 February 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.