Internal and External Factors Affecting an Organization: Apple Inc.

ORGANIZATION FOR BUSINESS: APPLE INC.
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Internal and External Factors Affecting an Organization: Apple Inc.
Introduction
An organization is formed with guidelines that are geared towards enabling it to compete successfully within the external environment. These internal mechanisms determine its competitive advantage which translates to its success or failure internally or in relation to its external environment. The purposes for which organizations are formed are usually outlined through their statement of purpose, leadership which inspires the realization of the organization’s mission, good communication practices which involve teamwork, a structured hierarchy that improves performance and continuous learning enhances human capacity. At the external level, many factors that affect organizations are mainly political, social, economic or technological and are determinants of the organization’s relations with the external environment. Both the internal and external factors directly influence the growth and profitability of an organization.
The business environment of an organization must be configured to strategically use its resources to its benefit to meet stakeholder expectations. It involves the factors that influence decisions that generate solutions to business problems both internally and externally. Organizations that resist adoption of transformative change fizzle out and gradually lose profitability and thus it is important to understand the business environment in order to integrate opportunities and cushion against threats that may prevent profitability and progress. This paper aims to analyze the internal and external environment and the organization of Apple incorporated UK, a leading technology company in the mobile phone manufacture industry.
Apple Incorporated
Apple Inc is a business organization which manufactures consumer electronics and related software solutions based in California USA but having an inter-continental network of operations. As a digital asset management company and a global mobile phone manufacturer of choice, the products that are manufactured include mobile phones, music players, computers and related software, and a variety of hardware and software accessories. Founded in 1976 by Steve Jobs and cofounder Steve Wozniak, the company named Apple Computer Inc. specializes in top of the range product designs and use cutting edge technology to aggressively make consumer products that are highly competitive, a fact that has gained the company brand recognition with a niche of high end customers loyal to the company’s diverse products which are customer centered. The popular range of products include the Macintosh line of hardware, the iPhone, the iPad, the Mac OS operating system, iOS for mobile phones among many others.
History of the Apple Business Environment
The first major breakthrough in the company’s innovation came in 1997 when it introduced its all in one Mac personal computer and in the following year, the company sold almost 800,000 pieces making good profit and introducing a strong brand presence. In 2001 new stores were opened on a global scale and diversification of the company’s products gave it a competitive edge through equipment like the iPod music player which became a big success selling over 100 million units within six years of market entry.
The first chip computer was released into the market in 2006 as a notebook computer called Mac book pro which gave way for the company to transform its products into Intel electronic chips. In 2007, the company launched the Apple TV together with the iPhone both of which made the Apple market share hit the market all time high the following day becoming a big success. The iPad was later launched in 2010. The CEO, Mr. Tim Cook announced in 2012 that the company had hit 35 million sales of iPhones and 12 million units of iPads further attributing this tremendous success to innovation (Shaughnessy, 2013).
PESTEL Analysis of the Business Environment
The target niche of the company is in the learning environment comprised of students, educators and involving the creative sector within the consumer industry. Using the company’s environmental analysis, factors that influence its business potential and operation strategies are categorized into political, economic, social and technological – PESTEL (Johnson, 2011).
Given the fact that the company operates across the globe, geopolitical uncertainties greatly determine its marketing strategy. Some of these factors include the war against terrorism and country specific legal provisions for work as well as health and safety conditions which differ from one country to the other. In countries such as Ireland, Korea and China, the company has outsourced operations to local franchises in order to reduce operational costs (Chan et al., 2013). Also this is part of its corporate global strategy where it has emphasized on outsourcing but maintaining its mandate on the quality of products and services being produced. When Apple produces iPhones in China, it is not Apple that owns the factory that manufactures them but by a third party that has been contracted to produce the iPhones with Apple provided specifications. The internalization strategy is being executed in such a manner that sophisticated research and developments are being conducted through intrinsic-ground breaking technologies to ensure that the company’s reputation is not destroyed by the contracted third parties. The trade theory plays an important role in shedding light into Apple’s production process. Local franchise holding as a strategy works best in markets where product entry faces political good will challenges.
Economic conditions prevalent in an economic zone influence the purchasing power. In many countries recently, there has been a high rate of unemployment which has precipitated in low volumes of sales of Apple products. Increased oil prices increases inflation in the global economy, which effectively increases prices of commodities in the market, hence negatively affecting the purchasing power. With improved economic conditions and anticipated economic recovery, the global market for Apple products continues to improve and revenues are expected to increase. Being an American multinational company, Apple has developed a strategy that protects it from foreign exchange risks. The costs it incurs in foreign countries are influenced by the current exchange rates. The company’s financial innovations are influenced by the monetary and fiscal policies implemented by the hot government. In 2008, the company reported to have showed interest in entering into forward and option dealing of foreign exchanges.
Socially, Apple products are preferred by a particular section of society and are viewed by a majority as luxury products (Nair, 2014). Their design and quality always give the products a competitive edge because purchasing of luxury products keeps increasing with the increase in purchasing power of iPods, iPads and iPhones across the globe. The social influence of the music industry is a key driver of Apple products’ success because consumers access music through its iTunes music store. This group of products resonates with modern lifestyles.
Being the highest earner in almost two decades now, technology has always been a driving force in Apple’s growth because of its innovation strategy which ensures that o...