Report On Analysis Of PESTLE, Functional Areas And The Role Of Internal/External Stakeholders Of Apple
Executive Summary
- Apple was established in 1977 by Steve Jobs and Steve Wozniak.
- The Primary Functional areas are distribution channel and Research and development.
- The Political environment poses mainly threats, from dependence to trade policies and disputes, the economic pose both opportunities due to emerging economies and threat through foreign exchange, the socio-cultural poses opportunities as dependence on technology are increasing, whereas, the technological aspect pose opportunities like 5g, strategic initiatives, and emerging technological changes and threats with innovation by competitors, Legal threats loom over strict regulations and lawsuits and increasing opportunities for clean energy and create a sustainable business.
- Internal Stakeholders are employees, board, shareholders and management team
- External Stakeholders are consumer, manufacturer/supplier, media, government, and regulatory bodies.
- High-Interest Stakeholders are board members, shareholders, manufacturer/supplier, management, and government/regulatory body whereas, the highly influential stakeholders are consumers, employees, shareholders, manufacturer/supplier, and board members. These stakeholders are to be managed closely and keep them satisfied with the success of the organisation.
Introduction
The stakeholders are defined famously by Freeman (1984) where he states that any group can affect or the capacity to get affected by the organisations achievement of its objective. However, in his definition, he transformed everyone into a stakeholder for the organisation as it includes not just those with an involvement in the association as well as those with an interest in the business, but excludes all requirements of subjectivity, immediacy, and validity. It has been more precisely defined by McGrath and Whitty (2017) in their stakeholder locus of interest they have categorised the stakeholders as whose involved with the commitment to the activity occurring with some control ( for those who have invested financially or emotionally in the organisation and are contributors to service the primary activity of the organisation) and uncommitted to the activity occurring with an influence (which comprises of observers and end-users). The attitude of these stakeholders can impact the success of the organisation. The report will base Apple Incorporation to study the internal and external stakeholder analysis through discussing the background of the company, its functional areas, PESTLE Analysis, the role of internal and external stakeholders, shareholder matrix, nature and degree of main stakeholders, the level of stakeholders’ influences, and industry comparison.
Company Background
Apple designs, manufacturers, mobile market communication, media devices, and personal computers. The business can be classified into five segments (1) Software, (2) Services, (3) Accessories, (4) Networking Solutions, (5) Third-party digital content, and application (Market Line, 2020). Apple-designed its first product in the year 1976 called the Apple 1, where the corporation was established in the year 1977 by Steve Jobs and Steve Wozniak. From Apple 1 to iPhone 11 the journey of 43 years where the company faced many breakdowns, controversies, the high peak of success, and criticism. Currently, Apple has 260.2 Billion revenue and is considered as one of the big four tech companies which include Microsoft, Google, and Amazon which are all valued at $1 Trillion, Apple leads its counterparts in the trillion-dollar club. The company now deals with the following products and services as stated by Apple Inc. (2019).
- Products
- iPhone
- Mac
- IPad
- Apple TV
- Wearables, Home, and Accessories
- Services
- Digital Content Stores and Streaming Services
- Apple Care
- iCloud
- Licensing
- Apple Arcade
- Apple Card
- Apple News+
- Apple Pay
The primary market for Apple Inc. is North and South America where an estimated $ 116.914 billion revenue comes from that region amounting to 45% of the whole revenue of Apple. The primary product of Apple Inc. is the iPhone with a revenue stream of $142.381 Billion in the Fiscal year 2019. The company has approximately 137,000 full-time employees.
Functional Areas
Apple Inc. has many functional areas but there are two essential functional areas which are the distribution channels and Research and development followed by other functional areas.
Distribution Channel
The Distribution channels which Apple Inc. has implemented to reach its customers efficiently are both direct and indirect where the consumers of the organisations are small and medium-sized enterprises, individual consumers, government markets, education market, and large enterprises. The indirect distribution channel comprises third-party cellular network carriers, wholesalers, resellers, and retailers which actively promote and sell the products of Apple Inc. (Market Line, 2020). The direct channel focuses on selling the product in all the major markets to medium-sized enterprises, by its online retailing and apple stores which are located in high footfall regions to attract high-quality customers. Apple Inc. focuses on these physical stores which promote higher customer satisfaction and also attracts new consumer due to its highly simplified presentation of the company and its presence through its store (Apple Inc., 2019).
Research and Development
The industry in which Apple Inc. exists is truly dynamic and is based on rapid technological advancements the potential of Apple to compete with rivals relies on its ability to ensure the consistent and timely launch of new and sustainable products, services, and technology. Apple Inc. has strong and effective in-house R&D facilities which counters all the requirements of the industry to constantly evolve in the technological advancements which serve the business well. The R&D function of Apple Inc. aims to introduce new technology and update existing products and services, as well as extend its offerings through research and growth. Emerging from its R&D, the company routinely files patent applications to safeguard inventions and is actively seeking thousands of patent applications worldwide (Apple Inc., 2019). The company initiated with a vision to have innovation with the beautiful design of the products, this philosophy has led to constant innovation increasing the demands of the customer as well as the industry norms require all the rival companies to evolve and innovate.
Marketing
Apple Inc. Marketing strategy is based on its consumer types which are individuals, and rest Business to business customers like education, government, small medium-sized enterprises, and large enterprises. The marketing communication for the individuals is clean and simple and can be defined in two words i.e. Customer Experience, whereas the business to business customers is designed as per the industry rather than the product. The strong collaboration of marketing and designers/engineers of Apple Inc. helps strengthen the vision of the company and its products.
HRM
Employees in corporate terms have a significant influence on the performance or loss of the company. Employees are comparable tools to any other company unit. While the utilization of the populations is critical as in any company hardware and raw content. Businesses like Apple where human resources are the driving force of corporate development; the paramount focus is placed on improving their expertise and capitalizing on their abilities (Price, 2007). Apple has effectively concentrated and capitalized on people’s wealth to gain strategic advantages in the marketplace. Apple is regarded as the most creative company in the sector and its staff (managers and other employees) have certainly made it the most creative company worldwide.
PESTLE Analysis
The ETPS was a tool introduced by Aguilar (1967), which has further enhanced as PESTLE analysis helps to identify multidisciplinary stakeholders and their relationships.
| Apple Inc. PESTLE Analysis | |
| Political | Economic |
| · Manufacturing Dependence in China
· Tax Incentives · Political Ties with other countries · Trade Policies and Disputes |
· Foreign Exchange Rates
· Disposable Income Level · GDP of developing nations |
| Socio-Cultural | Technological |
| · Dependence on Technology
· Increasing Adoption to the latest technology |
· Emerging Technology Changes
· 5G Technology · Strategic Initiatives · Innovation by Competitors |
| Legal | Environmental |
| · Privacy Regulations
· Lawsuits on Policies and Practices |
· Clean Energy
· Sustainable Business · Eco-Friendly Sourcing |
Table 1: Apple Inc. PESTLE Analysis
Political
The political external factors present mainly threats in Apple’s distant or macro-environment. This dimension of the PESTLE model of research illustrates the impact of governments and related organizations on businesses. The Trade war between the US-China led to many speculations as increased taxes by the Chinese government, also it affected the demand for apple products in the republic. The dependence on China mainly Foxconn is due to its strong supply and distribution network build over decades, this political issue could have major implications on china. The average tax rate of Apple Inc. is 24.6% which is higher than many multinationals (Apple Inc., 2017), recently in a case where EU ordered Apple to pay $14 Billion of back taxes (Chee, 2019) hints that tax incentives and policy changes can impact the company greatly. The political ties with other countries and the current trade policies can have major implications on the company. The massive company is always on the target and many decisions are based on the revenue stream Apple provides.
Economic
Apple exists in many parts of the world and is susceptible to foreign-currency volatility. The corporation publishes US dollar financials and its sales are subject to US dollar fluctuations against other usable currencies, as it performs business activities worldwide. In other currencies also a significant portion of its revenue is denominated. The key factors subject to exchange rate uncertainties include investments by the company in international branches and partnerships, and monetary assets and liabilities resulting from foreign currency market transactions (Apple Inc., 2019). The group announced a loss of US$ 408 million in FY2019 due to changes in foreign exchange conversion, compared to a loss of US$ 525 million in FY2018. To mitigate the uncertainties resulting from currency volatility, the business includes hedging foreign exchange by entering into forwarding foreign exchange contracts (Market Line, 2020). The increasing GDP and disposable economy in the developing nations is an opportunity for Apple to expand its product reach and tap on customers who are yet to experience Apple.
Socio-Cultural
The socio-cultural external factors present mainly opportunities in Apple’s macro-environment. The report by Statista (2020) shows that on average 0.3 billion smartphone users increase each year, these stats, however, is limited to the primary cash cow product of Apple Inc. whereas other services and products also have emerging dependence on the technology, and many growing economies of the world are adopting to technology while there is a massive boost in technology adoption in the business sector.
Technological
The technological external factors present both opportunities as well as threats in Apple’s macro-environment. Mobile 5G services are being introduced, primarily due to mobile video usage, networking facilities, and the growth of the Internet of Things industry, through rising demand for mobile data access at higher speeds. The acquisition of the Intel Corps smartphone modem business will allow increasing revenue streams for apple having over 17,000 patents for wireless technology (Market Line, 2020). The constant evolution of competitors which leads to massive innovation will be the biggest threat to apple, even though Apple has a differentiated customer the competitors offer significantly more at less price. Constant strategic initiatives can be a massive opportunity for apple given the rapid technological changes this industry requires constantly.
Legal
The legal external factors pose threats to Apple’s macro environment. The recent lawsuits like apple slowing down its previous models and breaking facetime intentionally reflect on the policies the company is based on (Miller, 2020; Stempel, 2020). There is a looming threat of privacy regulations which can pose limitations. The policies and implications are different worldwide, which makes legal issues a looming threat in its environment.
Environmental
The industry norms now seek for companies to source reliably and ethically, and run of 100% renewable energy as the cost of the current tech products pose a major threat to the ecosystem. The sustainable companies are perceived well in the eyes of the stakeholders, it increases the operational cost, and sourcing operations are to be revised but the constant requirement of the industry to leave no environmental footprint is essential.
Role of Internal Stakeholders
The internal stakeholders of Apple Inc. are its human resources, the board members, shareholders, and the management team.
- The human resources of apple require a high level of autonomy to be strategically aligned with the vision of the corporation, Apple corporate culture is based on the high level of collaboration amongst departments with constant learning for the employees.
- Shareholders or primarily investor relations in the case of Apple Inc.is essential as finances are the lifelines of any organisation, and improved investor relations can lead to less speculation in the market.
- Board members play a significant role in balancing the vision of the company between its human resources and investors, policies, direction, and strategic objectives are defined by the board members. While management is a bridge between the human resources and the board members to overlook the operational flow on a day to day basis.
Role of External Stakeholders
The external stakeholders of Apple Inc. are its customers, manufacturer/supplier, media, government, and regulatory bodies.
- Customers/End User who receives the value from the activity can be defined as one (Winch, Morris, & Pinto, 2007), they have a huge role in policies, design, product development, and direction for apple.
- The manufacturer or supplier has a major influence on apple strategy as the whole distribution channel and pricing is based on these suppliers and manufacturers.
- Consumers’ perception and buying decisions can be shaped by the media and the new form of social media, which cannot be influenced.
- Government and regulatory body policies and regulations can impact the internal policies for the organisation.
Shareholder Matrix of Apple
The Apple Inc. stakeholder matrix would examine how involved internal and external stakeholders are in the company operations and how they can affect the company outcomes.
| Stakeholders | Interest | Influence/Power |
| Human Resources | Low | High |
| Board Members | High | High |
| Shareholders | High | High |
| Management | High | Low |
| Customers/End-User | Low | High |
| Manufacturer/Supplier | High | High |
| Media | Low | Low |
| Government/Regulatory Body | High | Low |
Table 2: Stakeholder Influence and Interest
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Stakeholder Matrix of Apple Inc.
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Nature and Degree of Main Stakeholders Interests
The main stakeholders with a high level of interest are the board members, shareholders, manufacture/suppliers, management, and government/regulatory bodies. The level of high interest is based on investor relations where shareholders invest in a company that keeps the company running and operating in every sector and makes it possible to produce adequate capital to efficiently execute such functions (Zhong, Wang, & Yang, 2017). The shareholders’ key need relates to the idea of principles and the gain in income from their investment reflects their desire (Bettinazzi & Zollo, 2016). Suppliers/manufacturer in the case of Apple Inc. Foxconn and various suppliers are deeply invested in the corporation, and the government and regulatory bodies are an investment from the revenue it produces and the threats it poses to the community.
Level of Main Stakeholders Influence
The high level of influence is from the customer/end-user, human resources, shareholders, manufacturer/supplier, and board members. The consumer requires value from the product and is deeply invested emotionally in the organisation (Bettinazzi & Zollo, 2016), Apple is all about enriching customer experience. Human resources have a major influence on customer experience the development and distribution of the services/product used by customers is the responsibility of human resources. The loss or poor retention rate and high turnover of staff can create substantial casualties, and therefore the business facilities can deteriorate (McGrath & Whitty, 2017).
Industry Comparison
The retail sector for Woolworth operates is a different sector as compared to Apple Inc. which resides in the technological sector. Apple is highly influenced by its employees and customers whereas Woolsworth is influenced by its suppliers and customers. Customers, however, have a higher interest as well as the retail sector is purely based on the customer experience which requires Woolsworth to closely manage them, the government implications and policies have low interest and high influence due to the regulations. The employees are not as dynamic as apples and have low power and interest, whereas the shareholders are similar for both Woolworths and Apple having high interest and high influences.
Conclusion
The internal and external stakeholder analysis of Apple Inc. concluded that customers along with manufacturers and suppliers deeply influence and impact the organisation. The key functional areas are Research and Development, and Distribution which stands out for the business. Apple the biggest member of the trillion-dollar club is committed to creating high stakeholder engagement and manage their interest in continuous growth.
References
Aguilar, F. J. (1967). Scanning the business environment: Macmillan.
Apple Inc. (2017). The facts about Apple’s tax payments [Press release]. Retrieved from https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/
Apple Inc. (2019). Form K-10. Retrieved from
Bettinazzi, E. L. M., & Zollo, M. (2016). Stakeholders and Organizational Learning: Theory and Evidence from Corporate Acquisitions. Paper presented at the Academy of Management Proceedings.
Chee, F. Y. (2019). Apple says $14 billion EU tax order ‘defies reality and common sense’. Reuters. Retrieved from https://www.reuters.com/article/us-eu-apple-stateaid/apple-says-14-billion-eu-tax-order-defies-reality-and-common-sense-idUSKBN1W1195
Freeman, R. E. (1984). Strategic management: A stakeholder theory. Journal of Management Studies, 39(1), 1-21.
Market Line. (2020). Apple Inc Retrieved from https://advantage-marketline-com/Company/Profile/apple_inc?companyprofile#ProductsOverview
McGrath, S. K., & Whitty, S. J. (2017). Stakeholder defined. International Journal of Managing Projects in Business.
Miller, C. (2020). Apple to pay $18M to settle class action lawsuit claiming it broke FaceTime on older iPhones. 9to5 MAc. Retrieved from https://9to5mac.com/2020/04/28/apple-class-action-facetime-settlement/
Price, A. (2007). Human resource management in a business context: Cengage Learning EMEA.
Statista. (2020). Number of smartphone users worldwide from 2016 to 2021. Retrieved from https://www.statista.com/statistics/330695/number-of-smartphone-users-worldwide/
Stempel, J. (2020). Apple to pay up to $500 million to settle U.S. lawsuit over slow iPhones. Reuters. Retrieved from https://www.reuters.com/article/us-apple-iphones-settlement/apple-to-pay-up-to-500-million-to-settle-u-s-lawsuit-over-slow-iphones-idUSKBN20P2E7
Winch, G. M., Morris, P., & Pinto, J. (2007). Managing project stakeholders. The Wiley guide to project, program, and portfolio management, 271-289.
Zhong, N., Wang, S., & Yang, R. (2017). Does corporate governance enhance common interests of shareholders and primary stakeholders? Journal of business ethics, 141(2), 411-431.
