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External and Internal Factors of an Organisation

University: LSC London

  • Unit No:
  • Level: High school
  • Pages: 13 / Words 3218
  • Paper Type: Essay
  • Course Code:
  • Downloads: 738
Question :

This assessment will cover following questions:

  • Apple is known as top hardware and software company engaged in producing a range of personal computer, iPods. What roles and function does market economy and government play in Apple?
  • How trading with different countries is beneficial for the company?
  • Explain the increasing influence of the European Union on the business?
Answer :
Organization Selected : Apple Inc

INTRODUCTION

Business Environment symbolizes the major external and internal factors of a particular organization and the impact of these factors on the operation capacity and strategies of the organization (Prajogo, 2016). AppleInc. has been ruling consumer electronic marketing since the year 1977 when it was first established. This multinational company is headquartered in California and deals with electronics, software, and other online services. The current report will analyze the internal and external environment in which the company operates and the various strategies that need to be formulated based on the impact of these internal and external analyses. The report will also analyze the various forces in microeconomics such as demand and supply and the different microeconomics concepts will be analyzed and evaluated in this report. Lastly, based on the analysis of different facts, a conclusion summarising the findings of the report will also be presented at the end of the report.

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INTERNAL AUDIT

The productivity of any company depends highly on the industry and market in which it operates and the productivity overall refers to the ability of an organization to convert the raw materials of that company with respect to the goods and services that the company plans to sell. Smart work leads to increased productivity and this ultimately helps in improving performance. In order to improve productivity, an organization needs to formulate excellent strategies that can help them in achieving the intended objectives of the company.

EXTERNAL AUDIT

PESTLE Analysis:

Pestle analysis helps in analysing the external environment of the company and the industry analysis is done through which relevant conclusions are drawn (Deasy and et.al, 2016). Pestle Analysis helps in analysing every key aspect and then determining what are the strategies that can be adopted in the external environment and how these could help in bridging the existing gaps. Apple is already an extremely well-established company that is ruling the world with its merchandise of consumer electronic brands. The following factors help in analysing the external environment in which the company operates:

  • Political Factors:

    This American super brand is earning huge profits and the resulting income inequality has been a major political issue in many countries including the UK (Cardoso, 2017). Additionally, the company is heavily dependent on its reduced manufacturing cost in China and therefore, the ongoing tiff between the two economies might lead to reduced sales of the company affecting their operations in other countries as well where the unrest in the political environment leads to potential loss. Additionally, after Brexit, the political stability in the UK is also questionable but Apple being a reliable international brand might not be affected by this unrest in the British economy.
  • Economic Factors:

    The economic position of the UK economy is fairly strong and well settled i.e. there are no major fluctuations and the income earning is also fairly well (Gardere, Sharir and Maman, 2018). However, the middle class which is the main targeted consumer segment of the company in various economies is not experiencing much increase in their earning capacity and therefore, the stagnating income earning capacity is leading to a reduction in the sales volume of the company in various markets and economies spread all over the world. However, the best strategy that the company can adopt in the present context is to delve into the markets with newer strategies and the marketing campaign needs to be restructured making the brand attractive again.
  • Social Factors:

    The society of the people living in the United Kingdom represents lavishness and class where the residents consider themselves a part of the aristocracy and the lifestyle choices are frequently attached to the kind of class that they belong to. Apple Inc. is an extremely well-established luxurious company that has easy control over the trust and preferences of this class of consumers. They refer to Apple as the most superior brand, especially in the mobile phone segment and no other company has been able to beat the image that they have created in the minds of their consumers (SHTAL and et.al., 2018). Therefore, the company needs to ensure that the strategies that they have adopted in the past are complied with in future as well so that the image they have created in society is not compromised.
  • Technological Factors:

    In terms of technological development and innovation, the company cannot be questioned since it is leading the world with its unique and highly user-friendly technologies regarding the consumer electronics that the company manufactures. Similarly, the UK has a great taste and scope for the advanced technology and they themselves are very ahead in the field of technological growth. Therefore, the company does not need to formulate a separate strategy in this context since they are well ahead and established in this aspect and the goodwill that they have earned is also a huge contributor.
  • Legal Factors:

    Legal compliance is a necessary part which every company must comply with and when the company is operating on a global level such as Apple, they need to ensure that while operating in different countries and economies they comply with the legal systems of different economies (Khan, Alam and Alam, 2015). Therefore regulation compliance is an important aspect and therefore, the company is familiar with the different rules to which they have to comply since they have been trading in the economy of the UK for a long time period.
  • Environmental Factors:

    The Company has been long engaged in the CSR activities that they perform which are extensive and expensive and address different aspects at a single time. The different aspects like carbon footprints, energy exploitation, and electricity consumption are some of the added features that the company has to comply with and therefore, it is vulnerable as well to the costs that increase due to heavy electricity consumption. However, in U, the processes have remained stable and the company has earned huge goodwill with respect to the CSR activities that they perform.

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SWOT ANALYSIS

  • Strengths-

Apple has always been innovative in its product line and has presented hit products which is counted as the main strength of the company. It is considered the leading company across the globe in relation to the generation of revenue. It is counted as the second largest manufacturer of smartphones and positioned as first in the US by crossing the value of 700 billion dollars. The brand value of Apple is also seen as the number 1 among all companies in the world. It provides a unique design and technology and is always seen as a fantastic brand name with respect to its design and features. Apple mainly has over 470 stores in 17 countries (Sammuta's Bonnici and Galea, 2015). Along with these stores, the company sold through trade partners, retail stores and online channels. In addition to this, Apple launched a genius bar that directly resolved customer issues in its retail stores. Thus, the concentration of Apple on their service and the sales distribution is been seen as legendary. The core benefit of Apple as an organization is that it earns higher profit margins through the selling of its products. Being the technological leader with its top brand, Apple keeps for a hefty margin

  • Weaknesses-

The company seems to be weak with respect to meeting customer expectations as people are expecting great things from Apple as the passage of the year and maintaining such a level of expectation tends to be a challenging task for Apple. The main issue in the Apple company relates to its products that are incompatible with the third-person accessories or software. In comparison to its competitors that as Google and Microsoft, Apple has having very less number of product range. Thus, dependency of the Apple on each and every product seems to be very high.

  • Opportunities-

Apple Inc. is having an opportunity to expand its distribution network and explore its new product range. Apple company could look into more and more technological advancements by developing advanced MacBooks, iPads, Iphones and the Iwatches. The corporation is running its business operations in the growing market and attained high growth. This plays an important role in raising the GDP of the developing countries and increasing the consumption of such a premium brand. Apple needs to focus on its two main products that could increase its presence worldwide aiming at the future for creating a well-known digital presence at the global level.

  • Threats-

The company is facing a high level of competition from the other brands which in turn acted as the key threat for the firm with respect to the downfall in its prices and market share. The major threat to Apple company is it faces market penetration by other companies in the overall smartphone market (Swot analysis of Apple, 2018). In the field of Laptop also, it faced increased competition over the years as Dell had also introduced some beautiful models involving an Alienware model. Although Apple is the brand that is been loved by each and every MacBook has stiff competition from other competitors.

MICROECONOMICS

Microeconomics is a branch of economics which used to define the behaviour of individual and firms in making different decisions regarding the allocation of scarce resources and the interaction among these individuals and firms. In simple words, it can be said that microeconomics is used to study the choices which can people can make and the different factors which used to influence the impact of decision-making in the company (Sakuma and et.al., 2019).

Demand and Supply

Demand:

The demand for the product generally means the amount or the quantity of the product which consumers in the market are willing to purchase at the price level at which the product of the company is being offered. It simply means that if the demand for the organizational product is high in the market then the consumer generally likes the product of the company in the market. Price and demand are inversely related to each other in the market (Azevedo and Leshno, 2016). The reason behind the same is that when the price of the product is high in the market the demand for the product generally goes down as consumers look not to purchase the product whereas when the price of the product is low the demand for the product goes high as a consumer looking to purchase the product

Supply:

Supply of the product refers to the amount of the good available in the market to be offered to the consumer for the purpose of consumption. Supply and Price of the product is positively related to each other (Tao and et.al., 2017). As when the price of the product increases producers in the market used to produce the larger amount of the product in the market so that the consumer can purchase the same. This is better understood with the help of the same diagram.(Tao and et.al., 2017)

Elasticity

Elasticity is the measurement of the change in one economic variable due to the change in the other economic variable in the market. Generally, it shows how easy it is for the supplier and the consumer to change their behaviour and substitute another good. The elasticity of the variable has been defined in three different variables that are as follows:

Price Elasticity of Demand:

It is defined as the responsiveness of the quantity of demand for goods and services due to the change in the price of the product used to increase and decrease in the market (Guerrero-López, Unar-Munguía and Colchero, 2017). Price elasticity of the demand is also defined as a percentage change in the quantity of the demand when there is a percentage change in the price of the product. Price elasticity of demand can be calculated with the help of the following formula:

% change in quantity

% change in price

Income elasticity of demand:

Income elasticity of the demand is measured as a relation which is shared in the quantity demand of the goods and services and the change in the income of the consumer in the market (Larivière, Haustein and Mongeon, 2015). Income elasticity of demand is calculated with the help of the following formulas:

% change in quantity
% change in income

 

Cross Elasticity of Demand:

Cross elasticity of the demand is the measurement of the relationship between the quantity demand for a good to a change in the price of another good. (Head and Spencer, 2017). Cross Elasticity of Demand can be calculated with the help of the following formula:

% change in quantity

% change in income

Oligopoly

An oligopoly is a form of market in which the amount of competition in the market is very limited. There are only a few producers in the market who used to rule the market as they are the one who used to enjoy the majority of the market share and produces homogeneous goods. This is the market which used to open up a good scope of partnership and collaboration in the market as all the organizations used to produce the same and similar products in the market. There are many few newcomers who used to come into the market as the entry is restricted due to the maintenance of a strong network of distribution by well-established organizations (Tao and et.al., 2017).

The reason behind the same is always that the oligopoly organization used to earn the super normal profit which helps them in building the variety of obstacles for the organization who is entering into the market. The most commonly created barriers by the company operating in the oligopoly market are used to exert the power of monopoly over raw materials, patents and many others. One of the biggest examples of the oligopoly market is Apple iOS as the company is the only organization that used to sell phones with iOS software in the market. Also, Windows and Apple are the two firms which used to rule the market of the computer operating system.

Also Read -Managerial Economics With Business Strategy

LIMITATIONS OF MICROECONOMICS

Microeconomics is referred as the branch of economics which studies behavior of an individual and the company in making decisions in relation to allocation of scarce resources and interactions among firms and individuals. It covers exchange, prices, demand, profits, competition and the losses that arise when a person voluntarily associates them with other persons to achieve separate ends (Iossa and Martimort, 2015). In this sense, microeconomics is counted as the best thought of the branch of deductive logic, curves and models are simply counted as manifestations of such deductive insights. It reflects the ways in which people make decisions at the small scale level and at their individual part in terms of demand and supply decisions.

Individual analysis-

It explains only the small units of an individual's economic activity. This is considered a partial and incomplete analysis as for making the national economic assessment, aggregate output and income are required, and aggregate expenditure and the production level show the economic level of the country. All these subjects are not been counted in microeconomics so it is been regarded as an incomplete matter.

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Impractical assumptions-

Many of the models and the theories of microeconomics are been derived on the basis of some assumptions. For instance- all the other things remain constant, full employment, rationality concept etc. In a real-case scenario, it is impossible to fulfil such assumptions. In routine activity, there are several variable factors along with the time and the changes in the variables result to the changes in behaviour of an individual which impacts a microeconomic activity. In similar way, it is impossible to be as fully employed in the economy.

Wrong concept-

Microeconomics' belief in the concept of the laissez-faire economy reflects that there need not be any interference in the market economy by the government (Provencher and Ramnarain, 2019). It is been stated that in the market condition or life, the government should have its interference for their smooth activities. In the event of the great depression, the economy had made a failure towards this concept of Laissez-faire.

Ignores Macro-level activity-

The real economic mirror of the country is considered as income, price level, policy impact, employment, output, implementation and foreign trade. However, microeconomics does not analyse all these subjects.

Thus, theories of microeconomics are seen as abstract and static and run on the basis of unrealistic assumptions and analyses of only the part and not an entire economic system. It couldn't explain the functioning of an economy at large. Microeconomics misleads at the time when an individual tries to generalize from individual behaviour and unrealistically deals with the macroeconomic system by assuming the full employment level.

CONCLUSION

After going through the report it has been summarized that the external position of Apple is on the good and sound side as the SWOT analysis shows that the strengths and the opportunities of the company are good enough to overcome the threats and weaknesses present for the organization. After that, the report has summarized that the internal audit of the company is also in the favour of the company as PESTLE analysis shows that the company is able to survive the different factors. After that, the report summarized Microeconomics and its different elements of the same. In the end, the report has summarized the limitations of Microeconomics in the market. To get more details about online assignment help ask our experts.

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