Question

conduct a PEST analysis of a company that you know.Discuss briefly how PEST factors affect the operation of the company. make recommendations

Answer 1

A company that I know is Apple Inc. and its PEST (political, economic, social and technological factors) analysis is provided below:

Political factors – As more than half of the company’s sales come from outside USA good political relationships between USA and other countries are important for the company. Recently under the administration of Donald Trump USA’s political relationship with many countries deteriorated and this had a negative impact on the company’s sales and operations.

Economic factors - It should be noted that Apple’s products are expensive when compared to products of the company’s competitors and as such consumers tend to spend less om Apple products. This translates into lower unit sales (i.e. volume basis). The current imbroglio surrounding Brexit and economic uncertainties in Europe and in developing nations like China, India, Brazil, Russia etc. is also causing troubles for the company. The labor cost in China has also been increasing and this is causing problems for the company.

Social factors – Apple’s products are regarded as premium products and as such the different products of the company are sought after by consumers. It can be said that Apple’s products are aspirational in nature. Possessing a product of Apple Inc. is generally regarded as a status symbol in many countries. All these positively contribute to the incremental sales for the company.

Technological factors – As technology is changing at a rapid pace in recent times Apple has to continuously try and push the boundary in terms of innovation. With the advent of cloud computing, artificial intelligence, IoT (internet of things) the focus is not so much on the devices anymore but on the experiences that they provide. Apple will have to focus more on safety solutions, issues related to privacy and cyber-crimes.

My recommendations for Apple, based on the above analysis, is that going forward the company should look at rationalizing its costs by making its operations leaner and by eliminating all forms of waste in its operations. Once this is done the company should focus on making its products more innovative (as was the case when i-phones were initially launched). This will enable the company to hold on to its competitive strengths in a sustainable manner and lead the market both in terms of value as well as volume.