Abstract
This paper explores the different elements of business, specifically in the case of Apple, Inc. This company has been selected in view of the numerous material that is available on the Internet with regard to past and present empirical data on Apple, Inc. The elements of business – legal environment, social environment, economic environment, management structure, operational issues, financial issues, and potential change factors – are crucial issues that are discussed in this paper. Each of these elements must be appropriately addressed since weakness in any one of the elements would create problems for the entire business organization. Compliance with policies and regulations of the legal environment ensures smooth business operations without the problem of litigation. Knowledge of the social and economic environment in different countries is especially important for Apple, Inc. in light of its international business operations. The collaborative and effective management structure of Apple, Inc. under the leadership of Tim Cook allows the company to sustain its dominance in the industry. For Apple, Inc., the operational issues involved can be wide-ranging in view of the global coverage of its operations. The global presence of the company has a direct impact on a wide array of financial issues for the company. Finally, potential changes in the industry brought about by advancements in technology impacts Apple, Inc. as well as all of its competitors. Knowledge in the elements of business can improve the probability of success for any business as it has done so for Apple, Inc.
For a company to succeed, it has to be knowledgeable in several elements of business which need to be regularly assessed due to constant changes in the business landscape. These elements include: 1) legal environment; 2) social environment; 3) economic environment; 4) management structure; 5) operational issues; 6) financial issues, and; 7) potential change factors. The following sections will explore these elements within the context of Apple, Inc. to show that the present and future success of the company depend on effective management of these issues.
Apple, Inc.
It is widely-known that Apple, Inc. has its origin of success in the business of personal computers. Today, however, the company has expanded its operational coverage as it leads the technology industry through services and products such as the iPhone, iPod, iOS, as well as application services like Apple Pay. Arguably, the driving force behind the success of the company is innovation backed by good leadership, excellent quality, and a strong business brand.
Impact of Business Elements for Apple, Inc.
For Apple, Inc., or any other company for that matter, internal and external factors influence the operational efficiency and effectiveness of the organization. These factors include business elements that must constantly be assessed in order to improve the probability of success. The following sections highlight each of these elements in the case of Apple, Inc.
Basic legal environment. The company complies with different regulations that pertain to “law, public policy, government affairs, global security, and all of the compliance functions” (Veasey & Di Guglielmo, 2012, p. 39). Nowadays, the problem of piracy, especially within the music industry, poses litigation risks for the company because Apple Inc. offers software which can be used for illegal copying and distribution of music, thus promoting piracy (Bosworth, Kabay, & Whyne, 2009). Because of its recent entry into the financial services sector through its Apple Pay, the company has been obligated to comply with more regulatory policies to protect the privacy of its customers (Chishti & Barberis, 2016).
Social environment. Although there will always be a social segment [i.e., the elite class] for expensive products, more affordable gadgets capture the attention of the masses and it is evident that this has led Apple, Inc. to focus on trendy yet less expensive products. It should be noted that many of the manufacturing facilities of the company are in China and because of the rising political tension between the U.S. and China (Carbaugh, 2016), social resentment in America may not favor sales for products which are made in China. In the same light, social dislike for the U.S. may soon cause the large market in China to boycott products from this American company.
Economic environment. There is an economic trend for rising labor costs in China (Aung & Pablos, 2015). This does not favor the economic scenario for Apple, Inc. because it has many manufacturing facilities in China. There is also a trend for a shrinking middle-class sector in many nations (Petras & Veltmeyer, 2016). If the economic trend continues, this would inevitably impact Apple, Inc. revenues since majority of the company’s customers are from the middle-class sector. On the other hand, it goes without saying that a stronger American economy could potentially make Apple products more expensive for foreign markets which may not be as economically stable.
Management structure. Hierarchy is prevalent in the management structure of Apple, Inc. although changes have been made since the time of Steve Jobs when all aspects of the business personally went through him (Trippe, 2015). In Tim Cook’s leadership, collaboration between different sections of the company provides the direction that Cook decides to undertake; each department or section [i.e., software, hardware, marketing, sales, etc.] has a specific function (Jarrett, 2010). This type of management structure allows focus on every aspect of the business.
Operational issues. Aside from excellent marketing strategies, there is no doubt that good research and development [R&D] allows the company to continuously produce innovative technological products for the market, a differentiation strategy that has kept it highly-competitive. One operational threat, however, is its large dependence on China for the manufacturing of its products, as previously mentioned. Rising political tension between the U.S. and China could disrupt the operational effectiveness of the company. Recent developments also show that the United States is currently incentivizing its own manufacturing sector to curb the reliance on foreign manufacturers (Paganetto, 2015).
Financial issues. By providing value to its customers, the company has sold more than 350 million units of iPod alone despite its retail price which is two to three times higher than other brands (Simon, 2016, p. 64). In 2012, company revenues totaled to $156.5 billion with a market capitalization of $622 billion, surpassing Microsoft as the global leader in technology; by August of 2015, capitalization reached $642 billion (ibid). With the product value that Apple, Inc. provides, it is expected that profits will continue to sustain the company in the global scene for years to come.
Impact of potential change factors including the role of technology. High level of technology has allowed competitors to duplicate products and services of Apple, Inc. For instance, Android Pay, which is a payment application of Google, has similar features to its predecessor, the Apple Pay (Hitt, Ireland, & Hoskisson, 2016). Today, it is readily evident that popular android phones like Samsung have followed the lead of the iPhone as customers are enticed to look for more affordable brands with similar features. With the rising demand for android phones and tablets, there has been a steady decline of demand for PCs (Paley, 2015). The technological improvements of tablets and android phones therefore requires Apple, Inc. to adapt accordingly.
Conclusion
It is evident that Apple, Inc. has effectively sustained its success through good leadership whereby the critical elements of business are effectively addressed. In regard to this, issues such as legal, social, and economic environment, the management structure, operational and financial issues, as well as potential change factors must be regularly assessed by organizations in order to optimize operational efficiency. It is from these elements of business that Apple, Inc. has gained dominance in the industry of technology.
References
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