Access to HE Business Awareness PDF

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Business studies essay regarding business awareness...

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Anna Worthington Access to the HE (Business) – Business Awareness - 5.4 – Used opening, signposting, summarising to structure presentation 1.0 Introduction This report will analyse the multinational technology company, Apple Inc, the issues facing the company, the strengths and advantages of a specific product and finally a conclusion of results. Within this report, an analysis will be made of Apple’s product ‘AirPods’. 2.0 Product Specification             

Wireless Bluetooth Earphones with wireless charging case included Hands Free capability 2 Built in microphones on each pod ‘Hey Siri’ functions Optimized battery (50% increased battery life on 2019 model) Optical Sensors Motion accelerometer Speech accelerometer 24 Hours listening time 18 hours talk time Weight: 44g Engraving available at extra cost / free with online order Released by Apple March 20th, 2019

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[CITATION AppleApp19 \p Amazon \l 2057 ] ‘AirPods deliver an unparalleled wireless headphone experience. Simply take them out and they’re ready to use with all your devices. Put them in your ears and they connect immediately, immersing you in rich, high-quality sound. Just like magic.’ (Apple Inc, 2019) The AirPod embodies a simplistic design, equipped with Apples high-quality, premium audio. 3.0 Unique Selling Point (USP) According to Apple, the USP of this product is ‘The iPhone in an earbud: slick and seamless with super-fast charging’ (Apple,2019) (Evening standard, 2019)

4.0 SWOT Analysis SWOT: Strengths / Weaknesses / Opportunities / Threats A SWOT analysis is a proven tool used to assess aspects of a business. The analysis identifies strengths, weaknesses, opportunities and threats in an organized grid table.

Anna Worthington Strengths and weaknesses are internal factors within the business. This means the business has a certain amount of control and can also make changes accordingly to the outcome. Opportunities and threats are external factors outside of the business. These factors can indicate an opportunity for the business to make a good decision or help to protect the business against possible threats. 4.1 SWOT analysis of Apple AirPods Strengths:        

Weaknesses:

Superior Quality Brand Popularity & Reliability Premium Brand Ergonomic Lightweight Wireless Charging AI Features Practical for physical activity

Opportunity: 

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High price (£159.00) 1 size - May not fit all Not waterproof

Threats:

Premium branding gives Apple an opportunity to offer services such as Apple care Insurance which includes; Technical support & hardware coverage High profile events Product Engraving

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Lower cost options available with other competitive brands Market Saturation – Many manufacturers copy the design of apple products and market them as unbranded products. Political events such as Brexit, could increase costs on importation Unpredictable Social trends TAX changes / unfavourable regulations change

5.0 Resources and equipment

Product Apple AirPods (2019)

Resources  Human Resources  Employee’s  Design Specialists & Developers  Factory Unit’s  Security  Engineers  Quality Control  Using recycled materials  Safe working environments

Equipment  Automation equipment (machinery)  Software  Computer systems  Materials  Personal protective equipment

Costs  Manufacturing costs  Marketing Costs  Shipping and distribution  Staff Wages  Working Capital  Research  Health and Safety equipment  Retail overhead

Anna Worthington Apple does not disclose information about manufacturing costs with the public which makes it impossible to predict an exact value of cost associated with manufacturing AirPods. The table above (5.0) illustrates the resources and equipment required for production, including the essential costs. According to Business Insider, Apple markets their products generally with a 30% profit margin. This would indicate that if the Apple AirPods were to sell at the RRP of £159, AirPods would cost Apple around £55 to manufacture. Business Insider claims large companies generally maintain the same profit margin throughout all products. (Business Insider,2019) According to Glass Door, Apple Engineers earn an average salary of between $75,373 $169,835. Apple shop employees (customer service advisors) in the UK earn around £20,000 per year. (Glass Door, 2019). Human resources and management are both crucial factors in Apple’s success; ensuring products meet the high demand of consumers. Employees are paid by Apple to research and innovate new, exciting ideas. Employees must also be given a working capital to ensure daily operations of the business can take place. Apple understand the importance of safe and healthy working conditions. Health and Safety in workplaces is the most important factor of a business, especially in factories containing machinery. Apple must ensure all employees are given correct safety equipment (PPE) where necessary, this must be payed by Apple (the employer). In 2013, the company invested 10.5 Billion Dollars into supply chain robots and machinery. This reduces the required workload from Apple’s factory workers, whilst increasing the precision of the products assembly (Apple Insider, 2019). Machinery is an ongoing investment for Apple, as machines require servicing and repairs, along with added costs for essential fuel/oils to operate the machines. In 2015, Apple reported a total marketing cost of $1.8 Billion. Their marketing strategy is simplistic, yet very effective. In the image to the right, Apple’s iPhone product advertisement is displayed. This is a great example of the simplicity of Apple’s advertising. Image 2

Apple’s representatives claims that, “ongoing investment in marketing and advertising is critical to the development and sale of innovative products and technologies”. This tells the market that Apple will continue to invest in marketing/advertising due to previous success rates in correlation with the product. Technology is a large factor associated with production costs. To design products, Apple need reliable logistics which are necessary for both designing and programming the devices. As mentioned before, Apple’s engineers must have access to necessary technology required to manufacturer their products, including software. Distribution costs of AirPods would be drastically cheaper than normal Apple products (such as iPhones) due to their small size. It’s more cost effective for Apple to distribute in larger amounts,

Anna Worthington as they would pay less on shipping per unit. Apple are currently under threat of increased tariffs on distribution between US and China, this could potentially increase distributions costs.

Anna Worthington PESTEL Analysis

PESTEL – Political / Economic / Social / Technological / Environmental / Legal

A PESTEL analysis is used to understand issues businesses may face. The PESTEL analysis is useful, being a cost-effective method of providing a deeper understanding of the macro-environment of a business. It analyses six key factors, which together define a business. This table shows a PESTEL analysis on issues facing Apple Inc:

POLITICAL

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Trade disputes between United States and China Brexit negotiations Changes in rules and regulations Schools funding

ECONOMIC

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Decrease in sales revenue could indicate sales are slowing Decrease stock market value (below estimated revenue for first quarter)

SOCIAL

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Social Media (negative press) Social status Current social trends International anti-Apple sentiments Competitive opposing brands Purposely reducing the efficiency of software on older generation iPhone models

ENVIRONMENTAL

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Precious metals used in the devices Apple’s carbon footprint

LEGAL

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GDPR Identity theft Breach of Privacy

TECHNOLOGICAL

Conclusion From the SWOT analysis, you can see Apple’s AirPods have a strong strength-weakness ratio. Apple’s unquestioned ability to create superior quality products gives them an edge on their competitors. Apple can market their products with high cost, due to the premium reputation associated with the brand. However, not everyone can afford these high prices. Schools are struggling to equip all students with Apple technology, some schools are resorting to leasing the devices to spread the cost (KRCS,2019). Apple offer optional extra services such as ‘Apple Care’, an insurance for any device for up to 2 years, which covers technical and hardware support. This gives the consumer comfort in knowing their product will be protected by Apple, if the product was to somehow be deemed lost/damaged,

Anna Worthington therefore making it a more reasonable investment. Apple also offer an engraving service with the AirPods casing, to give the product a more personal touch. These are some of the ways Apple justifies the high premium, and outrivals their opposing brands, preventing their product from being saturated in the market. The wireless design of the AirPods enables a person to move freely without the interference of cables, as well as being lightweight and ergonomic. This increases its practicality and desirability for most, especially athletes. Apple continuingly have a large amount of marketing opportunities for high profile events, an example of this type of event would be the EUFA Euro 2020 Football event. This will present Apple a significant marketing opportunity. In 2012, the Euro football event accumulated 299 Million views worldwide for the championship final. Political factors at the current time potentially pose a threat to Apple. Factors such as unfavourable regulation changes could also be a threat to Apple, if there was an increase in tax charges it could cause Apple to generate less profits. Brexit negotiations regarding “greater restrictions on imports and exports”[ CITATION Tel18 \l 2057 ], imposes a threat to Apple, and could dramatically affect the financial results, as well as many company operations. United States and China have trade disputes which could dramatically affect Apple’s ability to expand, as well as posing a threat with the possibility of higher import/export tariff costs. Donald Trump suggested a 10% tariff on all Chinese- made Apple products. Nothing has changed yet, however this still poses a threat. Chief Executive officer of Apple, Tim Cook, made a statement in January 2019, “Sales will be lower than out original forecast for the first quarter” (Tim Cook, MacWorld, 2019). An expected revenue of $89 Billion-$93 Billion was not met. Apple posted a revenue of $84.3 Billion for the first quarter this year. This is a 5% decrease from last year’s results. This shows that Apple product sales are slowing. [ CITATION Mic19 \l 2057 ]. US President Donald Trump stated he feels as though the decrease in stock value was “just a glitch”, after the trade disputes with China are concluded, the stocks will return to normal. (The Washington Post,2019) Apple responded to the issue by operating after hours trading, to increase the stock market value. As mentioned before, Apple can market their products at a premium price, due to the popularity of the brand. This is supported by Apple’s strong social status, being such a desirable, fashionable product. This however may not always be a positive for Apple. Social media/trends can alter the way consumers feel about products and can exploit negative factors over a short space of time. This could pose a threat to Apple’s reputation. Arguably, Apple’s largest threat is their competition. Other corporations such as Samsung or Huawei are developing their technological capabilities to the current high standards consumers see in the latest iPhone. Other brands whom do not possess the premium social status Apple holds, sell their devices at a much more affordable price, with similar quality and specifications. This is hard to ignore as a consumer. Apple innovate new strategies to give them an edge on competition. For example, Apple introduced the ‘iCloud’ in 2011, which is an external storage platform exclusively available for Apple consumers. The iCloud was another strategy in which Apple used to justify the high prices of their products (Apple gives you free external storage when you purchase a device). Furthermore, there is now a large market for external storage platforms. OneDrive, Google Drive, IDrive and pCloud all now give

Anna Worthington consumers options as to which company they use for external storage. This is a great example of Apple Innovating a new idea, before being replicated and challenged by rival competition. The PESTEL analysis shows Apple could continue to lose revenue because of new, more economical competition. Apple must establish new strategies to attack the current market, such as expanding iCloud storage to reach new customers world-wide. In ways like this, Apple could increase their stock market value back to the predicted results. Environmentally, Apple is super-efficient. “Truly innovative products leave their mark on the world instead of the planet.” (Apple, 2019) Apple is the most environmentally friendly tech company in the world for the third year running (Greenpiece,2019). Although, in 2013, Apple previously had environmental accusations for toxic components being used within their devices, as well as poor protocol towards recycling and takeback of used, damaged or unwanted products. In February, Apple faced accusations of deforestation in Indonesia, in search of tin/aluminium for the shell of their products. Apple have now left these issues in the past, producing outstanding environmental results in 2019. (MacWorld,2019). Privacy regulations are a large factor currently affecting Apple. Governments’ are putting pressure on businesses to limit privacy settings, giving consumers more options as to what information they share. Apple recently faced legal issues over allowing third party repair services to obtain genuine apple parts/tools. The PESTEL analysis shows that Apple must develop their policies to be accustom to recent government pressure towards policies and privacy.

Anna Worthington Reference list for business awareness:  

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(Apple Inc, 2019) https://www.apple.com/uk/airpods/ (Accessed: 23/09/2019) (Evening standard, 2019) Cut the cord: The best wireless earbuds on the market https://www.standard.co.uk/tech/top-wireless-earbuds-2019-apple-airpods-beats-samsunga4219846.html (Accessed 23/09/2019) (KRCS,2019) Should schools be leasing new Apple Equipment rather then buying it? https://www.krcs.co.uk/news/soc-leasing (Accessed: 23/09/2019) (Telegraph,2018) Apple's UK arm highlights risk of post Brexit complexities, filing reveals https://www.telegraph.co.uk/technology/2018/06/06/apples-uk-arm-warnsfinancial-hit-post-brexit-filing-reveals/ (Accessed: 23/09/2019) (Tim Cook, 2019) Apple’s first quarter 2019 results include some bright spots https://www.macworld.com/article/3336868/apple-first-quarter-2019-results.html (Accessed 23/09/2019) (The Washington Post, 2019) Adding to fears of economic slowdown, Apple warns sales will fall short and cites ‘deterioration’ in China https://www.washingtonpost.com/business/economy/adding-to-fears-of-economicslowdown-apple-warns-sales-will-fall-short-and-cites-deterioration-inchina/2019/01/02/75e7653c-0eda-11e9-831f-3aa2c2be4cbd_story.html (Accessed 24/09/2019) (Business Insider, 2019) https://www.businessinsider.com/international?r=US&IR=T (Accessed 25/09/2019) (Glass Door, 2019) https://www.glassdoor.com › Apple-Engineer-Salaries-E1138_D_KO6,14 (Medium, 2019) Why Apple spend $1.8 Billion on advertising https://medium.com/seedxdigital-marketing-guru/why-apple-spends-1-8-billion-on-advertising-38d3940270bf (Accessed 24/09/19)...