Macro and Micro Environment

Topics: Personal computer, Apple Inc., Microsoft Windows Pages: 8 (2403 words) Published: April 5, 2013
Macro environment of apple company.
Macro environment is a far environment which comprise of several forces that raise   strategic issue to Apple. These forces are social force, economic force, politic force, and technology force which well known as PEST (figure 3).  

Figure 3 Macro Environment

Technology forces
The first force that influences computer industry structure is rapid and sustained technical progress. Each year, integrated circuits and other electronic components become better, faster, and cheaper, providing opportunities for improving existing computers as well as designing a new kind.   

As computer comprises of hardware and software, Apple is really affected by technology innovation forces around it. Rapid innovation on hardware by component producers (e.g. Intel, AMD) and software by competitors (e.g. Microsoft) as well as complementary products from partner gives no choice for Apple except responsively catching the new hardware technology and   also continuously innovating to sustain differentiation.  

Starting from 1976, Apple created   personal computer as a proprietary system. Apple created the hardware by assembling components, create operating system (e.g. MacOS) and develop applications. That time, as Apple controls both hardware and software, Apple can create personal computer that deliver great personal experience compare to its competitors.  

That time, Apple computer main competitor is IBM personal computer. Previously IBM followed proprietary system as well. In 1981, IBM changed into open structure. This move changed the environment of competition. This move brought many new entrants such as Compaq and HP to produce IBM PC Compatible. This also brought in Intel as new entrant as producer of processor and Microsoft as producer of operating system.  

Rapid innovation both from Intel created strong technological forces for Apple. As Intel released faster processor every quarter (figure 4), Apple, which that time sourced its processor from Motorola, had to respond with comparable or faster processor. Failing to respond this in time would create competitive disadvantage for Apple since competitors would adopt it and gain better technology.  

Microsoft which dominates operating system producer for Intel based personal computer is also the main competitor for Apple. The rapid innovation by Microsoft which releases new version of Windows every 2 years (figure 5) creates pressure for Apple to upgrade MacOS as well. This is not easy task for Apple since Microsoft Windows selling is very high so it can cover its R&D cost meanwhile Apple MacOS market share is a little.  

Figure 4. Intel desktop CPU Roadmap
Figure 5 Microsoft Windows roadmap
In addition, the open system adopted by Microsoft and Intel and the network size of Windows attracts many Independent Software Vendors (ISV) breed in order to create application for Wintel platform. The rapid innovation of Windows operating system and the increasing number of applications for Wintel platform make Windows Intel platform more valuable and thus create additional pressure for Apple especially high switching cost for consumer to switch to Apple.

Economic forces
Monopolistic competition characterizes computer industry. A lot of existing competitors in the industry (e.g. IBM, Dell, HP, Compaq, Ben Q, Asus, Gate Way, Lenovo, and Acer) and low entry barrier allow new entrant to enter the industry easily and thus increasing more competition. Supplier bargaining position is strong due to small number of processor suppliers (e.g. Intel, AMD, and Cyrix). Customer bargaining position is also strong due to low searching cost and low switching cost. Both of these characteristics constrain companies in the industry to get only low operating margin (figure 6). Apple is also affected by this economic force where Apple has to choose between low prices to boost market share or premium price but lower market share.

Figure 6 Comparison of...
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