23rd January 2013Q1: PESTEL analysisThe iPod has been touted as a reflection of Apple’s innovative mastery (Ashcroft 2011, p. 7). Launched into the consumer market in 2001, the iPod had innovative design and functionality ideas never again seen in the market (Ashcroft 2011, p. 7). As a mixed digital multimedia device, the iPod was soon complimented with the release of the iTunes in 2003. In description, iTunes refers to software that enables consumers to enjoy digital media downloaded to their computers and into their iPods. Through the iTunes platform, consumers can buy, organise and playback different media files which could include podcasts, music, videos and photos among others.
A PESTEL (Political, Economic, Social, Technological, Environment, and Legal) analysis on the iPod and iTunes would reveal the following: Political: As a US-based firm, whose target consumers are in and outside the US, Apple has had to develop and release different versions of iTunes in an effort to ensure that such versions comply with the territory- or country-specific copyright laws (Herrera 2006, p. 205). Economic: With the US and European countries being its main target markets, Apple’s products have been highly favoured by the well-performing economic environments therein.
The relatively cheap price of downloading music ($0.99) on iTunes has made it a popular online retail outlet for consumers (Chapman & Hoskinsson 2008, p. c-16). Social-cultural: The social-cultural environment in Apple’s target market is such that technologically is being received eagerly by different demographics. For example, the iTunes store is increasingly being perceived as a central portal from where consumers from different geographical locations can access their favourite music (Chapman & Hoskinsson 2008, p.
c-17). Technology: The targeted markets (especially the youth) are always tech-savvy, and have thus embraced the new development in both the iPod and iTunes. Since its launch, the iPod has undergone many technological enhancement thus its revolution from just a music-listening gadget, to a gadget with which people can watch videos and download music. More recently, iPods are GPS-enabled thus meaning that people can use them in cars to find directions. Environment: Operating in an environment conscious society has affected the manner in which Apple conducts its production processes. Apple stated that it is reducing toxic substances from its product, and is on record for recycling iPods and Macintosh PCs in different countries where it has established its presence (Apple Inc.
2013). Legal: Apple found a way of managing some of the legal issues concerning iTunes by making a deal with record companies that enabled consumers to download music from iTunes without infringing copyright laws in the US (Crossan & Mark 2005, p. 128). It however remains a challenge to handle record labels in other countries because of difference in copyright laws thus meaning that consumers may not access everything they may desire from the iTunes platform.
The above analysis relates to porter’s five forces, because firms often have to deal with all market dynamics in the macro-environment and the micro-environment. While the PESTEL analysis is ideal in the macro-environment, Porter’s five forces is a good analytical tool for a firm’s competitive industry. In other words, the two analysis tools need to be used together for purposes of understanding both the micro and competitive environments that a firm is faced with.