Industry Forecasting

Industry forecasting involves the study of trends that are likely to shape the performance of a product in an otherwise uncertain future. This is critical and unavoidable amongst entrepreneurs to remain competitive in the market. Gordon (2008) notes that, for change to be interesting, an entrepreneur must be competitive. Further, he notes that success in business always implies congruence between decision-making ability on the part of the businessman and the world in which those decisions play out. Macro trend analysis is one of those ways in which an entrepreneur attempts to handle change and remain competitive. Macro trend analysis refers to forces that are likely to shape consumer behavior and response towards a particular good or service.

Rogers (1999) notes the importance of macro trends in terms of their role in predicting the attractiveness of a product in the market, in a number of years to come. The forces that determine the product’s attractiveness are usually outside the firm and its immediate market. Burdette identifies six key factors, which are likely to shape the external environment of a given product. These include society, technology, demographics, government, economics and environment. However, Burdette (ibid) notes that many analysts limit their analysis to the following four factors, which include politics, economics, society (demographics) and technology. This is referred to as PEST Analysis.

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Politics plays a huge role in determining the leadership of a given country. In the US, politics shape the outcome of the electoral contest right from the grassroots (primaries) up to the national presidential polls. Politics in this regard will include, inter alia, factors like local and international legislations, pressure groups, regulatory bodies and processes, trading policies and geo-political considerations (Rogers, 1999). Currently, there is debate on the role China is playing in ‘shipping out’ US jobs from the domestic market to the Orient. The ongoing recession and low absorptive capacit of the labor market is blamed on China.

The presence of Apple manufacturing and retail outlets in China is evident. Apart from Japan, China is the only other country with a commanding presence of Apple outlets in the East. This will shape the market presence of I phones in the future, especially in view of counterfeit problems that are prevalent in China. The policies that will be enacted by the new government will have a bearing on the Sino-US relationships as each of these two countries seeks to have leverage over the other economically.Society is another macro trend that is expected to influence the performance of the I phone in the next 5 years.

The factors under this include demographic changes, brand/company images, consumer attitudes and trends, celebrity preferences etc. One key factor amongst these is demographic changes. The US population, currently estimated at 313 million (Schlesinger, 2011) is expected to grow at a rate of 0.96%. The age structure shows that up to 67% of the population is between 15-64 years, which is the consumer age group. The population growth in the Orient, especially in China and India, which is estimated at over 2 billion people, is another huge market for the I phone products.

This illustrates a growing market that the iphone manufacturers can tap into. However, this will be influenced by the branding acumen of the product. Indeed, one of the things that branding does to a product is to give it a competitive advantage over other related products in the market. Schlesinger (2011) argues that competitive advantage has two key components: cost and differentiation. Cost advantage refers to a situation where an organization delivers goods or services to consumers just like its competitors, but at a relatively lower cost.

I phones will tap into this aspect if they deliver their gadgets at a cost that corresponds to the customers’ income abilities. This will remain a challenge for iphone considering that most of its products do not necessarily target the low-end market. Other smart phone competitors like Androiid, Blackberry, and Samsung will edge out Apple if they do not handle the issue of cost well. Secondly, differentiation advantage refers to the ability of an organization to produce a product that delivers superior benefits compared to those of other competing brands. This is the edge that Apple has over other brands in the smart phone segment.

Surveys show that many end users rate iphones favorably over other competing brands. Therefore, to the extent that Apple will maintain its ability to produce iphones which have a better service package and optimum utility to the users, they will be brand leaders in the smart phone market. Technological changes are also a key macro trend that will influence the uptake of iphones in the next 5 years. This will revolve around aspects like maturity of the technology, innovativeness, technological response to other emergent social needs, consumer buying mechanisms, innovation potential, associated/dependent technology, global communication, cyberspace security, research funding and technological legislation. The mobile phone subsector has become extremely competitive in the recent past.

A lot of innovation is going into ensuring that a handset provides the much needed interface between the owner and his/her daily services and needs like reading, entertainment, and news. One key innovation that gives iphones a technological edge over its competitors is the versatility of its interface. The manufacturers have created multiple platforms that the mobile phone owner can use to meet his/her varied needs.However, these phones are facing increased competition for the same reason from other companies especially Samsung, which has been on the upsurge lately with innovations like the Galaxy Note. Research further notes that, in a highly competitive environment, reaction time to a new technological release from your competitor determines the survival of your product in the market. How well Apple keeps up with these innovations from other mobile phone companies, will greatly determine its performance in the market.