Apple Inc.
Introduction
Apple Inc began as computer software and hardware company in 1976. Apple has transitioned into the manufacture of other technology gadgets and practiced vertical integration by developing a chain of retail outlets to give a better buying experience for customers and consolidate its position against competitors over the years under various leaderships. Apple uses a variety of organizational tactics to stay competitive in a market where competition is fierce, and customers have greater bargaining power by putting a premium on innovation. This has been demonstrated in recent years by its capacity to be the first to introduce new, never-before-seen products like wireless headphones. Apple sets itself apart by including hardware and software in all its products. It was also able to create a subscription service that included music and video streaming, video games, and cloud storage, which attracted new customers and provided value to its products, ensuring brand loyalty. In 2020, the segment produced 53 billion dollars in revenue, making it the Company’s second-largest. Apple has divided its goods into sectors since 2018, including iPhone, iPad, Mac, service and wearable, home, and accessories, which are all overseen by various departments. Most of its revenue comes from phone sales, but service and wearables have dramatically boosted its market share over time. By keeping their designs basic, easy to use, integrated, and attractive to the eye, they stay faithful to the organization’s objective. Its capacity to remain relevant since 1976 is credited to its ability to comprehend the strengths and weaknesses of its organization and possibilities and threats. This also allows stakeholders to assess Apple’s standing in the industry and plan for future trends more efficiently.
Core competencies and strengths
The unique user interface, iTunes ecosystem, operating system, product design
Apple is dedicated to providing its consumers with the greatest possible experience through innovative products. Vertical integration is achieved by the Company’s ability to expand by creating all aspects of the products to provide new high-quality products and solutions to its customers that are simple to use, have seamless integration capabilities, and are innovative in design. The organization continues to grow its platform as part of its plan by linking its system with third-party digital content and applications via its online shop. Customers can use this to find and download apps and books to their devices. Since its inception in 2011, the Company has used the App Store to assist users in discovering new apps and software and educating and reporting any problems they may have with the download and installation of apps on their devices. The Company also encourages the creation of softwares provided by third parties that integrate with Apple products.
Well-connected global supply chain
Apple sells its products to corporations and governments all over the world. Their solutions are popular in various markets due to their high performance, productivity, simplicity, and effortless assimilation into information technology systems. Apple products integrate with a majority of third-party apps and services, which allow for the creation and secure delivery of custom apps.
Apple Weaknesses
Reliance on Steve Jobs leadership
Steve Jobs, known for his ideology of simplicity and relevance, was heavily relied on to put Apple on the map. His impact on the organization was greatly felt as his leadership supported creativity and innovation; however, since his death, the creation of new products has reduced significantly, leading Apple to lose some of its clientele to competitors such as Samsung.
Limited distribution network
The majority of Apple clientele are both in the middle, and upper class as their products are expensive. In recent years Apple products have been classified as luxurious, with most people buying the product to seem expensive. This leaves a huge chunk of the populous, making them buy products from apple competitors.
Inconsistency in quality of some of their hardware
Apple batteries performance has been inconsistent compared to the other hardware that Apple manufactures. Many of their clientele complained about how fast the battery discharges and repeatedly needs charging. It seems like it cannot handle some of its functionalities, inconveniencing its clients.
Apple Opportunities
Expansion of Distribution Network
Apple has not exploited the market, especially in countries outside the U.S. and Europe, because of limited distribution channels. The assumption is that these markets are too small to be bothered with, which has been found inaccurate. Its competitors, such as Huawei, have invested a significant amount to breakthrough into the African or the Mid-eastern market.
Opportunity for a breakthrough in the application creation market
App creation has been a trend in recent years that Apple has not ventured into .there are many ways Apple can venture into, such as proving applications to customers or businesses. The potential for an increase in revenue alone is huge.
Apple Threats
Industry Analysis
The threat of Supplier Negotiation Power
The bargaining power of the suppliers is significantly reduced because there is a large array for apple to choose from. Apple commission’s suppliers for large supplies give them more power as they are a huge clientele for the suppliers. Therefore, the suppliers will do whatever is needed to maintain Apple as a customer. Apple creates their chips used in all its products, therefore, eliminating a need for a supplier. In recent years there have been efforts applied towards manufacturing off their components. The strategy is to cut costs and perhaps even change the narrative of severely underpaying workers in the Chinese factories. The implementation of this strategy is yet to be seen, and if implemented, it would significantly reduce the bargaining power of the suppliers.
The threat of substitutes in the industry is moderate–
Apple’s strategy over the years has been to develop and replace obsolete products before the competitors. They have been able to remain relevant with time through creating their substitute products before their competitors. Apple has also created the Apple Watch that integrates with the iPhone, allowing for ease of use of frequently used applications such as messaging. This has increased the value of their cellphone products and offered convenience. Apple strives to stay top of the competition in all aspects, even though it means potentially resigning its products to launch new ones.
The threat of New Entrants
The threat of new entrants in this industry that might impact market position is significantly small. This is due to the extremely high cost of establishing a reputable company inside the sector that already has well recognized and valued companies (Mavrick, 2015). There is indeed a high cost associated with developing a successful reputation better than that of existing players (Mavrick, 2015). Before entering the market for individual laptops and mobile devices, any new entrant would have to spend heavily in the development and manufacturing to create and produce products (Mavrick, 2015)
PESTLE Analysis
Global factors: Developing foreign economies could cause Apple’s production facility in China to increase costs as wages in China increase following government directives to increase wage per hour. This may significantly cause an increase in pricing, which will, in turn, lead to the loss of clients.
Demographics: the majority of the populous in developed countries are in the 60-100 age group, which could influence Apple’s product design development and strategies to be relevant to the majority. On the other hand, developing countries provide Apple with growth opportunities.
Political/Legal– The recent instability of the political landscape of developed countries caused by the ongoing war between Ukraine that has the potential to spill over to NATO countries is a threat for Apple to stagnate and experience losses since the majority of its clients are from these countries. The governmental environmental factor of tariffs imposed, especially between the United States and China, carries a danger to the future development and reducing sales volumes from its merchandise, such as consumer devices.
. Legal– In the past few years, Samsung’s ongoing intellectual property battle has had repercussions such as redirection of funding to other ventures or discontinuation of some products.
Economic: Recent rise in fuel due to the ongoing conflict between Russia and Ukraine has affected buyers’ purchasing power, thereby might reduce sales of Apple products.
Sociocultural: Consumers’ environmental concerns, such as the use of hazardous materials in the manufacturing of some of its hardware, could influence Apple sales as buyers are now more informed of the consequences of these hazardous materials.
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