The Analysis of Apple Inc - Essay Example

?Apple Incorporated: Company Analysis Introduction Apple Incorporated is one of the leading companies in the consumer technology industry, which designs, manufactures and markets different product offerings to wide range of customers. Apple Incorporated has become renowned in the world because of its iPod’s cutting edge technology that stands as a cut above any other brands in the market. The company is good at stimulating needs for its product offerings which is one of the reasons why it is one of those leading in its industry when it comes to differentiation strategy. Apple Incorporated started to create its name in its industry by competing with IBM’s personal computing product lines. It was through this that Apple Incorporated was finally able to come up with its Mac (Macintosh) product line that started to create a name by itself. Integrated with this product line is an Operating System that also struggled to compete with Microsoft. It was not therefore easy for Apple Incorporated to establish its name due to the fact that its industry is home to fierce competition among its key players. However, as competition continues to grow, Apple Incorporated nowadays is able to come up with different product lines such as iPhones and iTunes, iPad, Apple TV, Xserve, professional software application, Mac OS X and iOS operating systems, and other service and support offerings. This is an indication of a never-ending quest for innovative products that continue to help customers address their needs that can only be found from consumer technology products. Apple Incorporated has correspondingly gained big market share in iPhones. Apple’s market share for smart phones in 2008 was 12.9 percent which eventually what made the company as the third largest manufacturer in the world for the said product line (Marino et al., 2010). In the midst of a very tough competition, everything for Apple Incorporated is a matter of creating a need for its product line. Moreover, once the need has been set, the ultimate goal is to look forward for customer’s loyalty and trust. In this essay, Apple Incorporated’s strategic performance is analysed based on its prevailing actions and market performance. Included in the analysis is the specific company analysis that includes internal and external factors of Apple’s business environment. Company analysis Today, Apple Incorporated operates globally with its products distributed through out its ‘retail and online stores, direct sales force, third party cellular network carriers, wholesalers, retailers and value-added resellers’ (New York Times, 2011). This implies that Apple is into aggressive marketing efforts prior to achieving its competitive advantage. This is an integral part of a global strategy in which the benefits primarily include economies of scale or product replication, the opportunity to serve global customers, exploiting international resources, and the access and integration of knowledge from multiple locations (Grant, 2010; Johnson et al., 2008). This is a matter of giving more ample opportunities for Apple to discover further competitive strength in its industry through the maximisation of its operation and resources, which eventually needs to be worked out. Global companies are known to diversify their operation and find the right combination of resources for their competitive advantage (Feist, 1999). In this way, it is necessary for them to reach certain level of achievement in their industry and that is to go for global strategy. The opportunities are great but there are also corresponding higher risks. Apple Incorporated has remarkably taken different approaches prior to achieving a significant market share and eventually enduring on a very tough competition and risks. In May 2010, Apple Incorporated becomes the world’s most valuable company by outperforming the software giant Microsoft based on its stock value. This is an indication that Apple’s strategic moves have paid off over time and its continuing operation in its industry is a significant indicator of an on-going healthy competition within consumer technology sector. However, it is important to look closely in detail what exactly are the actual scenario occurring within the consumer technology sector. This in particular will pave way to a meaningful understanding of what exactly is happening in detail at both the internal and external environment of Apple Incorporated. PEST analysis Politics Money has great influence on politics (Korten, 2000). This is the very reason why politics is associated with the business environment. Politics is about power and influence (Rosati and Scott, 2010; Trubowitz, 2004). Applying this in the context of business environment, every organisation that attempts to reach a specific competitive advantage requires generation of substantial power and influence. In the case of Apple Incorporated, power and influence have crucial role to play in achieving its competitive advantage. The company remarkably competes with multinational giant companies in its industry and in order to survive in this tough competition, it has to create a basic internal foundation and that is to have powerful and influential management system. It is always an issue of control when it comes to creating powerful and influential management system for Apple Incorporated. For instance, the part time obligation of Steven Jobs for Apple Incorporated in 2009 was considered a challenge because such would determine the level of corporate strength and influence. Investors are always looking forward to sound management system and this entire issue is about determination of the nature of internal political system existing within an organisation. Apple Incorporated looks forward to sound management that would be able to allow it to survive even in the midst of tough situations. On the other hand, the external political system is another great important consideration. The government has important role in order to create harmonious business for every company (Porter, 1990). Under this role is the opportunity for the business sector to achieve the growth of their investment and for the achievement of competitive advantage. The United States is said to be one of the most influential nations when it comes to creating a good political environment for the business sector. This is the reason why Apple Incorporated substantially created around 233 stores in the United States in 2010 and 84 international stores. As can be observed, there is a strong connection between existing political condition in a country and expansion of Apple Incorporated. There is a strong consideration of opportunity and one of the essential factors is the existing stability of political system of a nation. Economy Another important consideration for every business prior to formulating global operation is the state of the economy. The prevailing world economic condition is very important among global companies and this is the reason why they need to come up with the right analysis and decision-making process prior to the creation of a significant move. The global economy without question is still under recovery due to economic recession in the United States and other countries, as noted to be the worst economic downturn as next to Great Depression based on Gross Domestic Product (GDP) measurement (Marino et al., 2010). Marino and colleagues reported that this created a great impact on the financial performance of the consumer technology sector. This includes Apple Incorporated which at the very moment has to grapple with the day to day consequences of such event. In the case of Apple Incorporated, the economic recession which led to economic downturn was an important consideration especially on the level of designing, manufacturing and marketing of its product offerings. It is in this way Apple Incorporated could try to maximise the necessary requirements needed in order to still compete without compromising its standard quality line of product offerings. In 2009, the management of Apple Incorporated was so critical about its market share and the kind of product offerings that have potential market acceptance. It is in this reason that Apple Incorporated remarkably created an opportunity for smart phones especially on its iPhone brand. In fact, the result of this effort paved a great opportunity for Apple Incorporated to be the third largest and leading customer technology provider for smart phones. Amidst the existing economic downturn, smart phones have created special opportunity for Apple Incorporated. The idea therefore behind economic recession particularly for Apple Incorporated is not only to stimulate needs or demand for its product offerings, but the point is to find for profitable market and product lines. It is also in this reason why there was a tough competition occurring between Apple Incorporated and other customer technology companies and leading brands. This resulted to copying of the features of the products created by Apple Incorporated. This was a specific disadvantage on the side of Apple Incorporated considering that it tries to differentiate its offerings from another, but here comes the opportunity for other companies to remarkably copy what it has just started. Smart phones in short have created a healthy competition and competitive market among customer technology manufacturers and designers. This resulted to cheaper prices which further aggravated the situation for Apple Incorporated especially on hitting its desired profit. Social The world is composed of humans with different daily activities. The marketers for instance are busy with their daily functions that are in line with how to stimulate needs for their product offerings. In fact, every organisation that has aggressive marketing activities is actually certain with their objective to formulate specific strategies to stimulate needs for their line of products and services (Kotler et al., 1999; Boone and Kurtz, 2006). One of the reasons consumers are widely informed about the latest trend within the consumer technology sector is because of the aggressive marketing activities initiated by companies such as IBM, Samsung, LG and Apple. These companies are actually creating social awareness while stimulating needs for their product and service offerings. Apple Incorporated has become the leading company in consumer technology sector when it comes to innovation. It is because of this that people have become educated and are aware of their needs because the stimulation of needs has become so powerful that it converts substantial revenue for Apple, LG, Samsung, IBM and other consumer technology companies. As a result, people are educated with potential idea to rely on the best alternatives or options. On the other hand, Apple Incorporated is consistent about its image. This in particular has attracted social concerns among its customers. Apple Incorporated is known for its cutting-edge technology, innovative products, high quality product and service offerings, and on time delivery of goods and services for the benefits of its customers. Considering that there is a great deal when it comes to the existing competition among consumer technology producers, Apple Incorporated is still able to differentiate itself above any other and this remarkably created special attention and focus among its existing and prospective customers. The issue however is not only on politics and economics, but there is a need to focus on social issues considering the actual stimulation of needs of the consumers. The strategic option in line with this issue is about creating a need for a certain product considering that there are other existing alternatives. What Apple Incorporated substantially considered was to find for profitable market and product offerings. It focused its differentiation strategy in these areas understanding the fact that people have social concerns and that is to go for products at specific features and benefits. This sophistication of finding needs of consumers is a matter of how existing consumer technology producers stimulated needs for their product and service offerings. In short, Apple Incorporated is one of those potential companies that awaken consumers to know what they exactly need. It is in this reason that amidst economic and political considerations, Apple Incorporated has created a great impact and social acceptance for its product and service offerings. Technology Technology wise, Apple Incorporated has got what it takes to be the leading consumer technology designer, manufacturer and marketer. Technology is considered to be essential and integral component of human’s daily activities. Since before, science and technology had created important impacts on the human’s physical and social environment (Skolnikoff, 1967). Today, companies like Apple Incorporated are good at creating needs for their product and service offerings through highlighting the full advantage of technological advancement and its substantial benefits to the prevailing human activities. May it be for personal, professional or academic, Apple Incorporated has wide choice of product offerings to choose from which eventually make it a cut above any other customer technology providers. However, this does not mean that its competitors have not attained what it has achieved so far. Its competitors are also good at enhancing technological advancement for them to be able to attract potential customers. The status quo of technology in today’s society brings forward the acceptability of products and service offerings provided by companies such as Apple, LG, Samsung, HP, IBM and others. This is the reason why Apple Incorporated continues to maximise its operation and resources in order to create specific advantage through enhancing technology and making the desired innovation out of it based on the idea of stimulating needs. SWOT analysis Strength Apple Incorporated has remarkable market share and this means a specific advantage on its part. This also means that it has now remarkable number of loyal customers who are always willing to purchase anytime if there is a need so. This is also the reason why Apple Incorporated was able to open 317 retail stores in 2010 of which 233 from the United States and 84 from other countries. This is an indication of growth. Apple Incorporated has renowned brands and its known to be the leading innovator in its industry. Thus, customers are always looking forward to something new that it has got to offer. Weakness Apple Incorporated is a little hesitant for its aggressive expansion compared with other companies such as IBM. IBM is good at identifying the value of human resource as part of its expansion. It is aggressive at enhancing potential of human resource for expansion and for effective implementation of results. This is one of the things that Apple Incorporated is not totally good at present time because it is focused much on its innovation strategy. Microsoft on the other hand is good at feedback mechanism. This is very critical on the part of Apple Incorporated considering that it has become the leading producer of new innovative consumer technology items. However, when it comes to aggressive feedback mechanism, Apple Incorporated still requires more focus attention and this is to eliminate chances of other companies to copy the product features it has started for its offerings. Opportunity The existing economy in Asia such as China is a good opportunity for Apple Incorporated to explore especially for resource allocation such as cheap labour. On the other hand, the recent generation which is becoming more dependent on technology is another opportunity for Apple Incorporated. This can become the perfect reason for growth enhancement and strategic expansion for the company. Threat The existing competition is actually a threat for Apple Incorporated considering that its product offerings’ features are copied from time to time. If Apple Incorporated will not be consistent in its basic role in its industry as the leading innovative customer technology provider, its chances to be defeated on the process are tremendous. On the other hand, the existing economy and political condition and ever changing customer needs are other threats. Customers’ needs are apt to change from time to time knowing that competitors are willing to set trends and stimulate needs for their offerings. The competition existing among economies leads to political concerns which paved way to uncertain trend on business activities. Thus, Apple Incorporated has to keep an eye wide open into these issues. Porter’s generic strategies Porter’s generic strategies include overall cost leadership, differentiation and focus (Porter, 1990). Of all these generic strategies, Apple Incorporated exclusively has chosen to create a combined focus differentiation strategy. This is a specific strategy that always aims to achieve market leadership when it comes to providing something new and original for the customer’s taste. Apple is good at its innovation strategy because it is only through this that its differentiation strategy will work best. As stated earlier, Apple Incorporated is known to be aggressive in stimulating needs for its product offerings. In this reason, the said organisation is good at innovating possibilities. Apple Incorporated believes that one of the best ways to gain important market share for its product offerings is to stimulate needs and make some important efforts through designing, manufacturing and marketing. This is in fact the best reason why a certain firm covering complex operation on designing, manufacturing and marketing has to undergo the level of understanding customers or the idea or concept about customer centricity (Lal et al., 2006). Porter’s five forces The new entrants seem not to harm Apple Incorporated that much because of its established brands in the market. However, the bargaining power of buyers or consumers seems to be higher considering the existing competition in the customer technology market. In fact, this leads to the threat of substitute products or services considering that competitors are willing to compete in a way of creating something new for the customers. Thus, suppliers of raw materials have the best opportunity knowing that the demand for their product and service offering is higher. This whole scenario is both a great challenge and opportunity for Apple Incorporated. This whole thing is only a matter of understanding the prevailing industry’s business environment’s condition. Illustration 1. Porter’s five forces model (Porter, 1990). Value proposition Apple is good at creating value proposition for its product offerings. Like in the case of its personal computer line of products, Mac’s value proposition is in line with supporting costs, product longevity and its software (Apple Incorporated, 2011). There is a strong emphasis placed for product differentiation in this case and that includes long-term savings, support cost, longevity and software reliability. These are just some of the most important things that Apple Incorporated tries to incorporate in its brands and it has become successful due to the recent market acceptance. In fact, Apple Incorporated is known to be one of the most reliable companies that produces reliable brands at all times. Strategic clock Illustration 2. The Strategy Clock: Bowman’s Strategic Options Apple Incorporated has placed great emphasis on focused differentiation and it is in this reason it has substantially created higher price for its offerings but of course with high perceived value added. Thus, it is always clear from its value proposition what it would like its customers to share and learn from its product and service offerings. Its aggressive effort for innovation is a clear indication that focus differentiation is an ultimate strategy that Apple Incorporated tries to incorporate in its activities in order to achieve competitive advantage. There is however, a certain risk in this strategy knowing that there are many competitors that continue to challenge each other just to attain specific market share and competitive advantage. However, the focus differentiation of Apple Incorporated seems to be standing strongly for a long time already and it has become better considering that customers’ acceptance of its offerings is great and with positive feedbacks so far. BCG matrix At this moment, investment and priority is higher on iPhones for Apple Incorporated. This is due to the fact that smart phones have become phenomenal needs in the market. It is therefore clear that aside from its focus differentiation strategy, Apple Incorporated is good at finding for the most profitable product segments. Apple Incorporated started to compete within its industry with its personal computing product line. At that time, Apple Incorporated was eager to place more emphasis on its focus differentiation by trying to be innovative with respect to substantial changes on the current features of personal computer. This included essential package for operating system which had been made with considerable resistance against viruses and other online attacks and threats. It is therefore clear that Apple’s consistency to focus on higher priority and investment on products that will make a good opportunity is very consistent starting from its past operation until the present time. This consistency without question has contributed greatly to its competitive advantage. Recommendation As discussed, Apple Incorporated is one of the most excellent companies in its industry when it comes to creating needs for its products and eventually in reaching specific level of competitive advantage. However, this does not mean that it is perfect after all in all of its activities. There are certainly other perspectives that it has to closely consider in detail that the other companies have greatly considered recently. For instance, the aggressive effort for expansion into other countries to maximise resources and operation is what Apple should also focus as part of its focus differentiation strategy. The existing economy in Asia and part of Europe is an opportunity, but they could be threat at the same time. China’s cheap labour is a threat for Apple. However, if Apple continues with its aggressive expansion strategy just like IBM, the market in China and other newly rising economies will be more promising for its contemporary strategies and development. It is not enough to be confined only with innovation strategy because there are many existing companies that try to do the same. The entire essence of differentiation strategy will not make sense at all in this case if everyone seems to be doing the same strategy. By this, Apple Incorporated has to remarkably create specific influence and power for its products. Part of this is to minimise the chance of its competitors from copying the product features of its offerings. This is a great problem considering that the existing competition is open to all who are willing to go for innovation and further changes. Thus, one of the best options is to set apart Apple’s line of offerings by applying the full force and coverage of international intellectual property right law. This is to ensure minimisation of infringement with the existing strategy of Apple Incorporated. However, Apple seems to be doing this for long but still copying of its product features continues. Then, another important move is to allow customers to choose and decide for themselves. This means that in order to get the chance to be chosen by the customers, Apple needs to be consistent on how it stimulate needs for its products and at the same time aggressively address customers’ needs and concerns. In this way, customers’ trust and loyalty are ensured to the highest level. 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