Competitor Analysis of Apple Inc - Case Study Example

?Apple Inc: Competitor Analysis and its Competence Table of Contents Apple Inc: Competitor Analysis and its Competence Table of Contents 2 Summary of Analysis 3 Porter’s Analysis 4 Drivers 5 Can Do/Is Doing 6 Management Assumptions 7 Current Capabilities 8 Competitor Response 9 Conclusion 10 10 Reference 11 Summary of Analysis Apple Inc. core business is concentrated towards the designing, manufacturing, and services and network solutions for the market. The integrated product line and global presence of the company are the major strengths of the firm to maintain its market share. The company operates in a highly competitive market in all its product portfolios. This report is concerned with identifying the competitive environment of Apple Inc. and understands the core competencies of the firm to compete in market to maintain its position. Porter’s Analysis Drivers In order to cope with the competitors’ strategies Apple Inc has been continuously focusing on its strategies and implementing accordingly to create strong brand name and produce quality products for the market. The main focus of the company is on the rapid technological advancement which boosts the hardware and the software for the computers provided by the company with their own operating system. The main drivers of the company are the – Wireless products New digital hub platform Market for MP3 player Wireless products In future trend of communication and networking is primarily focused towards wireless products from the market. Apple is already positioned very strongly in this region as the company already provides many products for the market which will help a lot for the company to grow in this sector of market. The AirPort wireless networking technology from Apple allows high speed connection within a specified region. The increase in demand of wireless high speed internet connections will boost the top line growth of Apple Inc. New digital hub platform Apple’s new digital hub platform with the combination of iTunes is transforming the MAC platform for the customers to provide video contents directly into the television and portable devices of the customers. This new hub has great potential for Apple business in digital contents for its rapid growth in recent future. Market for MP3 player The increasing popularity for MP3 player from Apple Inc is rising high at a very fast pace. The market share for the company has increased from 71 % in 2005 to 78 % in the year 2006 and has great potential to in countries outside US. With more retail presence in both domestic and international market the company is expected to increase its product line of digital contents. This segment can act as key growth driver for the firm in short term. Can Do/Is Doing The current strategy of the company is to target the market with its own Operating system. Apple recognized that the competitors of the company primarily rely on the operating system of any third party. Like Dell computers use Windows XP for their products. Apple on the other hand have managed to incorporate its own hardware and software for the all its product line with the flexibility to use whatever the user wants similar to the other operating system. The company also segments the market based on geographical segmentation. It includes America, Japan, and Europe which acts as the core regions for the business process. The company also has retail stores in the particular regions for operating and overseeing the activities at different parts of the world. The integrated system of the Apple Inc helps to drive its entire business model at the same time. It provides the complete solution for the customers. Customer buying iPod will have to download music through iTunes. For most of the average users the computer provided are from Apple Mac. This creates a great control of the market with the complete solutions offered by the company to the market. The diversified product line from the company also gives a chance for the consumers to get introduced to the brand. Many people are not much interested in buying computers but may be able to afford or interested in buying iPhone or iPod. This is the core strategy for the Apple Inc. Management Assumptions The company is committed to provide the best user experience to the customers with its diversified product line ranging from internet, pc, networking, software and hardware. The company highly believes in the investment for research and development for more innovative approach for product development with the use of technologies (Apple Inc, 2010). The company is also very focused towards its new robust platform which will enable the use of third party digital contents accessible through iTunes Stores. Apple management believes that their product is mainly targeted towards the large population of next generation who are more brand conscious and ready to try new products. With the advancement of the web technology the online market store sales of the company is increasing at a very fast pace and is expected to be even better with more and more use of web technology in recent future. The laptop market growth is also growing thus the company will need to develop new models for the market to meet the demand of the customers. Apple is constantly expanding its business and developing better contact with the customer which is believed to be the best way to demonstrate their products and their features to the customers. In the fourth quarter of 2009 the company sold around 53.8 million units of smart phone and the management believes that demand for smart will even rise higher in the 2011. The mobile advertising technique of the company is expected to increase the sales potential across all the products of the company. Current Capabilities The core capabilities of Apple Inc can be referred as the major strength and weaknesses of the firm which are plays a vital role in developing and implementing strategies for the company for a sustainable growth and form a strong base in the competitive environment. The company’s strong operating performance have gained the confidence of the investors strengthen its position in the market. Strength The global presence of Apple Inc at various parts of America, Europe and Asia Pacific helps a lot in generating revenue from outside the domestic market i.e. US. The company has a very balanced existence in both matured as well as emerging market for a steady growth in the revenue of the company. It has a very strong financial performance in the last few years with remarkable growth in various sectors of its business. The strong operating profit margin of the company gained confidence amongst the investors to great extent. Brand image of Apple Inc. and brand awareness of the company is very high which plays a vital role to act as a barrier to the new entrants into the category and help the company to maintain premium pricing for its various products. The diversified product line from the company is another strong reason for the growth of the company. Apple doesn’t depend on any single product line for its business thus reduces the risk in business for successful implementation of strategies. Rather the profit margin can also be increased through cross selling of the different products of the company. Weaknesses The Return of Asset (RoA) for the firm is not very high and it managed to earn 4.7 % as compared to the industry level of 5.8 % in previous few years. The average return on investment is also significantly low in that period. This low return on investment can reduce confidence of investors to might affect the growth plans of the company. The company is also dependent on IBM for its various products. This dependency on single component may create trouble for the company if no alternatives are sorted out for easy flow of materials (Datamonitor, 2006, p. 19). Competitor Response In all the areas of business process Apple Inc face severe competition. Rapid innovation and technological growth introduces new products in all the sectors of the business portfolio. The lower prices of competitor products impose immense pressure on the company to gain its market share. The product features are also replicated by several competitors to compete with Apple products. Apple is mainly concentrated into the expansion of its mobile technologies and media devices. To compete in this intensified market the company believes in providing complete solution with superior innovation with the integrated approach of hardware and software for the customers. The core competence of Apple lays in its new innovation of products and its services for the market which results to profitability and operational success for the firm (Apple Inc, 2010). The quality of products and the target niche segment is the primary focus of the company for continuous growth in the competitive industry. Conclusion Apple Inc with the leadership of Steve Jobs is very strongly positioned into the market with its diversified product line. The High quality technology with the integrated technique of hardware and software gives a great flexibility for the firm to manage its profit margin from the various segments of its product line. Loyal customer and strength from the investors facilitates the process of innovation for the company to great extent. Apple Inc should implement strategies to improve its return of Assets to avoid risk and should also collaborate with more companies and industries to ease the supply process of the different components for the firm’s product. Reference Apple Inc. (2010). Business Strategy. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549. Retrieved on: August 16th 2011 from http://investor.apple.com/secfiling.cfm?filingID=1193125-10-238044&CIK=320193. Datamonitor. (2006). SWOT ANALYSIS. Apple Computer, Inc. Retrieved on: August 16th 2011 from http://www.alacra.com/acm/2009_sample.pdf. Read More