External and Internal Environmental Analysis of Apple - Research Paper Example

? External and Internal Environmental Analysis – Apple of the Contents INTRODUCTION 3 EXTERNAL ENVIRONMENT 3 INTERNAL ENVIRONMENT 4 Strengths 5 Weaknesses 5 Competitive Positioning 6 ORGANIZATIONAL STRUCTURE 6 References 8 INTRODUCTION Apple Inc. is an international organization originating from America. It was founded by Steve Jobs in 1976 (Apple, 2013a).The company manufactures computer software and advanced technological electronics. Apple is considered one of the best organizations in terms of innovation and creativity. The current business environment is volatile and changing. In order to survive and thrive in this competitive environment, firms will have to monitor and analyze the internal and external environment conditions before taking any business decision. In the present research paper, an external and internal environment analysis of Apple has been done. EXTERNAL ENVIRONMENT External environment can be described as the factors, entities, conditions and events surrounding a firm, which influence its choices and activities. In a multinational organization, external environment analysis is essential. Apple is a global organization operating worldwide. Thus, external factors surrounding the parent company and the subsidiaries and branches will have an effect on the overall decision making process. An external environment is also known as an operating environment. Apple Corporation falls in the consumer electronics sector and is involved in designing and manufacturing of computer hardware, software and other computer related operations. The major external factors which influence the decision making process and the computer industry are: 1. Rising price competition 2. Rapid changes in technology 3. Changing consumer preference Slow market growth and growing competition from local brands are the major reason for the rise in price wars (Knox, 2004). The majority of emerging countries have witnessed a host of local brands, selling brands and variants akin to iPhones and smart phones. They are sold at low prices, and there is an increasing pressure among bigger brands to decrease their price. In case of developed countries, price competition arises because of availability of a large number of variants from the same brand. Thus, competitors such as Samsung, IBM, HP, etc. launch more versions in developed counties, thereby intensifying competition. Rapid changes in technology have decreased the shelf life of electronic goods. More and more companies are now able to replicate the available technologies. By adding a few features in those technologies, these brands gain a competitive advantage. Apple faces major competition in personal computers and mobile laptops. Apart from that, a slow market and product similarities among most of its product categories have also resulted in an increased competition. Changing consumer preferences is another external operating condition, which impacts the decision making process of Apple. Consumers have become more conscious as a result of the recent economic downturn. As a result, the sale of high-end smart phones and laptops has decreased, especially in emerging nations. Considering that emerging nations are the highest growth contributors for companies such as Apple, monitoring and establishing proper strategies will be crucial for a sustainable future growth. INTERNAL ENVIRONMENT Innovation and creativity have always been the internal strengths for Apple (Rufat-Latre, Muller, & Jones, 2010). Designing and developing most distinctive products and capturing a market share on the basis of innovation has made Apple one of the most renowned computer software companies of the world. However, with the advancement of technology and modern capabilities, it is not taking much time for other brands to imitate Apple’s design and launch in the market with added features. Apart from that, it is very difficult to patent each and every design which Apple produces. Technology and human resource can be described as the most important and crucial resources for Apple (Johannessen & Olsen, 2009). Apple has excelled in the area of innovation. Most of the Apple products are regarded as highly innovative and ahead of the industry average. The human resource is essential in the software industry. The organization has a few of the best executives in its management team. Customer responsiveness and customer relationship management are given prime importance following the delivery of products and services in the target market. This has also provided a set of loyal customers to the company. In order to boost the employee morale in this slow market phase, the company can introduce bonus schemes and employee engagement programs. The major strengths and weaknesses of the organization can be described as follows: Strengths The organization boasts of state-of-the-art facilities and factories and has recently acquired a few manufacturing firms to give a boost to its capital growth. The outbound logistics has been extremely successful in online ordering and the company follows a lean inventory management with an inventory sale of less than two days. In terms of marketing, the organization has been successful in establishing exclusive stores and expanding its national presence through a chain of stores. Most of Apple’s products such as iPhone and iMac have been successfully launched in the market. The main reason can be attributed to the high loyalty and perceived high quality of Apple’s products. Weaknesses The recent inconsistent market performance and reoccurring customer complaints have become a grey area for the organization (McCray, Gonzalez, & Darling, 2011) The inability to improve competitiveness in terms of costs and the increasing cost structure has also resulted in decreased overall profits and revenue generation by the country. The personal computer sector needs rebranding and repositioning due to its shrinking demand and market share. The organization has also started observing a decrease in the employee morale, mainly due to the slow market growth of market and cuts in bonuses and incentives. Competitive Positioning The competitive advantage of Apple can be described in terms of innovation, efficiency, and customer responsiveness (McMillan, 2010). Innovation Innovation can be considered as one of the strongest capabilities of Apple. The company has been successfully practicing innovation with an occasional launch of blockbuster products such as iPhone and iMac (Apple, 2013b; Apple, 2013c). This provides a competitive advantage in the market. Efficiency The efficiency of the company has been marred to a certain extent as a result of increasing cost. The cost of operations has always been high compared to other competitors. This also exerts pressure on keeping the cost of products higher than the industry average. The organization has tried reducing costs, but advertising and R&D costs have kept on increasing. To resolve this issue, the organization can opt for investment in other profitable businesses. Customer Responsiveness Apple has large following of loyal customers who are also regular buyers. The company should keep track of these customers and maintain a cardinal relationship with them. Since the use of PCs is constantly decreasing, the company is losing customers in this section. The company can maintain these customers by providing them with similar products with better features and facilities. ORGANIZATIONAL STRUCTURE The organizational structure of Apple can be divided into two categories: corporate management and retailer management. Corporate management deals with designing, production, launch, marketing and analysis of each of Apple’s products and services. It can be also described as the core of the organizational strategy. The overall strategy and evaluations of the marketing and business plans are done by this group. In order to increase organizational performance, Apple involves in group dynamics and employee engagement programs. Regular discussions and brain storming sessions help in increasing creativity and innovativeness in the organization. Retailer management is another important job for the organization. Passion for the products, an optimistic approach and excellent communication skills are a few of the prerequisites for this department (Nash, 2000). Since this job requires direct contact with the customers, sales and performance in terms of figures and numbers are crucial in order to find out the reliability and efficiency of the management (Mills, 2002). To increase the productivity of this department, the organization uses motivational schemes such as incentives, bonuses, and foreign trips. References Apple. (2013a). About us. Retrieved from http://www.apple.com/about/. Apple. (2013b). The new MacBook. Retrieved from http://www.apple.com/mac/. Apple. (2013c). Iphone 5. Retrieved from http://www.apple.com/iphone/. Johannessen, J. A., & Olsen, B. (2009). Systemic knowledge processes, innovation and sustainable competitive advantages. Kybernetes, 38(3/4), 559–580. Knox, S. (2004). Positioning and branding your organization. Journal of Product & Brand Management, 13(2), 105–115. McCray, J. P., Gonzalez, J. J., & Darling, J. P. (2011). Crisis management in smart phones: The case of Nokia vs Apple. European Business Review, 23(3), 240–255. McMillan, C. (2010). Five competitive forces of effective leadership and innovation. Journal of Business Strategy, 31(1), 11–22. Mills, G. (2002). Retail pricing strategies & market power. Australia: Melbourne Univ. Publishing. Nash, E. L. (2000). Direct marketing: strategy, planning, execution. New York: McGraw-Hill Professional. Rufat-Latre, J., Muller, A., & Jones, D. (2010). Delivering on the promise of open innovation. Strategy & Leadership, 38(6), 23–28. Read More