Apple Inc. is globally renowned as one of the leading companies, especially for its specialization in the personal computers and consumer electronics industry. The company is most well-known for the iPod, a digital music player and Macintosh, a personal computer released in 1984. Co-founded by Steve Jobs in 1976, the company was named under Apple Computers Inc. and its initial product Apple IIe gained relative popularity and success. The release of the Macintosh revolutionized the computer experience with a graphical user interfere and a pointer devise called the ‘mouse’ was launched in the same year. The company went public in 1980 resulting in its owners gaining immediate wealth. However, its company’s success was not permanent. Since mid-1980s till mid-1990s, Apple Inc. went through a period of decline and Steve Jobs was fired from the company. Following Steve Job’s dismissal, he founded the company NeXT that was then purchased by Apple Inc. in 1985. Through this transaction, Apple Inc. has brought back Steve Jobs as part of the management team, which led to his position as CEO in 1997. (Linzmayer, 2004)
General Environment Analysis
An external research allows the company to ensure its place in the market, predict modify, proactively respond instead of responding, and impact of its own company for modify and development. The company functions an exterior research of two areas that is opinions are the company’s possibilities and risks.
Political Factors- the stability of issues relating to a country’s politics and how it affects companies and businesses in the particular region.
Economic Factors- local companies are affected by local economic conditions, regional firms by regional conditions, and national companies by national and international conditions.
Social Factors- sociocultural conditions, which can directly impact a business now and then. These conditions include demographics trends with factors relating to population size, age distribution, and ethnic mix. A company owns its success to its ability to adapt its product and services to sociocultural conditions.
Technological Factors- changes relating to technology. A company must assure its position and its ability to stay relevant and competitive in the industry by constantly reviewing the technological changes and applying it to its products and services.
Environmental Factors- weather and climate change.
Legal Factors- government policies and actions can have a significant impact on firms. (Kaplan Study Guide, 2014)
In 2007, Apple Inc. obtained 52% of its business outside the US. The company manufactures its products and components in countries outside the US like Ireland, China, Czech Republic and Cork. This would mean that political factors would play a significant part of the company’s business. Poor political relations among the countries including wars and terrorism would affect and influence the company’s business strongly as Apple Inc. holds no control over these factors. (CNetnews, 2012)
The global economic depression has impacted Apple Inc. significantly as the inflation rate increases followed by the unemployment rate in the country. As Apple Inc. products are considered as luxury products, this resulted in securing lesser customers. Moreover, the fluctuation of US dollar value affects the company’s products. To turn things around, Apple Inc. has since purchased foreign currencies, thus reducing economic effects on the company followed by an increase in revenue in the global market.
Throughout the history of Apple Inc, two aspects have been on the leading edge of the Apple Inc. products, the quality and the design of the products. Thus, globalization plays a very important role in Apple’s products. As the global cannot be imagined without the gadgets, thus Apple products have marked their presence on the worldwide market. Also, as the purchasing power of the common has risen in various markets across the global, the purchasing of luxury products have gone up. For examples, the iPhone, iPod, iPad and the most latest technology, iWatch. Having these products are considered as statues symbols in many societies which have also increased the sales of Apple Inc. products. Another big social influence to the Apple Inc products is the rapid growth of the music industry, which have improved markets over the cyber space as well. The main exclusive music store is the iTunes and it is ahead of any of their competitors. Thus, in all Apple products benefitted from the social aspects as it has started defining a modern individual lifestyle.
The product research and development field is a basic yet crucial requirement to survive in the consumer electronic industry. This is also mainly the reason that propels Apple Inc. to invest in the particular field, allowing Apple products to be at the top of new innovative products. Technology has been making huge leaps in improvement and the market has grown in size which leads to even more competitors, thus involving technical changes and reducing the product life cycle significantly. This enables Apple Inc. to constantly present newer products and therefore lead the market.
Apple’s Professional Group is responsible for setting and applying ecological guidelines. This group of experienced professionals is advises by group from across Apple organization, such as ecological technological innovation, service, functions features and provider liability. Apple’s global warming strategy is built into all features growth plans and performs an important role in the service process. During 2009, at the direction of the Professional Group, Apple Inc. became the first organization in the gadgets industry to report its entire as well as impact such as the impact of its products on the environment through consumer use. (Apple Inc, 2013)
Apple Inc. has faced legal issues particularly the legal case filed by fellow competitor Nokia. Nokia has stated that Apple Inc. has breached 13 additional patents by its products, namely the iPhone, iPad and iPod touch. In addition, Apple Inc. has been battling for its rights to the iPad trademark in China.
Competitive Environment Analysis
Intensity Of Rivalry Among Competitors
The Threat Of New Entrants
The Threat Of Substitutes
Bargaining Power Of Suppliers
Bargaining Power Of Customers
A Competition Environment would use the following 5 porters of external analysis, which refers to the intensity of rivalry among competitors, threat of new entrants and substitutes, and bargaining power of suppliers and customers. These forces would determine the intensity of competition, profitability and attractiveness of an industry. Such strategy should provide modification of these competitive forces and also assist in improving the company’s position in the industry.
Intensity Of Rivalry Among Competitors- competition with other competitors in the same field. The intensity of the competition are based on following factors – amount of competitors, growth of industry, usage of capacity, and amount of exit barriers.
The Threat Of New Entrants- New entrants to the market could be reduced through high capital requirements, government regulations and strong brand identification of a company.
The Threat Of Substitutes- Advancement of technology could initiate development of new products to supersede current products.
Bargaining Power Of Suppliers- A supplier’s bargaining power is based on several factors including sources of supply, amount of buyers, whether or not satisfaction of substitutes, and cost of switching suppliers.
Bargaining Power Of Customers- A customer’s bargaining power is based on several factors including amount of output purchased, importance of product, availability of substitutes, and standardization of product. (Kaplan Study Guide, 2014)
Porter’s 5 Forces Analysis
Intensity Of Rivalry Among Competitors:
While Apple focuses on a few high-end mobile devices, Samsung’s product breath helps it scoop up new, less affluent users who can be driven towards higher-margin devices, such as the phone-tablet combo Galaxy Note. In Asia, Sumsung is still in the stronger growth position when it comes to smartphones – bringing large screen models to the masses, re-introducing the pen with its Galaxy Note series and also, at the lower end, with its entry level Galaxy Y devices driving emerging markets like Indonesia and India (Reuters, 2012)
The Threat Of New Entrants:
Samsung’s vertical integration overpowers Apple Inc. as most parts of their devices are self-made components which give Samsung an advantage compared to other vendors like Apple who outsource close to all of device components. This results as a threat towards Apple Inc. (Techpinions, 2013)
The Threat Of Substitutes:
Samsung currently sells 59 Android smartphones in the United States compared to Apple who has only launched five iterations of its iPhone in only five years. This would mean that Samsung sells more than 11 times as much in just one country.
Bargaining Power Of Suppliers:
Google advertising system is a reliable source of income as the both ad-making partner and ad-receiving individual are both customer of Google. As long as Google maintain its marketing skills and good service with the search product and advertising system. Google will continue to increase its revenue of the company.
Bargaining Power Of Customers:
Most Google’s revenue us earn through Google Advertising system. Where customer pay Google Inc. to advertise their company or product on website owned by Google or Google’s website partners. Google plays a important role in services and good business ethic allowing the customer to be satisfied and willing to pay for the advertising.
List a minimum of four strategic recommendations you believe the company could enact to avoid problems you have uncovered from the Porter’s or PESTEL analysis (400words)
Having a intense rivalry like samung, differentiation strategy must be used, Throught differentiation it will increase it’s market demand for their products, which increase the uniqueness and attractive factor to the consumer.
By offering a small number of product at their launch and thus increase the high demand of the supply, with that huge demand of the supply they are able to focus on the niche markert which offer the phone at premium pricing and thus creating a halo effect that makes the apple’s consumer wanting the newest Apple product.
Diversification Process – Acquisition
Knowing that music is an essential key for most consumer in the smart phone industry, by acquiring BEATS ELECTRONIC, it expand and gain good market control over his competitor in terms of audio.
A diversification growth strategy in which apple uses its current strengths to diversify into related product into another industry.
Having strong brand reputation which create customer’s loyalty and a high financial resources,
APPLE create a new search engine, which is call APPLE SEED SEARCH ENGINE it linked up to the safari web browser, APPLE’s own web browser, and integrate to apple system for user and it is able to compete with GOOGLE’S SEO and Microsoft’s BING SEO.