case study of the Apple Company

case study of the Apple Company

Introduction

Apple is an American multinational company that designs develops and sells electronics, online services, and computer software. The company’s products include iPhone smartphone, iPad tablet, and the Mac personal computer[1]. The company was founded by Steve Jobs and Ronald Wayne in the year 1976 and got incorporated as Apple Computer Inc. in January 1977, and its computer sales proliferated.  This paper develops a case study of the Apple Company and the management report analyzing the company[2].

The Apple Company was established by Steve Jobs, Steve Wozniak, and Ronald Wayne as a small company that manufactures personal computers. Wayne, however, sold his share one year later for $800 a new investor by the name Mike Markkula became part of the company and helped the company with business expenses needed for its expansion[3]. The company’s revenues were growing at a reasonable rate and doubling after every four months for the first four years. The company kept growing and hence introduced the new versions of computers in 1977 and 1980[4]. It went public, and its shares were eventually offered in the stock market.  In 1984, the company launched Macintosh, which sold well at the beginning, but there was a failure in growth a few months after. The reason behind the failure was due to the price and limited use. This, however, changed with the introduction of LaserWriter and PageMaker, an affordable printer publishing software. A year later, there was a power-related conflict between Jobs and the CEO, John Sculley[5]

Internal and external environment analysis

Internal environment Analysis

The internal study summarizes those critical issues from the business environment and the strategic capability of an organization that is most likely to impact strategy development.  In this case, the strengths and the weaknesses are part of the internal environment within the business. At the same time, the opportunities and the threats are part of the external environment[6].

The strengths analysis proves that Apple Inc. is endorsed by a significant brand name; this means that the company has a strong recognition because of its aggressive nature of founder towards innovation and creativity. The company has also been able to elevate the sales as of practiced and skilled sales personals[7]. It has been able to position its direct sales branches at high traffic locations, which has been able to strengthen its revenues[8].  The other strength of the apple is based on brand equity. Naturally, being the global leadership position, the brand’s equity must be higher. The apple brad is the global number one values brand amongst all the companies globally, according to the report of 2016. It has remained one of the greatest and the market-leading brand due to the decency that exists in the distribution of its products[9]. Apple has more than 500 stores across 17 different countries globally. Besides this, the company sells through trade partners and other online channels and aspect, which makes it get to all the premium stores globally[10].

The company’s weaknesses

Being the world’s largest IT Company has responsibilities as well, the company is also facing problems in some areas. Basing on the internal analysis of Apple Inc., it is clear that the company had a strong strategy for the promotion of direct sales. Still, it is quite unfortunate that it lacks behind[11]. Being that they had only direct sales locations in only 13 countries[12]. Another weak area is its dependency on iPod and iPhone as their primary contribution towards the overall sales. It is also true that its products are luxury products as carriers a premium price. Therefore ordinary people would prefer to spend money on the more productive places rather than buying[13]. Lastly, the biggest weakness is the declining sales that continuously lead to diminishing market share. Being the leading company’s apple has a  significant market share and the most excellent customer expectation of all other companies in the technology industry[14]. However, there is a more significant challenge of meeting the individual’s needs of those customers who are ever expecting something new faster than the company can produce innovate. This has impacted on the business profitability in the recent days[15].

External environment analysis

The Porter Five Forces Analysis

The Porter Five Forces Analysis was used to analyze the strengths and weaknesses of Apple and the threats and opportunities in the competitive market. The Apple strategies are based on the need for addressing the forces in the external business environment. The Five Forces Model points the following strengths or intensities of the external factors in the company’s industry environment[16].

Competitive Rivalry

 Apple Company is facing the strong force of competition, this component of Porter’s Five Forces analysis model that determines the intensities of the influence that the competitors have on each other. The companies like LG and Samsung significantly compete with the Apple[17]. This kind of aggressive competition imposes a strong force in the Apple industry environment. In product differentiation, the available products that are present in the market are having the similarity of fulfilling their specific purposes. In Porter’s Five Forces model, such conditions create a potent force by making it easy for the consumers to easily switch to other providers or sellers[18]. Secondly, the low switching cost means that it would be easy for consumers to move from Apple to other brands, basing on the price, function, and other related concerns. The overall combination of the external factors in this part of Five Forces analysis would, therefore, lead to a fierce competitive rivalry which is the most crucial consideration in the company’s strategic management

Bargaining power of the customers

Another strong force that affects the Apple Company is the bargaining power of the customers. In this component of Porter’s Five Force model determines precisely how the customers make purchase decisions and other related preferences and perceptions impact the business. It is, however, straightforward for the buyers to change brands hence making them powerful in compelling the company to ensure the customers’ satisfaction[19]. On the other hand, the company’s total revenue is significant compared to the buyer’s somehow small purchase. Porter’s Five Forces describes that this condition renders the buyers weak at the individual level[20]. On the other hand, the availability of detailed comparative information about the competing products compels the buyers to shift from one provider to another. This model analysis tells that the company should include the bargaining power of the buyers as one of the most critical strategic variables in the business[21].

Bargaining power of Apple’s suppliers

The Apple Company experiences the weak force of the supplier’s bargaining power. The component of Porter’s Five Forces shows the supplier’s influence in imposing the critical demands on the company and the competitors. The global size of the company’s supply chain enables it to get access to several suppliers worldwide. The Porter’s Five Forces analysis context shows the resulting more significant number of the suppliers is external that shows the weak to moderate force against the company[22]. This external factor shows the presence of a small number of big companies like Apple and LG in contrast to a significant number of medium-sized and big suppliers. Therefore this section of Porter’s Five Forces determines that the supplier’s bargaining power is a small issue in the development of Apple’s strategies for the supply chain management.

Threat of Substitutes

The competitive threat of substitution is a weak force that affects the Apple Inc. computing technology and online services business. This component of Porter’s Five Forces, therefore, determines the strength of substitute products in customers’ attraction. There is the availability of some substitutes for Apple products in the market. For instance, instead of buyers using the iPhones, they can opt to use digital cameras in taking pictures[23]. In Porter’s Five Force model analysis, this kind of external force applies a moderate effect in the company environment. These substitutes have limited features and, therefore, low-performance[24]. Several customers may opt to use Apple products based on advanced functions and convenience. This condition, therefore, makes the substitution a weak force in impacting Apple’s business. This section of Porter’s Five Force analysis determines that Apple does not necessarily need to prioritize the substitution threat specifically in management decisions in the business processes like marketing and market positioning.

The threat of new entrants

Apple is experiencing a moderate force of the new entrants’ risk. This component of the Porter’s Five Force analysis determines the effect and the possibility of the new competitors that enter the market. New entrants apply a moderate force basing on the external factors like high capital requirements and high cost of brand development. In establishing a business that can compete against Apple would need a lot of capital. Secondly, it is highly expensive to create a brand that can compete with Apple. However, other large companies have the financial ability to make market entry[25]. For instance, Google has made a breakthrough by creating products like Nexus smartphones. This shows that there are large companies that are able to compete with Apple Inc. This component of the Porter’s Five Force determines that Apple Inc. must try to maintain the competitive advantage mainly through marketing and innovation to remain strong against the new entrants’ moderate competitive advantage[26].

Apple Company’s Sustainable Competitive Advantage

 The company has succeeded in sustaining, maintaining its leadership position in the upper-end smartphone market. They have maintained huge margins, a correct loyal base, and has been able to generate high amounts of hype with each smartphone they release. Many investors and consumers have been able to pay close attention to the news release that they make. The company has also created a durable brand quality. All these have been able to lead to a competitive advantage, but seemingly they are beginning to erode. However, maintaining this competitive advantage will be the high key to keeping their position as a leader in the market. The VRIO framework is used to determine whether the company has a sustainable competitive advantage[27].

Apple’s Value looks at the opportunities that Apple is exploiting or what threats are the company mitigating. The company is selling items of Value because they seal with vast amounts of products. To continue being valuable, the company must keep coming with excellent outcomes. Apple’s Rarity is determined by the resources used to make Apple products. Apple’s beautiful OS is no longer rarity, and the company has, however, succeeded because Android has historically not been as intuitive or clean. This has been a significant threat to Apple. However, Android phones will shake their reputation after some time. Once this is done, the advantage will be no more.

The cost of imitating apple network effect is hard, just by decreasing the impact would somehow have some powerful adverse effects on Apple.one very competitive advantage that is extremely hard imitating is the brand. A company with a strong brand like Apple takes years to build, considering many factors like the impeccable design. The ability of Apple to capture Value is quite unquestionable. It has been able to achieve 90% of the smartphone market profits with around $214b in sales in the year 2016. Currently, Apple certainly has a competitive advantage, but the sustainability of this advantage is a severe question[28].

Strategic Recommendations Based on Analysis

Both the internal and external analysis discussed above indicate that the company has significant strengths that can effectively manage it address organizational weaknesses. Apple can also use these strengths it has to exploit the key opportunities such as the network distribution expansion. Alternatively, the company can use its reliable brand name to develop and launch new products line. However, the company is facing aggressive competition and imitation threats; these are some of the critical challenges affecting players in the global market for consumer electronics, computer hardware, and software[29].

Basing on the strategic issues highlighted in this analysis of the Apple Company, a recommendation is there made for the company to continue the rapid innovation and aggressiveness that are involved in the development of new products. This innovation is likely to reduce the adverse effects of mitigation on the revenues. It is also recommended that the company further try enhancing the automation of the production processes and adequately support the automation of its contract manufacturers[30]. Lastly, the company should try to establish a partnership with more distributors to improve the overall market reach of the company distribution network.

References

1. Sanchirico, C.W., 2014. As American as Apple Inc.: international tax and ownership nationality. Tax L. Rev., 68, p.207.
2. Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), pp.955-961.
3. Johnson, K., Li, Y., Phan, H., Singer, J. and Trinh, H., 2012. The Innovative Success that is Apple, Inc.
4. Heracleous, L., 2013. Quantum strategy at apple inc. Organizational Dynamics, 42(2), pp.92-99.
5. Kanagal, N.B., 2015. Innovation and product innovation in marketing strategy. Journal of Management and marketing research, 18(4).
6. Hill, M.E., 2012. Marketing strategy: the thinking involved. Sage.
7. Green, S., 2015. Apple. Bellwether Media.
8. Vergara, R.A.G., 2012. Samsung electronics and apple, inc.: A study in contrast in vertical integration in the 21st century. Am Int J Contemp Res, 2(9).
9. Miller, T. and Maxwell, R., 2016. Apple. In Global Media Giants(pp. 383-396). Routledge.
10. Jun, S. and Sung Park, S., 2013. Examining technological innovation of Apple using patent analysis. Industrial Management & Data Systems, 113(6), pp.890-907.
11. Amit, R. and Zott, C., 2012. Creating Value through business model innovation. 2012.
12. Kraemer, K.L., Linden, G. and Dedrick, J., 2011. Capturing Value in Global Networks: Apple’s iPad and iPhone. University of California, Irvine, University of California, Berkeley, y Syracuse University, NY. http://pcic. merage. uci. edu/papers/2011/value_iPad_iPhone. pdf. Consultado el, 15.
13. Laugesen, J. and Yuan, Y., 2010, June. What factors contributed to the success of Apple’s iPhone?. In 2010 Ninth International Conference on Mobile Business and 2010 Ninth Global Mobility Roundtable (ICMB-GMR)(pp. 91-99). IEEE.
14. Thomke, S.H. and Feinberg, B., 2009. Design thinking and innovation at Apple.
15. Heracleous, L., 2013. Quantum strategy at apple inc. Organizational Dynamics, 42(2), pp.92-99.
16. Wonglimpiyarat, J., 2012. Technology strategies and standard competition—Comparative innovation cases of Apple and Microsoft. The Journal of High Technology Management Research, 23(2), pp.90-102.
17. Linden, G., Dedrick, J. and Kraemer, K.L., 2011. Innovation and job creation in a global economy: The case of Apple’s iPod.  Int’l Com. & Econ., 3, p.223.
18. Linden, G., Kraemer, K.L. and Dedrick, J., 2007. Who captures Value in a global innovation system? The case of Apple’s iPod.
19. Rothaermel, F.T., 2017. Strategic management. New York, NY: McGraw-Hill Education.
20. Rosenbloom, B., 2012. Marketing channels. Cengage Learning.
21. Priest, J., & Johnson, D. (2015). Covert channel over Apple iBeacon. In Proceedings of the International Conference on Security and Management (SAM)(p. 51). The Steering Committee of The World Congress in Computer Science, Computer Engineering and Applied Computing (WorldComp).
22. Novac, O. C., Novac, M., Gordan, C., Berczes, T., & Bujdosó, G. 2017, June. Comparative study of Google Android, Apple iOS and Microsoft Windows phone mobile operating systems. In 2017 14th International Conference on Engineering of Modern Electric Systems (EMES)(pp. 154-159). IEEE.
23. Myers, C., & Fellow, K. 2014. Corporate Social Responsibility in the consumer electronics industry: A case study of Apple Inc. Resource document. Georgetown University, Edmund A. Walsh School of Foreign Service. http://lwp. georgetown. edu/wp-content/uploads/Connor-Myers. pdf. Accessed, 10.
24. IFIXIT, A. Apple iPhone 5s.
25. Higgins, T. 2015. Apple Wants to Start Producing Cars as Soon as 2020.
26. Machado, R., Cant, M. C., & Seaborne, H. 2014. Experiential marketing on brand advocacy: a mixed-method approach on global apple product users. International Business & Economics Research Journal (IBER), 13(5), 955-962.
27. Saardchom, N. 2014. Design patent war: Apple versus samsung. South Asian Journal of Business and Management Cases, 3(2), 221-228.
28. Backer, L. C. 2013. Transnational Corporations’ Outward Expression of Inward Self-Constitution: The Enforcement of Human Rights by Apple, Inc.  J. Global Legal Stud., 20, 805.
29. Backer, L. C. 2013. Transnational Corporations’ Outward Expression of Inward Self-Constitution: The Enforcement of Human Rights by Apple, Inc.  J. Global Legal Stud., 20, 805.
30. Yuan, Y., Wang, X., Hatab, S., Wang, Z., Wang, Y., Luo, Y., & Yue, T. 2014. Patulin reduction in apple juice by inactivated A licyclobacillus spp. Letters in applied microbiology, 59(6), 604-609.

[1] Sanchirico, C.W., 2014. As American as Apple Inc.: international tax and ownership nationality. Tax L. Rev., 68, p.207.

[2] Khan, U.A., Alam, M.N., and Alam, S., 2015. A critical analysis of the internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), pp.955-961.

[3] Johnson, K., Li, Y., Phan, H., Singer, J. and Trinh, H., 2012. The Innovative Success that is Apple, Inc.

[4] Heracleous, L., 2013. Quantum strategy at apple inc. Organizational Dynamics, 42(2), pp.92-99.

[5] Kanagal, N.B., 2015. Innovation and product innovation in the marketing strategy. Journal of Management and marketing research, 18(4).

[6] Hill, M.E., 2012. Marketing strategy: the thinking involved. Sage.

[7] Green, S., 2015. Apple. Bellwether Media.

[8] Vergara, R.A.G., 2012. Samsung electronics and apple, inc.: A study in contrast to vertical integration in the 21st century. Am Int J Contemp Res, 2(9).

[9] Miller, T. and Maxwell, R., 2016. Apple. In Global Media Giants (pp. 383-396). Routledge.

[10] Jun, S. and Sung Park, S., 2013. Examining technological innovation of Apple using patent analysis. Industrial Management & Data Systems, 113(6), pp.890-907.

[11] Amit, R. and Zott, C., 2012. Creating Value through business model innovation. 2012.

[12], Kraemer, K.L., Linden, G. and Dedrick, J., 2011. Capturing Value in Global Networks: Apple’s iPad and iPhone. University of California, Irvine, University of California, Berkeley, y Syracuse University, NY. http://pcic. merage. uci. edu/papers/2011/value_iPad_iPhone. pdf. Consultado el, 15.

[13] Laugesen, J. and Yuan, Y., 2010, June. What factors contributed to the success of Apple’s iPhone?. In 2010 Ninth International Conference on Mobile Business and 2010 Ninth Global Mobility Roundtable (ICMB-GMR) (pp. 91-99). IEEE.

[14] Thomke, S.H., and Feinberg, B., 2009. Design thinking and innovation at Apple.

[15] Heracleous, L., 2013. Quantum strategy at apple inc. Organizational Dynamics, 42(2), pp.92-99.

[16] Wonglimpiyarat, J., 2012. Technology strategies and regular competition—Comparative innovation cases of Apple and Microsoft. The Journal of High Technology Management Research, 23(2), pp.90-102.

[17] Linden, G., Dedrick, J. and Kraemer, K.L., 2011. Innovation and job creation in a global economy: The case of Apple’s iPod. J. Int’l Com. & Econ., 3, p.223.

[18] Linden, G., Kraemer, K.L. and Dedrick, J., 2007. Who captures value in a global innovation system? The case of Apple’s iPod.

[19] Rothaermel, F.T., 2017. Strategic management. New York, NY: McGraw-Hill Education.

[20] Rosenbloom, B., 2012. Marketing channels. Cengage Learning.

[21] Priest, J., & Johnson, D. (2015). Covert channel over Apple iBeacon. In Proceedings of the International Conference on Security and Management (SAM) (p. 51). The

[22] Novac, O. C., Novac, M., Gordan, C., Berczes, T., & Bujdosó, G. 2017, June. Comparative study of Google Android, Apple iOS, and Microsoft Windows Phone mobile operating systems. In 2017 14th International Conference on Engineering of Modern Electric Systems (EMES) (pp. 154-159). IEEE.

[23] years, C., & Fellow, K. 2014. Corporate Social Responsibility in the consumer electronics industry: A case study of Apple Inc. Resource document. Georgetown University, Edmund A. Walsh School of Foreign Service. http://lwp. georgetown. edu/wp-content/uploads/Connor-Myers. pdf. Accessed, 10.

[24] IFIXIT, A. Apple iPhone 5s.

[25] Higgins, T. 2015. Apple Wants to Start Producing Cars as Soon as 2020.

[26] Machado, R., Cant, M. C., & Seaborne, H. 2014. Experiential marketing on brand advocacy: a mixed-method approach to global apple product users. International Business & Economics Research Journal (IBER), 13(5), 955-962.

[27] Saardchom, N. 2014. Design patent war: Apple versus samsung. South Asian Journal of Business and Management Cases, 3(2), 221-228.

[28] Backer, L. C. 2013. Transnational Corporations’ Outward Expression of Inward Self-Constitution: The Enforcement of Human Rights by Apple, Inc. Ind. J. Global Legal Stud., 20, 805.

[29] Backer, L. C. 2013. Transnational Corporations’ Outward Expression of Inward Self-Constitution: The Enforcement of Human Rights by Apple, Inc. Ind. J. Global Legal Stud., 20, 805.

[30] Yuan, Y., Wang, X., Hatab, S., Wang, Z., Wang, Y., Luo, Y., & Yue, T. 2014. Patulin reduction in apple juice by inactivated A licyclobacillus spp. Letters in applied microbiology, 59(6), 604-609.