Strategic Analysis of Apple Company

Strategic Analysis of Apple Company

Introduction

Apple Inc. is the world’s leading American multi-million company founded in 1976 by courtesy of Steve Wozniak and Steve Jobs (Finkle and Mallin, 2010). The company is renowned for the world’s popular smartphone, the iPhone. It also produces iCloud, iPod, iPad, MacBook, and owns iTunes, which is an application to download music. The company is based in Cupertino, California and comprises about 123,000 full-time employees operating around 450 Apple stores (Johnson et al., 2012). The paper seeks to address the reason behind this success by analyzing Apple’s external and internal environment strategy using PESTLE, SWOT and marketing mix. Additionally, the paper provides a comparative analysis of its market share with Samsung as a rival in the industry.

Internal Environmental analysis

SWOT Analysis

Strengths

The company has a robust financial position, with net sales of 162.90 billion (“Apple,” n.d.). Apple has also witnessed the Mac sales shoot since the launch of MacBook Pro (Akareem, n.d.). It is at the world’s leading valuable brand on Forbes list followed by Google recording net sales of 29 Billion in 2017 (CALANOG, 2019). In 2018 it was declared a trillion-dollar public corporate with a share price surge pushing it beyond the valuation landmark (Badkar and Bradshaw, 2018). It also has a skilful retailer strategy with 325 stores in 11 nations and 87 of them outside the U.S. (Yoffie and Baldwin, 2018). Product differentiation is a top notch-it stands out to be the best with Apple products having an iOS that makes it immune to hackers and viruses (Sokolov et al., 2013). According to Johnson et al., (2012), the company is gaining a rapid steady rise enjoying the better sales of Macs and iPhones (Lashinsky, 2012a).   .

Weakness

The premium image is deemed a luxurious and an ordinary person will not spend money on it (Khan et al., 2015).  It creates pressure on design and quality for any new brand that surpasses the expectations. Any fault leads to frustrations. Similarly, expensive products imply limited market access, which can affect the brand during low seasons (Sadeghi, 2012. The company has demonstrated dependency on specific products like the iPod and iPhone (Masi, 2009). Despite an excellent market scheme, Apple is still lagging by having direct trade channels with only 13 countries (“Document,” n.d.).

The Marketing Mix (4Ps)

Apple’s marketing mix is an indicator of how the company strives to meet the demands of the standards of the services locally and globally (Haque, 2017). It is mainly based on four key aspects which are price, promotion, place and product.

Product Mix

This aspect evaluates the company’s output in terms of services and goods. Apple’s goods are ever-growing creating room for penetration into non-IT services and products. The essential products include cloud services, accessories, software, digital content, Apple TV, iPhone, iPad, iPod and Mac (Calazans, n.d.).

Place

Apple constitutes company-owned locations as well as third party persons to supply the products (Madichie, 2010). In this case, Apple stores are physical locations which offer MacBook units and tangential devices for other firms (Lashinsky, 2012b). Similarly, customers can purchase electronics on the company’s website and online stores for mobile and desktop (Abdelsamad et al., n.d.). Digital channels help in optimization of international market outreach (Harper et al., 2015; Smithson, 2015).

Promotional Mix

Apple wholly involves communication techniques used by firms to reach their customers (Hasan, 2013). The company achieves this through public relations, sales promotion, personal selling and advertising. It advertises products on technological news sites as well as Google digital network (Abdelsamad et al., n.d.). Additionally, Apple participates in initiatives like ConnectED to boost formal education results while promoting its products and business to reach customers worldwide.

Pricing Strategy

This component sets price points and ranges for the products. Apple incorporates premium by setting their prices high to maximize profit margins and secure competitiveness (Kraemer et al., 2011). In freemium, some products are costless, but consumers are charged for more and advanced features. Mostly, it makes the most out of creative innovation and branding.

External Environment Analysis

Opportunities

Main customers of Apple Inc. include government organizations, large enterprises and people in the business (Montgomerie and Roscoe, 2013). It is time for Apple’s expansion to tap much from the corporate world (Calazans, n.d.). The customers’ loyalty is also a plus to the firm. Based on Goldman Sachs’ survey of May 2012, 88% of the consumers will stick on the same brand till the launch of a new device. Besides, 21% of them will buy the product irrespective of the price (Simko, n.d.).

Threats

In this case, the attention is given to the potential threats that Apple may experience from its competitors. Some of the risks include increased labour costs in certain countries, imitation and aggressive competition (Khan et al., 2015). Apple’s most significant competitor is Samsung, which is also undergoing rapid innovation. With replicas, many multinational and local firms have imitated the features and design of Apple products which have negatively impacted the brand (Lombardo, 2015).

Fig 1 Summary of Apple Inc. SWOT analysis

PESTEL Model

Political

Apple Inc. is predisposed to many political issues since it has entered a contract with several suppliers, including Asia. A high per cent of sales contribute to the company is external. Apple Inc. recently handled political issues arising from suicidal cases among workers in one of the potential supplier, Foxconn. In 2010, the company also reported two deaths and 16 casualties in an explosion in a manufacturer’s facility (Pun et al., 2016).

Economic Analysis

Economic factors are pertinent to focal business expansion and growth (Pezzey, 1992). Lower industrial standards imply lower sales and expenditures. Some time back, the world underwent a recession period that led to lower levels of income (Simko, n.d.). Times of economic turmoil makes even loyal customers gravitate to more affordable products (Lombardo, 2015). Apple Inc. is not immune to such cases. The regional sales in America summed up to 9% between 2012 and 2013 in comparison to 50% between 2011 and 2012 (“Document,” n.d.). Also, the stringing dollar affected the product’s profits, transportation cost and prices.

Social Analysis

Current social trends have affected the apple product in various ways. The millenary generation is significantly tech-savvy, and the company look forward to engaging the GenXers. Social aspects may also work against the product due to cultural diversity (Lombardo, 2015). However, it still receives some resistance in Asia, where 4G & 3G technology has not gained popularity yet (McCracken et al., 1991). Similarly, nations like do not readily accept items before seeing the thus, refusal of credit card services.

Technological Analysis

Currently, Apple Inc. is eminently known for its advanced technology, trendy product design and the aggressive futurist pioneer-Steve Jobs (Khan et al., 2015). It had secured customer loyalty and brand recognition from its diversification strategy (its laptops, tablets, television, music players, mobile phones and computers). It gives one a competitive advantage depending on utilization (Miller and Maxwell, 2016). Apple Inc. is a technology that has to live up its name. Apple’ unique technology led to consumer retention of 49% between 2012 and 2013 (“Apple,” n.d.).

Environmental Analysis

In Apple’s case, the company’s macro-environment offers opportunities for business growth and energy efficiency. Business sustainability is more concerned with the ability of the firms to adopt sustainable operations based on awareness of adverse environmental effects on the business (Clarke and Boersma, 2017). The ecological trend is geared towards strengthening the corporate’s brand (Kush, n.d.). Apple Inc. is expected to incur iPhone shortages due to Coronavirus outbreak in china where they are produced (Neate, 2020).

Legal Factors

Laws and regulations may impact this company by increasing privacy control or pose policy challenges on practice (Chan et al., 2013). The government pressure on security and privacy has increased privacy regulations on Apple (Sanchirico, 2014). Apple faces legal matters associated with its policies and practices, especially net sales services (Zhang, 2017). For instance, the company has faced legal battles and intense criticism in the United States, Europe and Australia.

Comparative Analysis between Apple Inc. and Samsung

The technology industry is among the most competitive sectors across the world. Innovation, creativity and degree of intake in the level of technology are classified as the significant factors that determine competitiveness in technology firm in the industry. The strategic marketing approach of Apple Inc. mobile phones have been ranked among the most successful across the world (Chen and Ann, 2016).

Cell Phone Market Share

According to Li and Wei (2019, Apple Inc. cell phones occupies 17% of the market share while Samsung has a market share of less than 23%. Comparatively, one of the significant competitive advantages of Apple Inc. is a popular and renowned brand across the world. Samsung prices, on the other hand, are more competitive, posing a significant threat to apple in the Cell Phone sector (Vergara, 2012).

Fig 2 Cell phones Shipment global market share (IDC 2019).

Tablet Market Share

Apple Inc. globally is ranked among the most competitive companies in the distribution of tablets. The company was estimated to have a tablet market share of more than 33% in the US. Brand name, tailored products and modern marketing approaches are classified as the significant incentives that have contributed to the success of the broader market share. Samsung, on the other hand, in 2019, had a market share of tablets of 17% in the United States. It was estimated that Apples Brand’s mix contributed more than 36% of the market share while the Samsung brand committed to a tune of 8 per cent of Samsung’s product mix (Yun, Lee and Aoshima, 2019).

Fig 3 Global Tablet market share analysis (IDC, 2018).

Laptop Market Share

This is one of the most competitive sectors in the industry. Samsung laptop occupies larger market share compared to the rivals Apple Inc. is estimated to have a market share of the less than 18% of the entire market. Apple marketing strategic approaches and brand name are classified among the significant competitive advantages over Samsung Company (Li and Wei, 2019).

Conclusion

Conclusively, Samsung is the leading cell phone producer across the globe. The company marketing approach and customer services are more competitive compared to Apple as its major rival in the industry. Apple has a brilliant marketing strategy that makes it a top-notch in the technological world. Samsung marketing strategies are limited in different market zones, while Apple Inc. brand has been linked with the success of the company over the years. However, Apple Inc. should be developed and review its pricing strategy to increase access and restructure the human resource terms and conditions to avoid excess turn over.

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