OPERATIONS MANAGEMENT & STRATEGIC (PDF)

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Apple IPhone Strategic Analysis
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Executive Summary
The following report describes the strategic and Marketing Analysis of iPhone in the UK
market. The report also looks at various other aspects like Apple (iPhone’s parent company) and
its significance globally. The strategy of any business is the long-term planning to achieve its
mission and vision. It has multiple tools to evaluate any business. The whole structure of
strategic analysis includes understand mission- vision of company, external analysis, internal
analysis, SWOT analysis, generic business strategy, corporate governance and leadership.
Recession and slow economic growth can impact the sales of smartphone devices. UK’s
telecommunication infrastructure is very advanced.
The various smartphone market players are continuously suing each other for patents.
The major operating system competition is in between Android and iOS. Smartphones have
become part of human lives. Apple has managed to outpace other competitors in the market. The
main reasons behind this are its integrated operating system, high specification products and the
quality of hardware. Apple designs its own software for most of the products. The hardware of
Apple iPhone has provided ease of use and advanced technology.

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Table of Contents
Introduction.............................................................................................................................................................. 3
External Analysis (PESTLE Analysis)............................................................................................................. 4
External Analysis (5 force Porter Analysis of Telecom Industry).......................................................7
Internal Analysis..................................................................................................................................................... 8
SWOT Analysis of iPhone.................................................................................................................................. 10
Generic Strategy................................................................................................................................................... 12
Ansoff Matrix......................................................................................................................................................... 12
Recommendations............................................................................................................................................... 13
Conclusion............................................................................................................................................................... 14
References:............................................................................................................................................................. 15

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Introduction
Apple Inc. is an American Multinational Corporation headquartered in California. It
designs, develops and sells consumer electronics. Its main products include computers (Mac),
music players (iPod), smartphones (iPhone) and tablet computers (iPad). In this study, we are
focusing on one of its product line – iPhone in the UK market. The main software used by Apple
in its product lines are OSX, iOS and iTunes. The first generation iPhone was released in mid-
2007. The basic functionalities which an Apple iPhone possesses are multi-touch screen, virtual
keyboard, take photos, play music, send and receive email, text messages , GPS navigation,
record notes , visual voicemail , video games , social networking, reference work and download
mobile apps (Mani & Stoyanov, 2015). The first iPhone was considered as revolutionary or game
changer for the mobile industry. The further versions has captured appreciation and dominated
the market. IPhone’s success has contributed a lot in making Apple one of the most valuable
consumer electronics companies. The iPhone boosts the financials of Apple.UK market has
multiple smartphone players like RIM, Apple, Samsung etc. The market is very promising for
these well established players. The competitors try to offer new features and compete with Apple
(Ying, 2016). Some of its major competitors are Samsung and Research in Motion.
Analysis
The various sections for strategic analysis of Apple I Phone business can be discussed as:
External Analysis (PESTLE Analysis)
Political Analysis

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The UK government has taken monetary and fiscal initiatives to address the deteriorating
economy. It is taking a lot of measures to aid banks and help providing employment to people.
The tax rates are high for the higher income group. The government in UK is stable. It is very
successful in terms of application of rule of law, corruption control, regulatory quality and
government effectiveness. According to World Bank, the UK government ranks satisfactory.
Economic Analysis
Because of robust economic growth, the UK economy is continued to be benefitted.
Services sector is majorly dominated in the southern part of UK where as industrial activity is
more prominent in northern parts. There is decline in industrial sector but services sector has
flourished. This resulted in increase in contribution of services sector in UK’s GDP. The UK
banks try to increase the interest rate cut in order to boost lending. This further leads to
increasing the money supply in the market (Campbell-Kelly & Yang, 2015).
However the inflation rate in the country has been increased. The inflation rate is highly
dependent phenomenon based on oil prices, political activities like exit from EU, housing
services etc. All these things impact the transportation and Food and Beverage costs. The
unemployment rate is high in UK. The UK has current account deficit since 1990.The value of
currency is not very strong. The current price of smartphones is fair but there are some players
like iPhones which are considered expensive.
Social Factors:
In UK, working age population lies between 15 and 64.This accounts for more than 60%
of population of UK (Linge & Sutton, 2016). However, rapidly aging population is likely to
become issue in the near future. This leads to relatively shrinking work population in the near

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future. The health care system of UK is one of the most powerful social ventures. The
expenditure of public on healthcare system is very high in order to maintain the quality of life.
Coming over to the education, it is considered to be very high quality in UK. The infrastructure
is good also UK’s education is highly recognized around the world. There is relative disparity in
the income of people. So the standard of living is depreciated. Government is looking out of
measures in reducing poverty. Some mobile phone brands like Apple acts as status symbol.
Technological Factor:
A person in UK spends significant amount of time browsing the internet. The number of
subscribers to internet is continued to grow. It is mixture of cables, fiber optics and radio waves.
The mobile phone market will reach saturation point. The main competition is between Apple’s
iOS and Android. Innovation is growing.
Legal Analysis:
According to European Union Labor Laws, the working week is 48 hours in 7 days. The
Employment Act 2002, The Employment Rights Act 1996 and several other provisions outlaw
race, sex, religion, disability, sex orientation and age discrimination (Bhagavatula & Savvides,
2015). Also there is increase in patent lawsuits among the smartphones players.
Environment Analysis:
Defra is the government department taking care of environmental issues. One of the key
responsibility of Defra is to empower and aware people about environmental means. The
environmental policy in UK is based on principles of command. UK has stringent law for the
protection of environment. The company’s development strategy provides structure to its

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economic, social and ecological development. There are various initiatives for sustainable
development. The foundation of sustainable development includes natural resources, bio-
diversity, waste, health and quality of life (Clarke & Boersma, M. (2017). So it is the
responsibility of manufacturers to comply with standard norms.
External Analysis (5 force Porter Analysis of Telecom Industry)
The micro environment is comprised of firm’s supplier, distributor and competitors.5
force analysis helps in determining whether the industry is attractive enough or not. The model
consist of the five forces: Bargaining power of suppliers, bargaining power of Buyers, Threat of
new entrant, Existing rivalry and threat of substitutes.
Threat of New Entrant (LOW)
Any new company planning to enter into this product line should have intensive capital,
marketing and technological power to make an impact in the market. However, there are some
key players like Google who work regressively in Software development services. So it is easy
for them to enter into this product line. Many new entrants like Oneplus, ZTE have introduced
themselves into the market .Thus there are many big players which makes this industry
unattractive for the new entrant.
Threat from existing rivalry (High)
The mobile phone industry has witnessed a significant change. Major players in the
smartphone or mobile segment include Apple, Samsung, LG, and Research in Motion,
Microsoft, and Google etc. Other indirect players are Cirrus Logic and Qualcomm. The credit of
success of these companies goes to innovative and new modern approaches (McWilliams &

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Coughlin, 2015). These approaches help in improving user interface design and ease the use of
hardware. The intensive competition has led to increase in patent technology. The majority of
smartphone competition is related to touch screen, transmission of mobile data and data access.
Research in Motion dominates the mobile data access cluster and however iPhone dominates the
touch screen.
Threat of substitutes (low)
With additional features in smartphones like watch, camera, pagers, organizers along
with phone calls, smartphones are here to stay for long. The added functionalities from other
electronic devices make smartphones’ services sufficient for the mobile industry.
Bargaining power of Buyers (Medium)
The bargaining power of buyers’ is medium. Customers have relatively large amount of
options to choose from due to more companies like OnePlus coming in and are appreciated by
customers. Also there is always price war among the smartphone provider which gains good
attention from customers. There are ranges of customers who are loyal to particular brand.
Bargaining power of Buyers (Medium)
Mobile phone manufacturers depend on the suppliers so this makes the bargaining power
of suppliers medium. The manufacturers buy these quality components from suppliers at
competitive prices. Some components like Android operating system are open source.

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Internal Analysis
IPhone’s success is also contributed to its luxurious brand image globally. One of the
biggest aspects is pricing difference between IOS phones and Android. The Android
smartphones are considered to be affordable. Apple generally fills its pocket from high income
group. It is necessary to make a unique distinction in the market by using integrated technology,
attractive looks, good quality, value added services etc. Apple try to invest a lot in Research and
Development to bring new and unique products that will help in retaining its brand image. Some
customers are loyal to the brand. IPhones are considered unique and innovative. Apple’s tangible
resources include talented employees, software, hardware, suppliers and retail stores (Piao &
Kleiner, 2015). Its intangible resources include cash, brand name, knowledge, customer’s
database, unique design capabilities, innovation capabilities, powerful brand image. Apple
constitutes highly professional programmers, engineers and designers that produce award
winning software like iOS. There are large amount of apps on the Apple store designed
particularly for iPhone. They provide much functionality.
VRIO analysis of Apple iPhone
The VRIO analysis helps in analyzing company’s resources and capabilities. It checks
whether resources and capabilities are valuable, rare, inimitable and the company is organized
enough to exploit the resources or not. Based on this parameter, it evaluates whether resources
provide sustainable competitive advantage (SCA), temporary competitive advantage (TCA) or
competitive parity (CP) (Knott, 2015).
Resources/Capabilities
Of Apple iPhone
Does it have
Value?
Is it Rare? Is it
Inimitable
Is the
company
SCA, CP,
tCA

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Organized to
exploit the
resources
Brand Name Yes Yes No Yes SCA
Top Executives Yes Yes No Yes SCA
Innovation and
Technology skills
Yes Yes Yes Yes SCA
Supply Chain
Management
Yes No No Yes tCA
SWOT Analysis of iPhone
SWOT analysis helps in summarizing both external and internal analysis. It reflects the
strategic capability of the organization and issues from the business environment.
Strength:
Strong Brand Image: iPhone is considered as innovative product with high quality and
outstanding design. Apple’s brand image is growing at fast pace worldwide. It is one of the
recognized worldwide brands. The unique products and features reinforce its luxurious brand
image.
Financial Performance: Apple’s financial reports reflect its strong performance. The company is
generating good profits with its many key products like iPhone. In spite of its high prices the

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company has made mark worldwide. Strong financial performance leads to more investment in
Research and Development which further makes it very rich in terms of large number of patents.
Innovation: iPhone is the result of innovation spirit. Steve Jobs, the former CEO of Apple,
wanted to make a phone which consists of only one button (SHENG & CHEN, 2015). The result
is iPhone. Being innovative help the company to emerge in smartphones market. Innovation’s
spirit also contributed to Apple chain of high class retail, its iTunes stores. It is considered as one
of the most innovative companies in the world.
Weaknesses
Dependency on the new product: In order to stay relevant in the market, it is necessary for Apple
to launch new version of iPhone in the market at fast pace. This sometimes led to pressure on the
human resources to come out with new technologies and design which maintain its position of
differentiation in the market.
Dependency on the name of Steve Jobs: Steve Job was smart and effective CEO of Apple. It was
his vision which makes Apple one of the most renowned companies in the world. His absence
may lead to the fall of the company. The company still uses his brand image to reflect company’s
personality. Many people believe that post Steve Jobs the quality and the benchmark which
company used to give have suffered a lot (Kane, Y. I. (2015).
Opportunities
Market Growth: The Company is planning to create a mobile search engine better than its
competitor Google (Thao & Tsanthaiwo, 2017). It can improve the security of data generated on

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iPhone. It will help in maintaining the edge over the competitors. It also provides opportunity to
improve the market growth for its products.
Increase exposure in Market: With improving economy of many emerging markets, Apple has
good opportunity to introduce its products in these new markets. Mobile phones also lead to
increase in sales of its accessories. The company can make changes in the prices to attract wider
audience.
Threats
Strong Competition
Technology changes at a very fast rate. IPhones have been created by using innovative
technologies. This gives reputation to Apple in the iPhone industry. But Apple in this
smartphones segment has lot of competitors.
External forces
The government policies look very promising but certain legal and environmental laws may
always act as threat for the Apple. Sometimes the government tries to boost home grown
company and thus lead to increase in import rates. Also labor laws and environmental laws take
priority.
Generic Strategy
The company uses Product differentiation strategy .It is committed to unique design and
innovation that helps in differentiating it from the rest of the competitors. Few years back, the
market of mobile phones was dominated by players like Nokia, Samsung etc. but Apple

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introduced iPhone which has created a revolution in the market. Its design, looks, user interface
appealed to the customers (Sun & Cai, 2017). This has helped in gaining customer loyalty. Apple
also sets itself apart from its competitors by proving different application and software in its
iPhone’s hardware. The architecture of retail stores which is designed to attract the customers
helps it in differentiating from its competitors.
Ansoff Matrix
Ansoff matrix determines the product and marketing strategy followed by the Apple for iPhone.
It has 4 parameters (Dawes, 2018).
Market Penetration: It means selling existing products to existing markets. Apple tries to use this
by various marketing efforts and promotion strategies.
Product Development: This involves developing new product to sell to existing market. Apple
follows this as core growth strategy.
Market Development: It means finding new market for the existing products. Apple also looks at
this strategy. It tries to enter in many attractive markets like South East Asia etc.
Diversification: Selling new products to new market. Apple does not follow this strategy.
Recommendations
The study helps in analyzing various aspects of iPhones in UK market as well as globally.
It is necessary that Apple maintains its position in this growing competitive market. This is
possible only if it maintains the status quo of its product. Its recent launches, iphone8 and 10 are
not very much appreciated by customers. This proves that customers have high expectation from

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this world class company in terms of design, quality and technology. The company which has
Tim Cook as the CEO need to have innovative minds on the board who could replace Steve Jobs
in terms of its technical and leadership skills. The company needs to reduce dependency on Steve
Jobs’s Image. The company also needs to continuously monitor the growing competitors in the
market like ZTE etc. It needs to create different strategy to outpace such competitors. Its new
search engine against Google is good strategy to provide long term sustenance. Also company
can upgrade marketing and selling efforts to attract large number of customers. This includes
provide iPhones on installments, free accessories or apps etc. This may help customers to
perceive that iPhones are affordable (Bonk, 2015). The company also needs to come up with
fresh products with in reduced cycle team. This can be done by proper market research and
investment in highly skilled human resources.
Conclusion
IPhones are one of the most aspiring smartphones worldwide. The parent company Apple
is highly recognized and renowned. In UK market also iPhones are able to make a big impact.
They are one of the largest selling smart phones along with Samsung and RIM. The PESTLE
analysis UK has shown that market is promising except during low economic growth time and
various stringent laws for environmental and labor. It is seen that Apple has dependency on
suppliers but since it has large networks of suppliers so it lies in medium, range. It has loyal
customers. But this does not ignore the fact that market is competitive and customer’s switching
cost is low (Hassouna & AbouTrab, 2016). The company can introduce Artificial Intelligence
and Machine learning in its device to enjoy its dominance. However, there is no substitute of
smartphones so the company needs not to worry about this aspect. There are multiple resources
of the company which provide sustainable competitive edge to the company like its innovative

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spirit, its executives etc. (Minakov & Shiyanova, 2015). So the main threat to the company is its
competitors. The company uses all three marketing strategies i.e. Market penetration, product
development and market development. However, the generic strategy which company pays on is
product differentiation.

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References:
Bonk, C. (2015). The impact of Apple's communication and French and Finnish consumers'
product perceptions: case of the iPhone product.
Bhagavatula, C., Ur, B., Iacovino, K., Kywe, S. M., Cranor, L. F., & Savvides, M. (2015).
Biometric authentication on iphone and android: Usability, perceptions, and influences on
adoption. Proc. USEC, 1-2.
Campbell-Kelly, M., Garcia-Swartz, D., Lam, R., & Yang, Y. (2015). Economic and business
perspectives on smartphones as multi-sided platforms. Telecommunications policy, 39(8), 717-
734.
Clarke, T., & Boersma, M. (2017). The governance of global value chains: Unresolved human
rights, environmental and ethical dilemmas in the apple supply chain. Journal of Business
Ethics, 143(1), 111-131.
Dawes, J. (2018). The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems.
Hassouna, M., Tarhini, A., Elyas, T., & AbouTrab, M. S. (2016). Customer Churn in Mobile
Markets A Comparison of Techniques. arXiv preprint arXiv:1607.07792.
Kane, Y. I. (2015). Haunted Empire: Apple After Steve Jobs. Harper Business.
Knott, P. J. (2015). Does VRIO help managers evaluate a firm’s resources?. Management
Decision, 53(8), 1806-1822.
Linge, N., & Sutton, A. (2016). The heritage of 30 years of mobile communications in the
UK. Industrial Archaeology Review, 38(1), 2-18.