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Strategic Analysis of Apple Inc.
IntroductionApple Computer Company began with a single man’s concept, Steve Jobs, followed by his friendSteve Wozniak. Together, they created this colossal called Apple, in Steve’s house basement. Formany years Steve Jobs was considered No. 1 CEO, and the company is often seen as the world’smost excellent organization (Johnson et al, 2012).Apple’s effect on technology, culture and the environment was incredible. Apple is the reason forthe existence of the computer in our lives. For personal purposes, work, communication, or gaininginformation, the computer has completely changed the world as we knew it in 1976 (O’grady,2009).Apple Inc has transformed over the last years into a corporate that brings innovation intotechnology due to its continuous capacity to keep an adequate supply chain management(Lockamy, 2017).The organization’s activity is to design, manufacture and market products from smartphones andaccessories to other associated services (Apple 10-K, 2020).External Environment of Apple Inc•Industry OverviewAccording to Apple Inc.’s annual report, the company is involved in the production and design ofmobile phones, media devices, computers but also selling of a multitude of software and services(Johnson et al, 2012).For being the first US organization that has come to market capitalization of $700 billion, Applesurpassed two times giants such as Google or Microsoft simultaneously. Being one of thewealthiest and most emblematic companies of all times, Apple Inc has been evaluated in 2015 asthe most priceless brand in the world, at $247 billion. Apple transformed the products fromelectronic goods to devices with an elegant design (Clarke and Boersma, 2015).Having the reputation of a big company that its duties are to continuously create and evolve bybringing modernization in high-tech devices, Apple soon found its competitors in Google,Amazon, Microsoft and HP (Johnson et al, 2012).Even though the competition is tough, many companies have flourished within the industry. Thesuppliers and consumers are the two main important aspects that influence the impact on eachother’s competitors (Masi, 2009).•Industry Life CycleThe life of Apple products in these sectors is briefer than any device from other areas. For instance,without support from technology, a device could become old-fashioned in less than a year. Hence,the statistics demonstrate that technological advancement is a core element of Apple’s industry(Johnson et al, 2012).
•Porters Five Forces AnalysisMichael Porter’s five forces approach describes a strategy whose purpose is to analyze the firm’scapabilities in order to gain competitive dominance in the market. Characteristics such asconnections with supplier, trading power of buyers, risks of new entrants, threats of substituteproducts or services and competition from existing firms could influence the company’s strategiesand position (Wonglimpiyarat, 2012).Competition from new entrants–Low – Potential competitors find obstacles to completelyunderstand the market. Apple’s attention is oriented to a niche category and a specific type ofclient. The company’s mindset to use manufacturing strategy for contracts helps it save anyunneeded spending. Even though copyrights and patents issues are low, the risk of losing suppliersstill exists. (Khan, Alam and Alam, 2015).Threats for substitute–Moderate – Similar industry companies have the potential to producesimilar goods in terms of functionality. Therefore, Apple’s products have a lack of unicitycompared with rivals such as Sony, Dell, Samsung or Google. New characteristics that othercompanies brought to their product surpass Apple. For this reason, the clients tend go for othercompany due to its smaller prices. In order for Apple to win extra market share, more innovationis required. (Zhang, 2018).Buyer bargaining power–Strong – The influence and variety of the customers could be veryhigh. Due to their diversity and expectations, the impact creates difficulties for manufacturers.Hence, manufacturers take advantage on customers by using loyalty and proprietary systems thatcan result to the retention of them (Masi, 2009).Supplier bargaining power–Low – Many companies are manufacturing and bringing togetherparts that are required for devices. A significant amount of them could produce suitablecomponents in terms of quality. Hence, in terms of buying products from another supplier, bigcompanies’ switching cost will be at minimum (Jijin, 2013).Competition from rival sellers–Strong – For a company like Apple,the competitors are directlyproportional with it.For instance, in PC’s industry, Apple’s rivals are Asus, Acer and HewlettPackard while in mobile computing production are Samsung and Google. Operating systems suchas Android run in many tablets and phones. Although the company faces rough competitors, it isstill bringing excellence through their products (Vasilaki and Tsakalidis, 2018).•Possible External Risks in Supply ChainThe analysis of Apple Inc. Supply Chain involves risks such as business climate, commercial,logistics, corruption or country that could also affect the way that company strategy is working.Country riskcould affect the international interaction between a possible relationship of buyer-supplier due to their economic and political factors.Business climate riskis seen as part of countryrisk but determined by factors such as legislation, religious or ethnic conflicts, governmentstrength, bureaucracy, GDP or debt.Commercial riskdescribes the interplay between the companyand country features due to country discrepancy in impartiality and doubt.Logistics riskindicatesthe level of a country’s capabilities to provide the essentials for a company to accomplish itsactivities related to transport, delivery or warehousing.Corruption riskrefers to country’sinstitutions where corruption is applied in a bigger extent in order to control the budgetarymechanisms of that country (Lockamy, 2017)