Strategic Manufacturing Management Report: Apple Inc. Market Analysis

This report provides a comprehensive analysis of Apple Inc.'s market position and strategic manufacturing management. It begins with an introduction to Apple Inc., its products, and the consumer electronics industry, highlighting its revenue and market share. The report delves into the key components affecting product functionality, such as quality and cost control, product design, and software. A detailed market analysis explores Apple's suppliers, competitor products, customer preferences, and the role of government. The application of Porter's Five Forces framework assesses the threats of new entrants, competitors, and substitutes, as well as the bargaining power of buyers and suppliers within the consumer electronics market. The report aims to provide a thorough understanding of Apple's strategic approach and market dynamics.

Apple Inc.

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Introduction
Strategic manufacturing management is method of taking the best decision on structure and
infrastructure that must be coordinated and support the competitive strategy. In
manufacturing organisation, management of the process is necessary for the effective results.
It is essential for a company to analyse the environment before taking the decision regarding
the best decision for the organisation. The organisation develops the strategies to attain the
market share by gaining the competitive advantage (Morden, 2016). It is essential for the
companies to analyse the environment before developing the effective strategies. There are
many strategic tools which can be used by the companies to analyse the market environment
such as Porters Five Forces Framework, PESTLE Analysis, and SWOT Analysis. These tools
help to analyse the factors which affect the policies and environment of the organisation such
as political, competitor’s behaviour of suppliers and many others. In this report, Apple Inc.
has been taken into consideration to analyse the environment of the company to develop the
appropriate strategies.
Overview of Company and Industry
Apple Inc. is an American multinational technology company which has headquarters
established in Cupertino, and California. It was founded in 1979 by the owner of Steve Jobs,
Steve Wozniak and Ronald Wayne. It comes under the top four technology companies such
as Amazon, Google, and Facebook. The company provide the technology products to the
consumer such as the iPhone smartphones, the Mac personal computer, the iPad tablet
computer, the Apple Watch smart watch, the Apple TV digital media player, the iPod
portable media player, and the HomePod smart speaker. In the year of 2016, the company
earned high revenues for an amount of $241 Billion. It is one of the world’s richest
companies in the industry and as per forbes, it was marked as the most valuable company in

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the market. The company operates under different industries as it offers different services to
consumers such as consumer electronics, Computer hardware, Digital distribution, corporate
venture capital and many others. It is the first company of US whose value is over US $1
trillion. It is the world’s third largest company in terms of manufacturing of Phones after
Samsung and Huwaei (Reuters, 2018).
In this report, Consumer electronics has been taken to analyse the market of the company.
There are many products of electronics which is offered by the company to its consumers
such as iPhone, iPad, Mac, iPod and now it is also offering the Apple watch to its consumers.
Consumer electronic industry has become an essential part of the consumer’s life because
these products are used by the consumers in their daily life routine. It has been seen that the
market is growing rapidly in the past few years. It is also expected that the industry will also
grow in the near future with the rapid growth. Further it is expected that the revenue of the
industry will grow to $2976.1Bn. Consumer electronic industry became the primary choice
for the middle class and upper class due to extensive use of smart electronic devices. The
global consumer electronics market is segmented on the basis of device types. There are
mainly three device types such as consumer electronics device, smart home device, and
wearable device. These devices attract different type of consumers and the revenue amount of
the market is also based on these devices.

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(Source: Persistence Market Research, 2016)
The global consumer market is highly competitive in terms of demand and revenue. There are
many companies which operate in this industry such as Apple Inc., Samsung Electronics,
Sony Corporation, Pansonic Corporation and many others. The number of competitors are
increasing day by day due to strategic acquisition and merger procedure.
Key components that affect the product functionality
Apple Inc. manufactures the multiple products to provide the services to consumer. There are
many key components which affect the product functionality such as product design, quality
and cost control, Inventory control, Maintenance and Replacement of machines. Apple Inc. is
a technology company which offers the consumer’s electronics that is why, software is a
major component which the product functionality. These components discussed are as follow:
Quality and Cost control
Quality and cost controls are the two aspect of the product which has inverse relationship
with each other. These are the important factors in the competitive world because consumers

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always want the quality of product in the cheapest price (Ma, Kremer, and Li, 2017). It is a
well-known fact that improving the quality of services including the high cost. Product
functionality is based on the cost and quality. Apple Inc. is one of the companies which are
popular for their quality of services with the high prices. It is essential for the company to
maintain the balance between cost and quality of raw material such as Cobalt, sapphire glass,
aluminium and many others to develop the quality of product.
Selection of product design
Product Design is the major factor because it clearly defines the functions of the product.
This factor is also a technique which can be used by the company to attract the customer. It is
necessary to develop the design according to the requirement of the customer in order to
satisfy their needs and desires. The company manufactures the consumer’s electronics
product that is why it develops the design which is attractive with high features facilities.
Software
Apple Inc. manufactures the consumer electronics product that is why; it adopts the advance
technology which is considered as a key component that affects the product functionality.
The company uses the high technology during manufacturing the product to provide the
quality of services to consumers.
B-Market Analysis
Suppliers of the components
It has been seen that the Apple Inc. is operating the business in the wide area. There are many
consumer electronics products, which are offer by the company to consumers to satisfy their
demand. The company requires the large amount of raw material with the high quality to
develop the products. There are 1049 number of suppliers in the world who supply the raw

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material to the company such as Alps Electric Company Limited, Advanced semiconductor
engineering incorporated, 3M Company, Asahi Glass limited, Jabil Circuit Inc. and many
others.
The company build their relationship with their suppliers by developing the flexible policies.
It develops the policies for the suppliers by accessing the needs and wants at every point of
the supply chain (Tanskanen, and Aminoff, 2015). The code of conduct of Apple Inc.
consistently sets the bar high for safe workplaces and the environmental protections. The
company develops the strong relation with the suppliers to serve the quality of services to
consumers. Suppliers of the company provide the quality of services just because of healthy
environment and strong coordination between employees. Apple Inc. educates the employees
by organising the education programmes to more than 3.6 million of suppliers so that they
perform their function very well. The company measure the performance of suppliers and
analyse the opportunity for improvement (Apple, 2018).
Competitor’s products satisfaction
The company have the high value of goodwill due to which large number of companies beat
it by developing the similar kind of products. There are many competitors of the company
such as Samsung, Dell, Microsoft, and Sony. Samsung comes under the top competitors of
the company that always try to beat the Apple by attracting the large number of consumer.
Samsung compete the company in providing the similar function of smartphones in less
prices to satisfy the customer. Dell and Lenovo are also the top competitors that provide the
Laptop services with the similar function to satisfy the demand of consumers. Lenovo also
provides the high quality of services in Laptop to consumers (Bourne, 2015).
Different Function of competitor’s product

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It has been seen that the Samsung provides the similar product to consumer at the lower
prices that attract the customer. Apple provides the service of IOS application with high
security that satisfies the consumer need of installation of application. Samsung satisfy the
same need of consumers with the different function of play store but with less security.
Customer preference
Customer of Apple always prefers the high security in their product to protect themselves
from leakage the data. The high brand value product of the company is the other preference
of Apple consumers. Consumers of competitors prefer the various functions within the
reasonable prices (Cision, 2018).
The role of government
The Government support is received by Apple through many legal channels while requesting
for info and action as well. While manufacturing and selling the products, it is necessary for
the company to follow the applicable laws as well as statutes to request customer info and
data. The Apple Inc. is continuously working for higher transparency and data security
protection with the help of government support on behalf of their consumers. In this way,
Govt. do not have any direct access to Apple servers which allow Apple Inc. to be 100% sure
about the security and safety associated with their products. The reason is that Govt. supports
the way of Apple never creating a back door or master key entry to any of their products or
services (Apple, 2018).
C-Application of Porter Model

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Porters Five Forces Framework
It is a framework which is used by the company to identify the competition in the market.
This framework is classified in five factors such as threat of new entrants, threat of
competitors, threat of substitute, bargaining power of buyers and bargaining power of
suppliers (Grant, 2015).
(Source: Jurevicious, O. (2013)
The threat of new entrants
It has been analysed that the threat of new entrants of the company is weak due to high
capital requirement to enter the market. It is required for the company to enter the market
with the high capital amount. It is also observed that the brand value of existing companies is
high due to which it will difficult for new companies to enter the market and beat these
competitors. Apple Inc. is the largest technology company in the world, and it is also has
strong financial condition so it can easily adopt the advance technology. It is observed that
the new entrants of the company have high risk to enter this industry and require the high
capital amount. It is observed that the consumer electronic products are luxurious product that
is why it consumes high cost to enter the market.
The threat of competitors

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It has been analysed that the company has high threat of competitors in the market just
because of high competitive environment of the industry. There are many companies
operating under the same industry with the high value of goodwill. Samsung, Lenovo,
Microsoft, HP and Dell are the companies who offer the similar product to customer. In the
terms of product differentiation, there less number of different functions in the products of
these companies that is why; the competition is high among the competitors (Spoonauer,
2016). The company adopt the price strategy to attract the customer towards their services.
Different prices offers by the multiple companies due to which it is easy for the customer to
switch from the Apple brand to other brands. It is observed that the prices of Apple are high
due to its high security features and high brand value. But the competitors of the company
provide the similar product in the fewer prices as compare to Apple to gain the competitive
advantage (Mathooko, and Ogutu, 2015).
The threat of substitute
The threat of substitute is less because there are less number of products which satisfy the
customer needs and demands. There are some products in the market which can replace the
Apple products. Instead of using the iPhones, people can use the digital cameras to take the
picture. But most of the customer prefers the Apple products because these products have
limited features and functions. Apple products are more convenient and advanced functions
product that cannot be replaceable with the other products.
Bargaining Power of Suppliers
Bargaining power of suppliers is moderate due to which the supply chain network is
disturbed. As discussed above, there are many suppliers of Apple which provide the services
to the company for their own benefits because Apple develops the strong relationship with
their suppliers by providing the extra benefits. Apple Inc. is the company which provide the

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education to the employees of supplier and also encourage them to take participation in
environmental programs. Suppliers have many benefits to work with the company but it is
also observed that there are many other companies who are operating in similar products such
as Samsung, Lenovo and Hp. At the time of high demand, bargaining power of suppliers is
increases. That is why; the bargaining power of suppliers is moderate (Sillanpää, Shahzad,
and Sillanpää, 2015).
Bargaining power of buyers
Bargaining power of buyers is totally relies on their preferences. There are many customers
prefer brand name and high security products at any cost. But there are other some customers
who prefer the similar services of the product but in less prices and less security function.
Consumer income is a factor which affects the demand and preferences of customer towards
the organisation products because the products have high prices as compare to other
companies. As there are many competitors, the bargaining powers of buyers are high because
the switching cost of consumer is reduces. It is also observed that the consumers have many
options to switch with their demand. Bargaining power of buyers is high in the case of high
competition but it in the context of preferences the buyers has moderate power. That is why;
it can be said that the consumers of the company have moderate level of negotiation power
that can be changed with their situation.
Porters’ Generic Strategies
It is a framework which is used by the company to gain the competitive advantage in the
market. In this framework, there are three competitive strategies such as cost leadership,
diversification and focus strategy. The company can use these strategies in order to
differentiate their product from the other companies to gain the competitive advantage.

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(Source: Mind Tools, 2018)
Cost leadership strategy
Cost leadership strategy states that the company has to reduce it cost of production with the
high quality of services. It is observed that the products of the company have high prices as
per its brand value and image. There are many customer who does not afford the prices offers
by the company. Competitors of the company take the advantage by offering the lower prices
to consumers. It is recommended that the company has to reduce its prices by maintaining its
quality of services so that the large number of customer attract towards the product of
organisation. The company has strong relation with its suppliers so that it can take the
advantage of discount in raw material from them. The relationship with them helps to reduce
the cost with the high quality of services (Aithal, 2016).
Diversification strategy
Diversification strategy defines the differentiation in the product which makes the product
different from others (Lasserre, 2017). It is observed that there are many companies provide
the similar products in the market. It is recommended that the company has to adopt this
strategy to differentiate their product. The company has to adopt the advance technology
which cannot be copied by the other companies (David, and David, 2016). It also develops

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the different designs as compare to the other companies to develop the product different from
the competitors.
Focus strategy
This strategy refers that the company has to focus on its existing product by improving their
services to gain the competitive advantage. It has been seen that the company does not
promote their products in the market with the help of advertisement (Wheelen, Hunger,
Hoffman, and Bamford, 2017). It is recommended that the company has to adopt this strategy
and promote the products through various ways of advertisement. It can also change its
packaging to attract the teenager customers towards its product. Focus strategy helps the
company to enhance its product so that the large number of customer attract towards the
services (Sheehan, and Bruni-Bossio, 2015).
Conclusion
From the above analysis, it has been concluded that the company has to high scope to grab
the large market share in the world. As per the above discussion, it has been seen that the
industry is growing continuously with the rapid rate due to increasing demand of consumer
towards its services. It states that the company can gain the competitive advantage by
adopting the porter’s generic strategy. It has been analysed that there are many companies
that compete the company in the terms of revenue. It is recommended that cost leadership,
differentiation and focus strategy of porters helps it to gain the competitive advantage.
However, the company have high brand value which reduces its threat of new entrants and
substitute product but the competitors copied the design and develop the similar products
which is a disadvantage for the company. Differentiation strategy helps to differentiate the
product from the other companies. It is concluded that the company has high scope to survive
in the market.