External Analysis
Discuss about the Platform Control During Battles For Market.
The company began in 1976 with specialization in computers and it has expanded and specializes in different categories of products. Its growth was accelerated when the company went public in 1980 and since then, the company has tremendously transformed in product development. In 1989, the company structure was re-organized and this led many of its top management team quite because of dissatisfaction. This was the time when management of the company was at test. In 1999, on the emergence of Steve Jobs, the management was transformed and Apple began to stand in the light of success. Steve Job was a restorative instrument to growth. The company since then has gone through transformation and diversification in products innovation. The organization’s leadership emphasizes on doing things in a different manner as opposed to the competitors. The coming of Cooks as the new CEO brought in another leadership transformation of democratic leadership and this has further moved the company to a different notch (Suggett, 2018). The report examines the strategic issues of the organization and begins external analysis which is followed by Porter’s five forces, the competitors, core competencies, business and corporate strategy, the threat, recommendation and end with a conclusion.
Political Factors
The creation of policies concerning free trade is not hindering Apple’s business strategies that have been created for some time, particularly with emerging nations. These policies have allowed the organization to distribute its products to different markets the world over (Dockalikova et al., 2014, p. 418). Furthermore, a large portion of the assembling plants for its products are done in other nations outside America (Fleisher and Bensoussan, 2015). It means that these nations like China and Korea have the stable political environment that permits business to thrive well. However, there are the tax policies and import limitations experienced in the assembling plants situated in other nations and are this additionally one of the issues that influence trade in these countries. The focus on the opportunities facilitate commerce with the emerging nations is valuable and profitable for the organization. The strategy provides Apple with opportunities to further distribute their products in different markets (Meade, 2013).
The stability of the economy of most emerging nations presents chances for the organization. Furthermore, the emerging nations are growing economically fast. For example, Asian has a high rate of economic growth and this present a significant opportunity for Apple to enhance sales in these business segments (Grant, 2016). In the examination of the economic effect on the business, the organization can unfavorably be affected by economic crisis and recession because of its pricing technique which is premium. The US inflation rates experienced can influence organization’s monetary reserve (Baker, 2014).
PESTEL Analysis
The pattern of the expanding prevalence among the people on the use of mobile is an opportunity for the organization to keep giving products usable with ease. The company has established a way to maximize this opportunity, for instance, through the creation of different products like the iPhone, Apple Watch among the many (Hasan and Ali, 2015). The company characterizes people’s way of life and the growing demands for Apple’s items have assisted the company in detailing techniques of opening establishments and invest heavily in emerging nations (Baker, 2014). However, there is an issue of coping with the changing needs of the market. Will the organization continue developing its products based on design and quality? The reason is that there are rapid and dynamic changing needs of the customers (Hasan and Ali, 2015).
With the current demand for Apple’s item, the element of innovation for Apple’s developed market. As the pacesetter, the organization continues to offer the remarkable and innovative product. Therefore, Apple has to concentrate on the inventiveness of its items and put emphasis on the life-cycle. Despite the fact that the organization spends a great deal on the innovative work, the rate of innovation changes and the way contenders are competing in terms of technology is not essential because Apple always lead in innovation (Grant, 2016).
Apple has constantly adopted an extensive strategy to reduce issues of environmental concerns and consider this as an important role. It has revealed for carbon footprint, however, it has not figured out how to lessen the footprint. The company uses proper waste disposal techniques (Baker, 2014). In addition, it is working in reusing electronic parts. With the rising changes in climate, the contamination related issues grows, the organization’s suitable way of dealing with the ecological issue is putting emphasis on the well-being cognizance presented by the products and is examined in lawful and socio-social effects (Meade, 2013).
Currently, many governments are getting to know the protection as well as privacy issues associated with innovation and this is a threat since it creates difficulties organizations in creating products that compromise of the transmission of private information. These regulations are stringent to the point that organization gets to threaten to the point of halting their pursuit of meeting the demand of customers with quality product. On the other hand, this is a factor that presents an opportunity for the organization to enhance its products includes and ensures the protection of privacy (Baker, 2014). Other legal encounters are right infringement by other organizations like Nokia, Samsung among others which present the organization with many lawsuits (Meade, 2013).
Porter’s Five Forces
Competitive Rivalry
The organization is experiencing a strong competition from the rivals because the intensity posed by competing players is high. The reason is rapid innovation, competitive advertising as well as imitation. Also, the customers are in a position to switch to products that are of low prices (Eaton et al., 2015, pp.217-243).
Bargaining Power of Buyers
There are strong forces as a result of cheap products from competitors which renders Apple’s products as expensive. Moreover, the small numbers of buyers who are able to buy Apple’s products are small. Therefore the company must incorporate the power of buyers as a variable in strategies development (Teece, 2014).
There are large numbers of suppliers supplying the organization with raw materials. It is, therefore, an advantage to the organization. The demand of these suppliers is weak (Ghazawneh and Henfridsson, 2013).
There are available substitute products to rival Apple’s products, however, the performance of these products are poor, thus rendering Apple’s products to still stand out in the market and hence favorable to many customers (Al?Aali and Teece, 2014).
New entrants into the mobile business have to put in the high capital in order to rival Apple and to spend a considerable amount in the development of a strong brand. However, there are potential organizations such as Google and Samsung who have the capacity to enter the new market and compete favorably with Apple (Haslam et al., 2013).
The analysis of Apple competitors is based done based on product category. In the iPhone product category, Samsung is leading in the market with market share of 21.0% followed by Apple at 12.5%, Huawei at 9.3%, Vivo at 5.9% Oppo at 7.1% and others comprise of 44.2%. In the iPad category, Apple is leading with a market share of 21.5% followed by Samsung, Amazon, Lenovo, Huawei, and others at 15.5%, 7.3%, 6.3%, 5.6% and 44.2% respectively (Jurevicius, 2017). The analysis shows that Apple is not the only the leader in the digital market. There are other strong players like Samsung and Lenovo who captured a larger market as compared to Apple.
Leadership and Innovation: The leadership has assumed a fundamental part of the company, Steve and Cooks employed a blended mix of leading styles like autocratic and democratic styles (Mao, Chen, and Li, 2013). They made the workers perform highly, improve and complete given work with quality. The combination of these two styles of leadership has put the organization at a high standard that no one can compete and hence become strength to the company (Taheri et al., 2014). Moreover, the innovation and the development of products as well as services through constant innovation imparted values for Apple Inc (den Hartigh et al., 2016).
Competitive Rivalry
Perfect Design and Usage: The Company’s items are novel in their design, utilization as well as quality. Every customer utilizing the company’s products have admiration for them and attest that the style, design, and features of these products are perfect. Additionally, these products are user-friendly as they are easy to learn and use. The organization continues to offer a remarkable and innovative product; therefore, the company concentrates on the inventiveness of quality products and putting emphasis on the life-cycle. The strong branding that the organization builds is strong and the products created are interrelated to each other which encourages customers to buy more than one of Apple’s products (Brewster, 2017)
Human Resources: In the course of launching their products, the organization has most of the things inbuilt with the use of their own resources. The company has a well-equipped and able team of human resources spanning from different expertise (Purce, 2014). It is exceptionally hard to change over a designed item to genuine and customization product, however, the company is able to perform this with flawlessness, very much developed and easy to use. The explanation for it is assets of employees which dynamic capacity that the company enjoys (Rugman and Verbeke, 2017).
High investment in R & D: As per pulse live, (2017), the organization is putting a lot of finances on research and development in order to improve its products as well as the product range focusing on four product segments where the demand is increasing thus calling for more investment. They concentrate on product depth as opposed to the breadth of the product. Additionally, there is increasing demand in the service segment like the Apple pay, App store, iCloud, etc. call for more investment to meet the growing massive user base; there is a bigger concentration on in-house technology in which the organization has control of product roadmap. Through this, they are endeavoring to maintain a higher degree of distinction and be unique among the players in the industry (Niu, 2017).
Product Diversification and Marketing Strategy: The organization in the pursuit of getting hold of the larger market diversified its product into different category range. It is at this point that there are varied products such as iPhone, iPad, Tablet among others. In addition, the service sector concentrates on different products like the Apple pay, the Apple care and App store among many (Rugman and Verbeke, 2017). The reason is to capture a different type of target segments in the market. The strategy employed in marketing take the advantage of superior technology, brand equity, brand loyalty, and premium pricing strategy (Pineda, 2017).
Bargaining Power of Buyers
The company uses cost leadership in the industry and concentrate product differentiation and this is seen through product functionality and design. It incorporates the constructing new retail stores as well as expanding the retail online stores and its network of distribution to achieve more clients and provide excellent sales and support post-sales understanding. Additionally, the organization uses iTunes Store to distribute and expand its digital content and applications. Moreover, the company set its competitive advantage by taking advantage of its product features and capabilities via the list of innovative products created (Meyer, 2017). In particular, a critical success of the company is its identification with the ecosystem, which has been empowered through the use vertical integration (Grayson and Hodges, 2017). The products of the organization are in synchronous with each other. Applications developed by the organization can interface well with numerous Apple gadgets and with no big differences in user interfaces; however similar products do not combine well with those of different organizations, in this way making a closed ecosystem to their products. Apple’s ecosystem makes exchanging costs for its clients to the opposition. Additionally, the company employs first-mover advantage as a competitive strategy which is challenging to the organization because it requires a long-term sustainability for a longer perspective (Linton, 2018). However, the innovative nature of the organization places this strategy at the forefront of the company endeavors to continually innovate and make distinctive products for the market. In the respect, the organization has placed the service business to the core of the business strategy where the service’s business revenue has grown and become the second income generator among Apple’s line of products (Dudovskiy, 2018).
Apple has a strong system of suppliers, as well as the stakeholders. It gives the organization an advantage. The organization possesses chip creation, controls fabricating, have strict control to over the programming models as well as workings on its stores (Klettner, Clarke and Boersma, 2014). The music and entertainment companies are the source of the media for the organization’s products. Additionally, the company has a group of approximately 6 million programming designers who are making applications for the products developed by the company. Therefore, the company has control of whole procedures beginning with development, manufacturing, and marketing. This is a strategy that cannot be matched by the competitors (Dobbs, 2014).
The company uses premium pricing for its items and limits discounts to wholesalers in order to have consistent prices in the entire market. The company strives in offering the clients good quality products that carry with it special features (Wheelen et al., 2017). On the other hand, the company uses high prices to give the impression that the products are of values with special advantages. This pricing strategy sets a good pace for the rival so that they continue struggling to create products that match Apple’s products and thus enabling customers to be presented with quality products across the board in the market (Gershon, 2013).
Bargaining Power of Suppliers
The organization strives to hold a larger market through diversification of its product into different category range. It is at this point that there are varied products such as iPhone, iPad, Tablet among others. Moreover, the development of products as well as services through constant innovation imparted values for Apple Inc. (Pineda, 2017). In addition, the service sector concentrates on different products like the Apple pay, the Apple care, and App store among many. The reason is to capture a different type of target segments in the market. The strategy employed in positioning take the advantage of superior technology, brand equity, brand loyalty, and premium pricing strategy. The strong branding that the organization builds is strong and the products created are interrelated to each other which encourages customers to buy more than one of Apple’s products.
In view of the PESTEL analysis undertaken by the organization, it is evident that the organization has a favorable macro-environment that presents good opportunities to thrive. It is the reason why the company has penetrated into major global segments and it is poised to continue leading in the mobile industry. In the analysis of the organization with use of Porters Five Forces Model, it is apparent that Apple still is moderately strong because the bargaining power of suppliers’ demand is weak; threat from substitutes is also weak and the new entrants to mobile business have to put in high capital in order to rival Apple which is impossible.
However, the organization must come up with strategies to deal with the legal issues such as right infringement by other organizations like Nokia, Samsung among others which present the organization with many lawsuits. Additionally, the company have a high task in dealing with strong competition from the rivals owing to their rapid and intense innovation, competitive advertising as well as imitation; the bargaining power of buyers that is strong as a result of cheap products from competitors which renders Apple’s products as expensive; and potential organizations such as Google and Samsung who have the capacity to enter into new market and compete favorable with Apple.
Conclusion
The organization has to make effective strategies by focusing on leadership and credibility and utilizing on the favorable macro-environment presented while working on the threats. Additionally, the organization has to penetrate into the emerging markets where the coverage is still limited. The organization has to look for ways of dealing with imitation and other legal suits that try to taint the company’s image. Apple’s fundamental corporate and business strategy concentrate on the development of best products and these strategies concur with the company’s strong product and brand creation. Therefore, the penetration strategy couple with its constant innovation must be a priority for the organization in order to remain resilience against competitors. The organization has penetrated into the market and captured a sizeable market share irrespective of stiff rivalry experienced through new entrants as well as potential competitors in the market.
Threat of Substitutes
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