Apple's Environmental Analysis to Choose a Correct Competitive Strategy - Case Study Example

Running head: MARKETING PLAN REPORT Name Course Institution Tutor Date Contents Contents 2 Executive summary 3 Introduction 3 Main findings 4 Environmental analysis 4 Macro environment 4 Porters five analysis 5 Pestel analysis 6 The internal environment 7 McKinsey’s 7S analysis industry 7 Apple’s SWOT analysis 8 Strengths 8 Weaknesses 8 Opportunities 9 Threats 9 Recommendations and conclusion 9 References 11 Appendices 14 Executive summary Apple Inc. is one of the leading and most prestigious mobile and computer manufacturing companies in the world. The company has experienced immense growth especially in America, Europe and Asia and Australia. The company gets a majority of its sales form phones, computers, monitors, music players among other products. It is ranked as one of the most valuable and prestigious brands in the world today. The uniqueness of its products has seen the company increase its market share in the last decade to become a leading technology innovator and provider for the while world. At the helm of Apples success, competition from other players in the telephony and computer manufacturing has intensified as major corporations increase their innovative powers by coming up with competing products. Apple gadgets run on an operating system that is unique to Apple products only. This is unlike the rest of the market which has embraced other forms of technology such as windows and android. These are the main rivals of Apple products with Google’s android taking a majority of the market. Introduction The android wave in smartphones and computer tablets took the market by storm and this has taken part of Apple’s market; for instance, Samsung which is also a leading mobile and computer gadget manufacturer (West, Mace, 2010, p. 270). The company uses android operating systems for its smartphones (Lin, Ye, 2009, p. 617). Most of competing rivals with Apple use the android operating system which is widely accepted in the global market (Sahu, 2010.) In this scenario, Apple intends to adopt android system by buying rights from thee provider Google. This will be entering into an already dominated market by its rivals. However, Apple will continue with its other lines of products and strategize on how to enter the android market. In this scenario, Apple intends to produce a line of Apple android smartphones that will be introduced in the market to compete with other android operated gadgets. Among its products, the iPhone is the most common in the market and is a favourite of many consumers Main findings Though Apple has dominated in its line of production for the years it has been in operation, the android and windows phone market is eating away on it market share. This is despite an increase in its overall sales (Vergara, 2012, 13). This has been facilitated by the increase of mobile telephony penetration in the world especially in developing and emerging nations in Asia and Africa (Dhir, Kaur, Jere, Albidewi, 2012, p.27). Apple products are considered high end and expensive compared to other products in the market that serve the same purpose. In order to remain relevant and competitive with giants like Samsung, Nokia, Blackberry, strategizing to include the other market options and varieties is paramount for the organisation. Environmental analysis In the year 2013, the android phone market dominated the industry with over 80% of the market share. This is in comparison to a 13 % market share that Apple had. Though both market shares increased, it was realised that android was actually taking over part of the market that Apple dominated. The trends and projections further suggest that the android and windows phones market is going to continue growing due to its diversity and affordability globally. Macro environment As mentioned earlier, the ain macro element of the environment that has affected the performance of Apple and seen a reduction in the rate of increasing profits is competition. The market is highly competitive with rivals providing cheaper handsets to the market compared to Apple. The main advantage that Apple has is its brand name which is well recognised as a quality brand which provides unique utility compared to others. However the price of Apple products are limiting for many (Hall, & Anderson, 2009, p. 65). The situation in the macro environment for Apple can be explained using several relevant theories Porters five analysis The porters 5 analysis of the Apple Inc. can be used to explain the competitive environment of the organisation. Looking at the supplier of Apple products, the company which is based in the United States produces its gadgets overseas where production rates are cheaper. This aspect however is still inhibiting due to the high pricing of Apple products (Johnson, Li, Phan, Singer, Trinh, 2012). If the products were made locally, they would be more expensive than they are due to high production costs. However, the country as established a working supply of its products that ensures that the global market s adequately served. In terms of rivalry, the company faces stiff competition form phones and gadgets that are android powered. Most of these companies have in the recent past invested heavily and the results are paying off through increased market share. Their growth in the industry has been projected to continue increase as that of Apple slows down. The sales volume of Apple has been on the increase due to brand loyalty and quality over the last decade. The company is expected to make net income of over $37 billion in the year 2013. This is a decline from the $ 41 billion it made in the year 2012 (Keith, Olson, Parameswaran, Sun, 2013). Apple has gained loyal consumers who follow their every release with a lot of enthusiasm. However most are turning to equally attractive options from other providers at cheaper prices the mobile telephony and smartphones can be said to be already established and hence very difficult to have new entrants. Entering the industry would call for massive investments and years of development to reach the status of Apple. In this case, entry by other players is not a key concern. The entry concern that these companies have is the diversification of already existing markets in products offered. The company has a well established brand name that has gained consumer confidence and trust all over the world. Pestel analysis The global economy has experienced a boom in mobile and smartphone penetration over the last decade despite hard economic times. Even with the economic meltdown of 2007 and 2008, mobile phone manufacturers were some of the few organisations that reported profitability amid losses in other industries. It is the industry is therefore stable and the demand for products is always high. Mobile phones have become a social tool that is a must have for everyone. The current technological era gives consumers power to connect and access information whenever necessary. Mobile telephony has facilitated this by providing high quality smartphones. In terms of technology, the company has a well developed innovation team that is always seeking to address specific consumer needs. The pace of technology in the industry is so fast that new versions of phones have to be produced repeatedly over short periods of time. This has been driven by competition and the need satisfy consumer wants. In the legal environmental, Apple has been involved in a couple of high profile court case due to infringements of copyrights b its rivals. This is evidence of how intensive the rivalry is in the industry. Rivals have been ordered to pay billions of dollars in compensation to Apple due to these legal tassels (Mintz, 2013, p. 9). The internal environment Under the leadership of it co funder Steve Jobs, Apple has experienced immense growth since its inception. It had a several turbulent times that affected it on the way threating its closure. However effective management and innovation has created one of the most valuable superior brands in the McKinsey’s 7S analysis industry The uniqueness of Apple has seen it become a giant in an industry that is highly dominated by other giants with a different approach. The strategy that the company uses is to provide products that are unique and of high quality (Research and Markets Adds Report, 2013). Apple holds right to its operating systems the iOS for its mobile phone. It is the only company that is legally allowed to use the operating system which has a design and utility that appeals to many consumers. The company is also structured in a strategic manner where management and leadership use core vales and organisational culture set on consumer satisfaction. The company has a dedicated team of experts all over the world that are carefully selected to work for the company which is considered prestigious (Research and Markets Adds Report, 2013). The company has set up systems all over the world in terms of sales distribution and consumer stores. They also have application in collaboration with major business that allows consumers to have a wide variety of utility from their gadgets. All this is driven by shared values of simplicity, making great products, innovation and technology among others. Therefore, the decision making framework in the company is driven by its core values and the ultimate consumer satisfaction(Research and Markets Adds Report, 2013) Apple’s SWOT analysis In its operating environment, SWOT analysis can effectively lay out insights that are necessary for consideration when coming up with the marketing plan Strengths One of the main strengths that have contributed to the survival of Apple in the industry is its customer loyalty which is ever expanding. The company has products that are appealing to many consumers and they always seek to acquire new ones when improvements are made. Every launch of a new Apple phone is anticipated for weeks all over the world. The company is also a leader in technology innovation and development. This way the company is always able to improve on its products by providing unique features unlike other rivals. Another strong point that has aided the company to reach its heights is a valuable and a highly reputable brand. This has enabled the company to develop a strong financial and infrastructural base which facilitates its operations. It also has retail store across the globe that enable sale of its products closest to consumers who demand them Weaknesses The main weakness with Apple is its highly priced products that are out of reach for many people globally. Also, the company relies heavily on one product which is the Iphne.it accounts for over 50% of its revenues. This means that if it had to halt or profitability was reduced, then it would be detrimental for the company. Apple products are also not compatible with other operating systems. This is often limiting to consumers who would require a wider variety. The company has also had defects in some of major products after release. Opportunities The company has the ability to use its brand to appeal to consumers whenever they launch n new product. As along as it has the Apple logo, it will attract a lot of interests form stakeholders. Though the market share has been falling, Apple products remain in high demand all over the world (Carayannis, Clark, & Valvi, 2013, p. 444). The company has also has patents that are highly valued and has even been compensated from infringements Threats The biggest threat for Apple is competition from android operating phones that are used by other companies such as Samsung (Gold, 2013, p. 16). The company also faces competition form organisations like Amazon, Google, and Microsoft (Seitz, 2013). The effects are already being felt through declined rate of profitability and market share. Rapid technological changes also offer a big threat to the utility and the rate at which current technology is becoming obsolete (Tsuruoka, 2013, p. 270). Apple has also been forced to reduce the prices of it major products in order to compete with other rivals. This is a huge threat of the overall profitability and margins (Kenney, Pon, 2011, p. 239). Recommendations and conclusion Apple is a strong organisation with a huge infrastructural and financial base. However its rivals are gaining on the company by providing highly competitive products at cheaper and affordable prices. To counter competition, the rolling out of android phones with an Apple logo would provide the company with a major lifeline in the industry. This should however, be strategically rolled out to avoid overshadowing of tit current status. The product should be competitively priced to ensue that a substantial market share is created this way the company can supplement its current market share by entering into the new one. The marketing plan and strategy should focus on the current existing market and also on potential markets that are inhibited by the price range of Apple products. The new market should be in such a way that it does not affect the already existing share. The company could also integrate other operating systems capabilities in their phones as well Apple is a reputable company for its satisfactory products that it has continued to roll out in the market regularly. The challenges it faces in rolling out in a new market can be countered by its infrastructural orientation and strong brand name. There is al lot of potential in the new market though there are well established players. The aim is to reduce the market share of android phones from other companies and transfer them to the Apple market. Diversification of the Apple portfolio to include this market could see drastic market changes References Apple iPhone Losing Share 2013, , Los Angeles. Carayannis, E, Clark, & Valvi, D, 2013Australia Telecommunications Report - Q4 20132013, , Business Monitor International, London. , "Smartphone Affordance: Achieving Better Business Through Innovation", Journal of the Knowledge Economy, vol. 4, no. 4, pp. 444-472. 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