SWOT Analysis of the Apple Company - Case Study Example

Apple Case Analysis Report Name: Tutor: Course: Date: Apple Inc. Analysis Introduction Apple Inc. is an American Multination based in Cupertino, California. It designs, develops and undertakes sale of computer software, consumer electronics and personal computers. They produce various brands and products. Major products are; Mac computers, iPhone smart phones, iPod music players, iPad tablet computer, iOS and OS X operating systems, Safari web browser, iTunes media browser and iLife productivity suites. The company is the second largest in revenue after Samsung in IT products while coming third in mobile phone technology after Samsung and Nokia. It has about 408 retail stores in more fifteen countries (David, 2011). It also has online iYunes stores and Apple store. In market capitalization, it is the largest publicly traded corporation worldwide worth more than US$420billion as at March 2013. The company is committed to ending the use of coal and takes a 100% shift to clean energy especially from renewable sources. The following is SWOT analysis of the company. Strengths Apple has competent sales staff that is acquainted with current computer and mobile phone products. The products are; Mac computers, iPhone smart phones, iPod music players, iPad tablet computer, iOS and OS X operating systems, Safari web browser, iTunes media browser and iLife productivity suites. The firm has about 73,000 employees on permanent full-time and another 3,300 who are on temporary employment. Apple has established good relationship with its customers through after sale services and constant internal communication. Both online and the 408 stores experience a high level of traffic with strategic choice of location (Driver,& Valdes, 2010). The company is a late entrant in the market after Samsung and Nokia hence employs the follower strategies especially flank attack and leapfrog to capitalize on designs and methods not pursued by the pioneers. The marketing strategy is through timely introduction of products meeting the current trends and fashion. Apple is reputed for innovative products like iPad mini and iPhone smart phones in 2011. Customer loyalty has grown since 2009 combined with broadening closed ecosystem. Apple becomes a leader and innovator in the mobile device technology. It boasts of a strong financial performance with US$10billion in cash and a gross profit margin of 44%. It had no debt. All its brands such as Apple TV, iPad and iPod are reputable. It also has strong advertising teams and marketing. Apple has heavily invested in research and development, customer service and advertising. Weaknesses The company has a single unit of command which inhibits innovation. The CEO decides on what to be done by thumbing his decision against other line of products. The firm is currently bogged with too much work and is struggling to meet deadlines. The company at the moment spends a lot in rent payments for more than 13,000 employees. The market research data is a bit old as they rely on the findings of the previous year. The company experiences cash flow problems in 2013 compared to 2012 due to loss in market share along product categories (Hoovers, 2010). It is holding a lot of stock which still remains as dead stock. There are unresolved cases involving patents with Samsung, Motorola and Microsoft. Plant capacity also fell in 2011 which reduced the level of sales in that year. Further changes in management after the dead of Steve Jobs brought inefficiencies in major product lines (Srivastava & Thomas, 2010). The products are incompatible with other operating systems. There were reports of defects seen in new products. The company faced challenges from Eastman and Kodak in 2012. Environmental concerns and adherence to labor laws challenges the business ethics of Apple in countries like China and Malaysia. Non-Eco friendly Apple products faced opposition from GreenPeace campaigners who are opposed to wanton environmental destruction through dumping of toxins, iPhone hardware and non-recyclable hardware components. Opportunities There is a growing demand for iPhone 5 and iPad mini especially in emerging markets and Europe. There is a high likelihood of a high boost from the launch of iTV. There is an emergence of new providers for application processors. The tablet and smartphone markets are experiencing rapid growth. The company will benefit greatly by obtaining patents through acquisitions. Countries have passed strict laws awarding damages for infringement of patents which may benefit Apple. There is a strong growth in the mobile advertising market. The demand for cloud based services has also increased (Manning, 2007). There are opportunities for newer markets such as India and China which can take new products like iPad 3. The company will benefit from expansion of retail stores and offices in the US and franchises.  Currently, Apple partners with ATT in the US as the only telecommunications carrier. Many competitor phones double as multiple carriers. Customers are likely to forego iPhone ownership if not willing to switch to ATT from their current carrier. Additional carriers partnering increases iPhone’s sales hence encouraging consumers to purchase other Apple products.  Threats Apple experiences rapid technological change in a market that desires innovative and smart products. The taxes increased in 2013 especially from the lower tax countries such as Ireland, Netherlands and Luxembourg (Schept, 2010). There is intense competition and technical war from Samsung, Nokia and Microsoft. The uncertainty of global economic conditions will cause shift in the market share. Personal computer sales have been declining since 2011. The company is dependent on some suppliers like IBM which makes it difficult to assert price fixing or changes to material prices. The conditions (safety, health and labor) to suppliers are difficult to be enforced since they posses too much power. There are reported increases in pay levels especially from Foxconn workers. The company will pay more on litigation for breach of IP rights. There is a growing pressure from Samsung regarding principal components (Popper, 2010). Android OS growth has been strong with rising strength of the dollar putting Apple at a disadvantage. Competitors have moved into the online music market. Recommendations Success of Apple is dependent on; quality of its marketing strategy, Apple brand, and the company's innovative capabilities. For continued success, there is need to build strategic partnerships that establishes the outcome of the company's ventures into mobile phone, the music, and video-on-demand businesses (Harris, 2009). Apple's actions and commitments need to be coordinated and integrated so as to maximize value, utilize the firm’s core competencies, and support its competitive advantage. The analysis shows that securing strategic success is critical for Apple Computer through sufficient investment in the firm’s competitive advantages in marketing and innovation and safeguarding the Apple brand image (Schept, 2010). Some of the suggestions for attaining this are: 1. Cautiously target the low-end of the market which is capable to tarnishing Apple's reputation as a leader in technology. 2. Apple should manage brand exposure carefully 3. Research and development should be a continuous investment if it is to lead radical product, stay ahead and become steadfast in technology discoveries. The firm’s future financial situation and results of business operations are significantly dependent on its capacity to pursue various improvements in the Mac platform. The Apple's software, hardware, and services ought to relate with consumer electronic devices in every product market. 4. Apple must upgrade and maintain design appeal to lower the chances for new entrants 5. Rapid technological advances have huge impact on personal computer, mobile communication, and consumer electronics industries. The firm’s ability to successfully compete is largely dependent on continuous and timely flow of competitive services, technologies, and products to the marketplace. Any failure or miscalculation on the part of Apple can be associated with commercial production of fruitful innovations that enters the market as a first-mover (Smart phones, 2010). The company needs to consider broadening product offerings range and intellectual property by way of acquisition, licensing of joint development projects. These can be Visual Voicemail project or technologies 6. Apple needs to enhance its current products in all areas such as consumer electronics products, computer peripherals and hardware, systems and applications software, mobile communication devices, communications and networking solutions and software, and Internet solutions and services. This will maximize the product life and value. However, the company to timely engages in planned obsolescence that considers the company's market leader status and competitive advantage 7. The firm should to regularly evaluate if it is drifting away from internal strengths or expanding its reach way beyond its manageable and known markets. To do so, it should reach and define the customer base more widely and profoundly. Apple will appeal to more consumer groups if it enhances its quality, security, and improved image. The company's distribution network should be expanded to effectively capture a good number of its targeted customers. This will provide them with post-sales support experience and high-quality sales intended to serve and increase market penetration. Retail "membership" culture and one-on-one programs are some of the unbreakable customer bonds. The company will easily perpetuate its devoted base of customers and secure long-term customer loyalty (Bulik, 2010). Apple's success in retail stores presents the firm with a specific opportunity to understand its customers' expectations and needs. It should provide a forum for generating attention and floating ideas. Apple has just established itself as a global player in relation to the global sector. As the firm extends its reach into various parts of the globe beyond its existing locations, huge efforts should be channeled in studying customer preferences in those locations. This ensures that marketing efforts and service offerings are targeted and accustomed to tackle unique needs in those areas. Companies providing access to new customer groups and partnering with Apple are very significant in the firm’s quest to expand its market outside the existing installed user base. Most significant is paying attention to the objectives and needs of strategic partners, specifically the interests of providers offering content. Smart phone industries and internet video revolution is good especially like the firm did in the music download industry (Bulik, 2010). Essential are unique carrier services and good media content hence it influences the strong relationships with phone service and key media partners. The success of Apple TV can be limited by the number of available movie downloads. The standardized carrier service will frustrate product differentiation of iPhone from its competitors. Ways that the of Apple's market share and power of brand name should be sought. Benefit to partners and protection of business interests shows that relationship terms benefit the industry as a whole and offers mutual value for all parties (McGuire & Baker, 2010). Apple wants to institute partners who are engaged and motivated in Apple's success just like internal stakeholders. Furthermore, Apple's product line attains huge benefits from specific, co-branding opportunities and complementary products, more so if they can aid in overcoming bottlenecks in the mainstream market of Apple's proprietary technology. Some other suggestions to advance strategic success comprise; 1. Vigilant cost management through maintenance of pricing flexibility and improving competitive position with regard to low-priced competitors. 2. Strengthening the performance of other applications through leveraging Apple's seventy percent of music market share 3. Develop a succession strategy and the top management team to minimize over-reliance on one individual while advancing company interests. References Bulik, B.S. (2010). Marketer of the year 2010, Marketer of the Decade: Apple. Advertising Age. David, Fred R. (2011). Strategic management: concepts and cases (13th ed). Upper Saddle River, NJ: Pearson Prentice-Hall.  Driver, M. & Valdes, R. (2010). Apple loosens restrictions for iOS developers. Gartner Industry Research Group. Harris, A. (2009). Design at the very core. Engineering & Technology, 4(16), 60-62. Hoovers,R. (2010). Apple Inc. Hoover’s Company Records. Manning, H., Temkin, B., Bodine, K, Dorsey, M., & Geller, S. (2007). Topic overview: customer experience. Forrester Research. McGuire, M. & Baker, V. L. (2010). Apple's iPod and iTunes updates keep pressure on competitors. Gartner Industry Research Group. Popper, B. (2010). Will white iPhone 4 send New York teen to college ... or to jail? The New York Observer, Daily Transom. Schept, K. (2010). BrandZ top 100 most valuable global brands 2010. Millward Brown Optimor. Smart phones. (2010), Consumer Reports, 75(9), 24-27. Srivastava, R.K. & Thomas, G.M. (2010). Managing brand performance: aligning positioning, execution and experience. Journal of Brand Management, 17(7), 465-471. Read More