Strategic Analysis of Apple Computer Inc - Case Study Example

STRATEGIC ANALYSIS OF THE APPLE COMPUTER INC. [Student name] [Institutional Affiliation(s)] Strategic analysis of the Apple Computer Inc. Introduction & background information Apple Inc is an American global technology company whose headquarters are situated in California. It produces excellent industrial electronics and computer software. It was founded on April 1st, 1976 by Steve Jobs. He recommended that switch should be its slogan since it valued innovation at all times. Its employees are one of the highest skilled personnel in technology as they enable the company to be the world's largest IT Company. It's commonly known for its production of iPhone and iPad which are commonly used all over the globe mostly by young people, especially in China. Executive summary Apple operates in various lines of computer operations that mainly include the designing and manufacturing of its computers. In the previous years (Lüsted, 2012) explains that the company has been majorly involved in the music marketing by promoting the iPad, music player and iTunes. The inaugural of 65 recent retail openings including one in Japan has participated t its growth movement all over the world. The company carries on to toil on offering the advanced products for its consumers. However, promotion in small markets has triggered some complications that have led to its trade shares to be reduced below 5%, and its operating system varies significantly from the Wintel operational structure used by Microsoft Company. Lüsted illustrates that the software engineers are not motivated about coding programs to sustain Apple’s operative structure since it has inadequate prospective auctions. The benefits that come with the Apple's laptops are swiftly removed since the rivals can duplicate, bargain and segment them. Despite the fact that the challenges, (Lüsted, et al. 2012) illustrate that apple possesses an advantage by having its operating system that has not yet faced the complications that Microsoft and its operating system has stumbled upon. Upgrade of Microsoft's operating system has caused it to be overwhelmed with malware attacks and other software design errors and complications that have made many hackers to gain access to the network. Apple has not exploited on the complications, thus the reason it has gained more customers, but the number is not broad enough to enable it to gain a considerable market share. Organizational structure The company has tried to create a high significant assessment in the vastly competitive personal computer commerce by revolutionizing and falsifying a path that is significantly dissimilar from those of the leading rivals in the business. It performs this by distinguishing its products from those that it’s in competition with and also designing elegant products that are uniquely identifiable by its customers in the market. (Lashinsky, 2012) Clarifies that Apple Company has effectively innovated its system to a contented market situation imposing quality prices due to how its management can utilize the key capitals and competencies that include the company leading design groups and the skilled software and hardware engineers. The company is also able to conduct a solid exploration and enlargement financial plan which is accountable for a collection of thousands of charters which are strategically examined under the leadership of CEO Steve Jobs. Generally, (Lashinsky et al. 2012) states that the company uses the hierarchical organizational structure which was developed by the CEO Steve Jobs which ensures that there is a focused realization of the leader's innovative ideas as well as the visions of the business The company has employed numerous employees who require being controlled reasonably. For proper management (Lashinsky et al. 2012) explains that the corporation authorities decided to divide its management into two main parts where one was the corporate section, and the other was the retailer part. The corporate sections refer to work behind the scene, that is work that involves the engineers, designers and those that implement the launch of the apple products. The retail section contains the staff who deal with marketing and evaluating the apple products. The figure below shows an illustration of the organizational structure. Given the number of challenges that the company is facing. For instance the decrease of the life cycle of its products and the decline in the sales of its products, it is rational to forecast that the organizational structure may be exposed to certain modifications that will be utilized to increase the company’s efficiency in the global market. Environmental analysis of the company The primary focus of this review is to critically analyze the context of which the corporation controls by scrutinizing both the peripheral and inner settings. The Setting is defined as the amalgamation of external physical circumstances that influence the survival and development of the company. It primarily describes and illustrates the business environment at which the company operates within as we are going to review. (Daft, 2016).  Apple Company is characterized as the leading digital resource Organization Corporation and universal smartphone supplier that also generates and controls both its software and hardware. External environment The business climate is usually analyzed using the PESTEL model and the PORTERS five forces. The outer business climate according to (Daft et al. 2016) represents the uncontrollable factors that lead to the market development and business operations. PESTEL model analysis The model deals with the political, economic, social, technological and legal environment analysis Political aspects (Warner, 2011) Explains that numerous complications cannot be controlled by a corporation such administrative reservations, violence, health issues and ability to work. All these factors can influence the sales of apple products globally. To reduce the operating income, the company has outsourced to various nations like China, Ireland, Korea and Cork. Economic aspects According to Warner, the purchasing power of companies relies on the world’s commercial environments. The joblessness rate in many nations is very high, and it leads to the decrease in sales of apple merchandises. Growth in the cost of major resources like oil will make the global economy to inflate negatively. These are some of the economic factors that make Apple Company lose the purchasing power and also lead to fewer sales of its products. Social factors The music industry has been a significant social influence throughout the globe. Apple has the advantage of designing the quality of its products to meet customer satisfaction. The purchasing power of the iPad, iPhone, and the iTunes has risen since having the latest technology in the music industry has increased the social influence of people purchasing the products Legal factor The legal aspect focuses on the regulation of occupation, healthiness, and safety that the company has to adopt for its operations both locally and globally. Technological features The company will always try to adapt to the latest technology due to its highly innovative and skilled engineers. The global competition has made the company always to develop products that possess the latest technology thus the reason the company manages to be at the top of the innovative products. Competitor analysis Apple being a huge corporation faces huge competition from similar companies in the market. Such companies include Samsung, Nokia, Google, and Microsoft. (Arthur, 2014) states that the current digital competition is mainly influenced by Porter's competitive forces which include the strength of competition within the business, negotiating influence of dealers, bargaining influence of buyers, the risk of new entrants and the risk of substitute products.   The strength of competition within the company. The Apple Company provides a technical support that assists in creating customer loyalty as well as employee support to producing products. (Ireland and Hoskisson, 2012) explain that the company sustains its yield without setting down a product by providing greater products from Android phones, tablets, and laptops which lead to achieving a higher market share with minor costs. Bargaining power of the suppliers (Hitt, 2012) Explains that the bargaining power of the suppliers can influence the profits to go down by showing the high prices for vendors. The corporation continues to look for different merchants and then allows the new dealers to moderate the negotiating influence of contractors by cataloging or through online registration on the Apple’s website. This results to the firm decreasing their bartering power through new opposition among the large numbers of merchants. Trading power of buyer The corporation must follow the customer preferences for it to sell its products and gain a profitable income. It is also important for the company to obtain a significant share of the market and buyers are more price sensitive regardless of the uniqueness of the products, and they can switch to other products that have got the same requirements but at a cheaper cost (Hitt, 2012). According to the latest survey, apple holds around 75% of the market share due to its strong brand loyalty thus making it hard for most of its customers to switch sides. Threat of new entrance When more companies make an entrance in a market, it means that Apple share will be reduced. However, according to (Ireland and Hoskisson, 2012) a corporation can sustain the market share and yield profit over the disparity of products and merchandise as well as making resilient presentation strategies that will offer the company with a competitive advantage. It will, therefore, be tough for new businesses to compete against a company that has a solid brand image as well as possesses excellent customer services. Threat of substitute product Replacement of goods influences the price and performance of the products. The price and performance allow the consumers to shift the merchandise as well as the will of customers to change. According to (Arthur, 2014) the risk of substitute can be deducted as long as the consumers are devoted to the products. Internal environment analysis of Apple Company. These are the controllable factors within a corporation; the management will always use the best methods of marketing their products as well as its brand name to increase its income productivity. Apple Company is known for utilizing the differentiation strategy to allocate its resources and services. (Muller, 2010) Illustrates that it uses the strategy to present outstanding designs for its products, custom-made services, and highly modified quality products. For it to reduce its operating costs (Muller et al. 2010) describes that it outsources its production to the third party through massive economies of scale. The acceptance of product as Muller states makes the target market vary from the beginners to expert users. In reviewing Apple Company’s internal environment, we are going to evaluate the SWOT analysis of Apple Company. SWOT evaluation of Apple Company The company is known for making software and technology gadgets like smart phones, tablets, and laptops. It also offers a lot of innovations to the global technology that has enabled it to increase its investors. The company also evaluates its performance which it uses to upgrade its performance. (Muller et al. 2010) Illustrates that for a company to be fully productive in utilizing its innovation and creativity, it must ensure that it evaluates its strengths, weaknesses, opportunities, and threats. The table below shows a brief SWOT analysis of Apple Company. Apple’s competitive strength evaluation The main fundamentals that influence Apple’s general competitive policy are based on merchandise variation, logical completive approach, merchandise modernization and the vertical incorporation. As seen earlier, product differentiation is founded on the industrial manufacture of its products which are more uniquely identifiable in the market. Apples justifiable completive approach focuses on constructing solid consumer loyalty by undertaking their client necessities more efficiently with their merchandises improvements and distinctive designs. The completive advantage according to (Muller et al. 2010) has privileged the company apart from its competitors by being ahead of the competition even when it introduces new products and updates the existing ones. The company practices both the horizontal and vertical in corporations to shape a strong competitive advantage. Its corporate policy governs its distinctive capability to plan and advance its own operating systems, hardware and application software as well as its services. Muller states that the vertical incorporation offers governance over the user and delivers a sustainability of the company’s market share. Apple Company, therefore, builds a sustainable competitive advantage that is tough to duplicate. Conclusion Apple is a successful company that has earned a strong brand name from its unique products and services it offers its consumers. It is a corporation that manufactures its products based on the creativity and innovations that will adopt the latest technology. Outsourcing its products makes it reduce the operations costs, but it has to deal with the various political and social environments in nations where it has outsourced for instance China and Korea. An enormous amount of customer loyalty and the uniqueness of its products makes it more competitive than its rivals. REFERENCES Lüsted, M. A. (2012). Apple: The company and its visionary founder, Steve Jobs. Minneapolis, MN: ABDO Pub. Lashinsky, A. (2012). Inside Apple: How America's most admired--and secretive— company really works. New York: Hachette Audio. Daft, R. L. (2016). Organization theory & design. Warner, A. G. (2011). Strategic analysis and choice: A structured approach. New York [N.Y.: Business Expert Press. Arthur, C. (2014). Digital wars: Apple, Google, Microsoft and the battle for the Internet. London: Kogan Page. Hitt, M., Ireland, R. and Hoskisson, R. (2012). Strategic management: competitiveness and globalization (concepts and cases) 6th Edition. Thomson South-Western Arthur, C. (2014). Digital wars: Apple, Google, Microsoft and the battle for the Internet. London: Kogan Page. Müller, C. (2010). Apple's approach towards innovation and creativity: How Apple, the most innovative company in the world, manages innovation and creativity. München: GRIN Verlag. Read More