A Strategic Anaysis of Apple Inc.
Rowda Al Ali
Apple Inc. was founded in 1976 by Steve Jobs and Steve Wozniak. The company is based in Cupertino, California (Apple, 2014). The company has about 123,000 employees globally with majority staioned in its California offices and manufacturing plants in Asia. Currently, Apple Inc. is valued at $835billion. It is set to grow especially that the company’s profitability is expected to grow by almost double digits. The company recorded revenues of $229.234billion in 2017 and a net income of $48.351. Despite a fall in iPhone sales, the company recently announced growth in revenues and profits. The firm made $20billion in profits during its last quarter of 2017. The company’s products include Macintosh, iPhone, iPod, Apple TV, Apple Watch, iOS,Shazam,IWork, Homepod, iPad, iTunes, iCloud and Apple Music. The firm designs, develops and sells electronic devices and services in all the continents. The design of the devices is done in the US and manufactured in South-East Asia, China specifically. The company has distribution centres in North America, South America, Europe, Africa, Australia, and Asia. The current CEO, Tim Cook, replaced the founder Steve Jobs in 2011. Apple Company has managed to position itself strategically in the market as the best quality consumer electronics and mobile phones. The company’s major competition comes from software and electronic companies. These include Google; Microsoft; Samsung; Nokia among other competitors.
Apple is one of the leading smartphone manufacturers in the world. The company has a footprint in all the continents and is one of the most profitable American companies. The company besides mobile phones manufacturers smart TV, desktop computers, and recently announced plans to go into electric vehicle manufacture.
The company is a market leader in a range of products including mobile phones and desktop computers.
Apple has a strong brand image and value currently approximated at $170billion.
Large financial base.
Well-developed supply-chain infrastructure. Apple products are of higher prices compared to competition.
Overreliance on iPhone.
Incompatibility of most Apple products with other from different manufacturers.
Inadequate presence in the service segment.
Few product ranges.
Increasing presence in the service sector.
Entering strategic partnerships.
Improving the compatibility of products.
Investing in research and development projects. Quality issues with its major products.
Stiff competition in India and China.
Intellectual property cases with Samsung.
Tax scandals especially in Europe which have destroyed the reputation of the company.
Rising cost of production.
Apple is one of the global leaders in the Smartphone market. The company is known for its quality products such as the different series of iPhone. The company rakes billion in profits annually from different iPhone sales. Being a market leader is a significant strength of the company. As a result of its position in the market, Apple has a strong brand image and value approximated at $170billion (Aversa, Haefliger ; Reza, 2017). The strong brand image has earned the company loyal customers as it works to increase its market share. Consequently, the company has huge profit margins and a large capital base which can be used to expand operations and invest in the development of a cutting-edge technology. The company has a well-developed supply-chain which enables it to deliver products to its customers within the set schedules.
Conversely, the company’s products are highly priced as compared to the competition. Most of the company’s revenues and sales come from the iPhone. The overreliance on iPhone has exposed the company negatively. Apple products are incompatible with other devices and software as compared to what competitors offer (Bicen ; Johnson, 2016). The incompatibility has made it hard for some customers to use Apple products across different platforms. The company as well does not have any presence in the service sector which only leaves it with one revenue stream.
There are opportunities that the company can explore to strengthen its business and expand operations. The company needs to expand its footprint in the services segment. Such a move would increase revenue portfolio. The company can as well enter strategic partnerships which would assist in manufacturing and distribution among other activities that can increase its presence in the market (Khan, Alam ; Alam, 2015). It is useful for the company to increase the compatibility of Apple products. Such a move would allow customers to use the products across different platforms with no limitations. The company should invest more in research and development to aid in innovation and creation of cutting-edge technology.
The recent quality concerns over some Apple products play out as a major threat. The recent quality concerns about iPhone X has impacted negatively on the brands. The impact can result in reduced sales and market share for the company which prides itself as a manufacturer of unique and quality smartphones. Growing competition in India and China, which are currently the largest consumer markets, threatens the company’s growth prospect. Intellectual property cases and tax scandals have negatively impacted the company besides costing billions of money paid as settlement. Such scandals have as well dented the company’s image in public which views it as an example of ethical business practices and the top in innovation.
The company needs to invest in its talent to maintain a competitive advantage in the market. The following are some of the considerations for the company’s employees.
Education of employees to acquire relevant skills to observe high professionalism in Apple’s operations.
Suppliers should treat workers and other stakeholders with the respect they deserve.
Every employee requires a safe work environment.
Apple’s operations should be done in environmentally manner.
Employees and suppliers are required to meet the set standards.
The technology industry demands innovative employees who can create ideas that stand out and work collaboratively to achieve organizational goals. Besides empowering employees, it is essential for the company to diversify its products and services. While iPhone forms the base of the company’s business, it is essential to consider introducing a new range of products and services to increase revenue streams (Schaefer, Walker ; Flynn, 2017, August). Optimizing the company’s image and quality is one thing that the company should use to grow its footprint. Optimizing the company’s content and quality- establishing trust with consumers is an uphill task if the quality of the product does not meet their expectations. Quality gives a product brand much credibility and as such giving it a strong brand name (Wheelen, Hunger, Hoffman ; Bamford, 2017). The price in this regard does not count very much, but consumers expect to get the value for the money. Apple CEO, Tim Cook, speaking to Bloomberg Businessweek in 2013 said “We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured a way out to do it at a lower cost.” (Grobart, 2013). The company should use the image and its reputation for producing quality products to grow its core business areas and introduce others.
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