Apple Inc is a company which was found on April 1st in 1976. This company is recognized for new designs, manufacturing of personal computers, media devices, markets mobile communication, sells a number of software’s related along with services and many accessories also with applications and digital contents also by third-party. Product and services include iPhones, iPads, iWatch, Apple TV, Mac , iOS , macOS, watchOS , and Tv OS , iCloud , operating systems, Apple pay, with many more accessories , support and other services. I chose this company because it is one of the most successful companies in the world of electronics which made me select this company rather than the others.
Situation Analysis- Strengths
1. Strong Brand Image:
Apple is known to be the most recognized brand which is reliable and customers trust and love. It has the worth and value of US $184.154 ; US $170 billion. This strong recognition can help the brand to be capable of introducing new profitable products. Their brand name goes a long way which has created a very loyal customer fanbase. Apple Inc maintains their image and keeps their brand value by satisfying their customers’ needs and meeting up to their expectations of new products with better, newer and more efficient technology designs and unique look. Apple sells their brand as a lifestyle towards newer and advanced technology and has been the most reliable. Apple manages their segments of business on a geographical base and each is separate. They also maintain their customer relations very well which creates very strong customer loyalty along with a better reputation for their brand worldwide. This also creates a stronger brand image because of all the satisfied customers and positive feedback.
2. Product Innovation:
Apple has had one of the key strengths of innovative product line up. This brand is known to be the leading innovator among electronic brands. Apple has easily distinguishable products from other ones because of their distinct different technology and unique looks. Apple has brought its consumers to the conclusion that they are the ones to bring the best new product to the market. Apple has been successful with their mission of creating hits after hits starting from iPod, to iPhone, iPad, IWatch, and the MacBook’s. Apple is known to deliver the best products giving customers their best experiences with their highly innovative, well-functioning and well-designed products. They have the ability to design and develop their own hardware, software, services and applications available for their users which are easy to use. This method creates a competitive advantage over other companies. For example, Apple users have Apple Premium products which they could buy and this is only available for Apple not android. Apple has been innovative and has only been growing in the industry of electronics.
3. High Profit Margin:
Apple has a high profit margin on its product and this is a strength for this company. Many of their products have 60% or more profit margin. In 2017, they achieved sales of about 216 million. According to “Time Money” an Apple iPhone is sold at $649 and its production cost is only $225. This example just makes it evident that the MRP of an Apple product is possible to be up to thrice it’s production cost. This also concludes that high margins equal to higher profits on selling products. This is also a reason why apple is a rich brand. This has played quite a role in making Apple a rich Brand as they strategically managed their pricing and manufacturing costs assuring quality and services to their customers. This has caused the brand to also be financially stable. Apple is on the top of the list on Forbes as “the most valuable brands in the world”. In 2015 they reached their highest revenue which was at $233 billion dollars. In 2017 they reach to 229 billion dollars. There has been quite a growth with their sales of iPhone and Mac’s which has also caused the brand to grow more and gain more profits. This allows the company to have a stronger and free cash flow which allows them to invest towards expansion into new products
Situation Analysis – Weaknesses
1. High Prices
Many people complain about Apple having high priced items. But many fans use the justification that they are “premium gadget- makers “.
A standard PC laptop or device is about $200 at the lowest whereas a MacBook ranges from $1100-$1200 + (or more) . Sales only reduce these prices from $50-$100 on an average. Most of the groups of people that usually get sales which are consistent for Apple products are students. There are companies like Dell, HP are known for their PC laptops and have been around for a very long time and they are priced much lower compared to MacBook’s. They are advanced and have similar technology and are well known and are available more. MacBook’s don’t sell as much as iPhones, and tablets because of this reason.
2. Dependence on High End Sales Market
High priced Apple products limit their buyers because only middle to high class people in the society can afford these products. On a global scale, there is majority of lower-class buyers but Apple does not consider this demographic that seriously. This creates a type of limitation on their business. High prices mean fall in market share which would lead to difficulties when times of low economy. There are more lower-class buyers globally which makes their target market shorten as they aren’t considered so they prefer other brands which cater their needs instead in a reasonable price. Apple targets a High-end Market. Apple loses a lot of its customers because there is access to cheaper priced products with less or even more features like Samsung, Microsoft and etc. Apple loses a lot of its customer base because of the other cheaper options available
Apple Cost Samsung Cost
32GB iPhone 7 £599/$649 Samsung Galaxy S7 with 32GB micro SD cared £597/$670
64 GB iPhone 8 $699+ 64 GB Samsung Galaxy S8 $601.62- $664.79
256 GB iPhone X $1,149 256 GB Samsung GAlaxy S9 $839.99
3. Limited Product Portfolio
When compared with competitors you can tell that Apple has a limited portfolio. The company itself consists of an ecosystem of inter-compatible products. Somehow the total number of the products which are included in their portfolio is low compared to several of its competitors. Their most popular product which sells the most include the iPhone, iPad and Mac. The other products sales are not as high compared to the ones mentioned. A lot of the sales are dependent on the popular products that sell as others have more competitive brands also with good reputations.
Competitive: Apple has many competitors. These are the top 5.
• Dell – This competes with Lenovo, Acer and HP but also Apple in the market of PC’s as they don’t make smartphones. It has doubled its sales in the past recent years with through PC’s.
• Lenovo – is a Chinese company that make PC’s, mobile phones, software systems and electronics. It competes with Apple for all its products – tablets, smartphones and laptops. Lenovo lacks in advertising their market and brand equity but also has a in depth product portfolio and a great range of laptops.
• Samsung – Samsung is the primary competitor to Apple’s iPhone. The release of the new Samsung Galaxy Series and the Note series are big reasons for less iPhone sales. Samsung is greatly recommended if you prefer an android smartphone but not so much with their laptops. Samsung smartphones are Apple iPhones main competitors.
• Hewlett Packard Enterprise (HP) – Has been around since 1939 and create computers, printers and IT solutions offered. HP is a strong competitor with Apple laptop MacBook and all other top brands like Dell and Acer.
• Microsoft – Microsoft has a very stiff competition with Apple. They compete between their smartphones, entertainment media markets and computers.
Account requests – All account request(international) for stored data in Apple Inc’s centre must comply with ECPA (Electronic Communication Privacy Act).
Increased privacy concerns – Account Preservation Requests: Are made pursuant to the ECPA (Electronic Communication Privacy Act) which later allows the law and govt to request and preserve customer information on the Apple account.
By the end of 2018 Apple Inc has decided to launch a type of online portal used for authenticated law enforcement officers globally to submit lawful requests for data, track requests and obtain responsive data from Apple.
• Recessions and economic crises can affect the revenue of the company in a negative manner to a larger extent if compared to other businesses based on the premium pricing policy choice.
• The costs of labour in China has increased, this could take away the cost advantage of some products of Apple.
• If the US dollar is strong, the exchange rate could be high making the business in Europe ; China more expensive.
• There are less high-end buyers globally compared to lower end buyers which means the potential market for Apple could shrink and affect the economy.
• There’s rapid growth of developing countries where Apple can expand its business. There is also a rapid growth of developing countries.
• Rising use of mobile smartphones and tablets will lower demands towards Apples popular products
• Is seen as an accessory for a high- end lifestyle. Making it a symbol of social status.
• In coming decades, the consumer spending will increase in areas of the world like Africa where not many people are aware of Apple products.
• Some people in the United States and Europe backlash against the products which are expensive and stylish.
• Rising use of social media is an opportunity as it makes the demand increase for digital devices such as apple products.
• Samsung is one of Apples biggest competitors who have proven to copy/duplicate services and products by Apple. In less than a year Google created a payment app known as android pay almost the same as apple pay. This no longer makes apple as unique.
• Apples new products are limited. For example, Apple Tv has a limited market.
• Growth in the usage n demand of smartphones and tablets will reduce the demand for Apples personal laptops.
• Apple was known for being secure and safe but lately due to cyber criminals Apples system is less secure which also is taking away one competitive advantage along with affecting its reputation.
• Larger screen preferences are to take into consideration. Phablets were created by Sony but they got popular quick.
Situation Analysis: Opportunities
Apple has shown us that they are potentially capable of collaboration with various strong existing brands which could relate to their market. For example, they have new Air Pods which they decided to team up with Beats headphones so that their wireless headphones BeatsX could be used alongside with their iPhone 7 reveal. Nintendo is another brand which is collaborating with Apple bringing a brand-new game called Mario Run to the iPhone. This could bring many Nintendo fans together with iPhone users. Apple could be mocked but building these relations with these brands could bring benefit to Apple immensely.
2. Product Diversification
Product diversification brings in a lot of new opportunities as Apple has a narrow range of products. Apple is capable of bringing a new market leading product to the market as it is known for being an innovative brand. For example, Apple watch was a huge success. In 2017 Apple shipped 18 million Apple watches. If the features of an Apple watch are enhanced, surely more iPhone users would want to purchase an Apple watch at this rate of selling speed. They also have new audio products which are wireless headphones called Air Pods. Apple just released a smart speaker called Home Pod. If this product was to be improved and could potentially be offered at a lower cost or have a lower cost version it would be positioned well for growth in its market. There are a lot of space for market growth & opportunities, especially in the world of audio production for the future.
3. Increased demand for Smartphones and technology
The rising sales in the Apple company is due to the high demand of technology and mobile gadgets in today’s society. Being compatible with other brands can grow sales. There is a high demand of new Apple products such as PowerBook and Power Mac. Also has the newer upgrade to MAC OS X. The demand for Apple watches has increased exceeding the available supply. Apple customers are also looking forward to and waiting for the new iMac line and iDVD.
Situation Analysis – Threats
1. The growing environment of electronic devices
The electronic device industry is rapidly increasing and innovating constantly. It is important for a company so big like Apple to keep up with the pace of all their competitors or else Apples market could fall drastically. This is a serious challenge that the company has to face whether they like it or not. The rapid competition in the communication market is what forces Apple to constantly design and modify their products to match the consumers wants and needs. So that they are provided with what they demand and stay satisfied.
2. Damage of reputation (Tax Scandal )
There was a tax scandal that went viral which involved Apple. Apple went in the hands of taxmen and managed to keep aside $44 billion from the revenue. The company pays minimum taxes.
Apple chooses its design to be very simple smooth and this makes it easy to replicate. There are some stores (global) which sell fake versions of iPhones and iPod touches. They look the same from the structure and design as they look identical. A lot of people are caught even fall for scams as they think they find cheap Apple products that are sold online.
The market of smartphones is competing mainly between Samsung’s and iPhones. They already have big competition but ever since apple removed their headphone jack in iPhone 7, their competition has also gotten harsher. Apple did this in favour of supporting their own proprietary products as substitutes. This change caused a lot of backlash in the world of digital products. It has a chance of lowering profit turnout this year.
Situation Analysis – Recommendations
Overall Apple has more opportunities & strengths compared to threats and weaknesses. In the industry right now, Apple is given leadership. But even in such a case, Apple needs to strategically address and handle the threats & weaknesses which have developed recently. The factors which are external and internal have been analysed in this situation analysis and there are many strengths which could be used to exploit a lot of these opportunities along with expanding the network of distribution. The company has a very strong brand image and fast process of innovation which are also strengths, to develop and launch more new lines of products to engage in more success on larger scales. Apple watches were a great example of a new product which became popular very fast. There are also certain threats Apple faces such as aggressive competition and imitators, these are also known as major challenges faced by Apple as it affects many of the players in the Global market for Electronics, online digital content distribution, computer software & hardware.
A recommendation based on the SWOT analysis is to keep up and continue the aggressive & rapid innovation. They should also enhance the automation of its production process supporting its contract manufacturers automation. This is a type of way to address the labour costs which are rising including the manufacturers of Apple products.
It would also be smart to improve and create partnerships with a variety of distributors which would result in the improvement of the overall market reach of Apple Inc’s distribution network also. For example, how Beats and Apple did a collaboration, it increased sales.