Apple incorporation was founded by Steven Paul Jobs and Stephe Gary in 1977 in California. The company is globally famous for its high end technological products like iPhone, laptops, tabs and computer software. The unique selling point of the products made by Apple is its dissimilar operating system on which all its devices work. Apple’s operating system is possessed by Macintosh as the company does not favor the use of the operating system of Google and Microsoft. The company has a global presence in as many as 50 countries all around the globe and covers the market of some major areas like UK, France, Germany, Spain, Japan, USA and Canada. (Apple Inc., 2017). Apple’s strength lies in its constant technological innovation. Technology is the power of the organization. The company is huge in size with almost 14,200 people employed by the company all over the world. The company also has a wide product line that includes iPhone, iPod, Macboo, iPad and Apple Tv. Even though Apple is one of the leaders in its industries, the company has few weaknesses and threats that need to be taken care of (Hanson & Giannantonio, 2013).
Apple’s mission statement comprises of two parts. Firstly, the company’s main aim is to offer matchless and stylish technological gadgets to its customers. The company’s principal concern is its product improvisation and maximize customer satisfaction. Employees are given importance at Apple, but only after the main aim is fulfilled. Hence, the main focus of the company is on self-improvement, company goals and current strategies (Johnson, et al., 2012). The second part of the mission statement is focused on the how Apple could flourish in all countries of its operations by introducing creativity in its existing products like phones, notebooks, desktop computers and operating systems.
The corporate strategy at Apple has its aim to make the company grow. In order to achieve this goal, the company uses two integration models which are described below:
Horizontal Integration: – This strategy at Apple deals with the integration of similar business practices which are placed at the same level of the company’s value chain and hence it is termed as a horizontal integration model strategy. The practical use of this strategy involves the introduction of new products or making new innovation in the existing products and also by introducing these products in new geographical locations and markets. This strategy uses approaches like acquisition, joint ventures and mergers to increase the scale of of operation. This approach helps the company to keep up with the competitors in the industry and eventually leave them behind and gain dominance in the market (Jinjin, 2013).
Vertical Integration: This strategy focuses on gaining effective control by Apple on the companies that come vertically under the organization in terms of the value chain structure and distribution. This is a very important and effective part of the corporate strategy. The strategy focuses on the operational areas of Apple like the product design, timely production and the marketing and promotion of the products of the company. Once all these processes are unified by the company, Apple can develop direct contact with the users of the final products using the online Apple store called iTunes and via the retail apple stores that provides excellent customer support and product care information (Jung, 2014). This will additionally help Apple to lower the cost of transaction and have a fixed supplier and distribution network, which could help the company to stay ahead of its competitors in the industry.
The business level strategy of Apple has the goal of staying ahead of the other competitive companies in the industry in which Apple is operating. The main focus of this strategy is to gain competitive advantage. In case of personal computers, the major competitors of Apple include HP, Lenovo and Dell. In terms of operating system, Microsoft is the main challenge and in context of smartphones the list of competitors involves both domestic and international firms like Nokia, HTC, Samsung, Sony and several others. The key difference between the former and contemporary strategies at Apple is that the company emphasizes more on the improvisation of its Smartphones and less on the personal computers and notebooks. (Khan, et al., 2015).
The PEST examination involves the political, economic, social and the technological aspects that may have an impact on the business of Apple either directly or indirectly. This section explores these factors and their anticipated impact on the business operation of Apple.
Political factors: – The political factors like change in the ruling government and political stability in the country of operation may have a major impact on the business of Apple. Amendments in the free trade policies of several countries provide an opportunity for Apple to distribute its products in different countries all over the world in a facile way. Additionally, the countries with greater political stability should be made as the focus of business as this will help the organization to operate smoothly without any fear of anticipated political turmoil or disturbances (Mrak-Blumberg, et al., 2006).
Economic factors: – This section focuses on the effect of the economic factors like recession, boon on the business operations of the company. Ballooning in the economy acts as a hurdle in the increase of revenue of the company. The countries with stable economic condition have a huge potential to become Apple’s target geographical area as these regions ensure maximum profit and uninterrupted business for the company (Gosnar, 2012).
Social factors: – Social factors have a significant effect on the business of Apple. Due to increase in the trend of smartphones and other technological gadgets, Apple found a lot of opportunities all over the world. These factors can be used for current business operation and also to predict the future of the company based on the analysis of the social trends in the future. The increasing trend of social media for both personal and professional use is also helping the company to increase its sales. People have become so addicted to smartphones that they cannot practically work without them. This is a good news for Apple.
Technological factors: – Technological advancement is the bread and butter for Apple. The rapid advancement of technology is a blessing as well as a problem for Apple. The company is highly innovative and hence technological advancement is a blessing. But since the rate at which the technology is developing it can be very difficult for the firm to cope. The technologies developed by the company involve a lot of hard work and these can get out date in no time. So this can be a threat to the business of Apple (Nagaraj, et al., 2013).
The biggest strength of Apple is its strong worldwide brand image. This helps the company to introduce new products with a lot of faith. Additionally, Apple’s premium pricing strategy enables the company to maintain huge profit margins. This helps the company to remain flexible when it comes to adjusting price without compromising its profit. Another strong point that Apple possesses is an innovation in its products. Rapid innovation keeps Apple ahead in technological advancement and hence helps the company to maintain competitive advantage.
Apple’s restricted distribution proves to be a great weakness for the company. The company is very careful in selecting authorized sellers due to the company’s policy of exclusivity. This has resulted in a reduction of the company’s distribution network.. This weakness limits the company’s market reach. The products of the company have been priced at the high end, which makes them affordable to only high income customers. This squeezes the company’s customer base by disabling the majority of low and medium income customers to have access to the products of the company (Melnychuk, 2011).
Expansion of the distribution network of the company is the biggest opportunity available to Apple which is also directly connected to the company’s weakness. Apple can reach a wider customer base globally if the company exploits the opportunity of expanding its existing distribution network. Additionally, the company can also increase its product line. Apple has always been considered as a very innovative company. This innovation can be used to introduce new and more creative products. As the existing products of the company are highly successful, the company could use its brand image to introduce new products with high acceptability among the customers. Introducing and developing new product lines can help the company to grow. The analysis showed that Apple has a lot of opportunities in the industry even though there is intense competition prevailing in the industry (Xue, 2016).
Since the industry in which Apple is operating is highly competitive, the company faces threat from its competitors ike Samsung, HTC, Lenovo. All the competitors of the company are very innovation and highly aggressive making it difficult for Apple to keep its market share intact. The biggest threat that the company faces from its competitors is the threat of imitation. Samsung is the most significant threat in case of imitation as the features of the company’s products are closesly matching the features of Apple’s products. Some domestic firms are also trying to adopt the physical and technical features of the company. Another threat for Apple is the rise in the cost of labor rates in China. The company has located its manufacturing units in China specifically for the reason that labor was available in region at lower cost. The rise in this cost will automatically increase the cost of production for the company. This will further put threat ot the profit margin of Apple.
Apple has always been admired for its innovative products. It was the first to launch a number of distinguished products in the industry. The company has a wide line of products each with its unique features. All products manufactured by Apple manage to stand out among the competitors similar products. The main products and services offered by Apple are given below:
The above analysis reveals that Apple is undoubtedly a globally renowned company that has been highly successful due to its innovative nature of doing business. Apple has always been aiming to be a leader in the industry. Even though the company is already doing great, there are some suggestions which the company can use to become better than what it is right now. Firstly, the company should indulge in the quick expansion of its branches all over the world. This will make the company more accessible to a very wide customer base and hence help the company to increase its sales. This will ultimately increase the company’s market share.
Secondly, the managers should have absolute clarity about the mission and goals of the company. This is very important to sure that the employees know what they are targeting and hence can choose the right method to achieve it. This enables the company to set its strategic objectives in consistency with the mission of the company. This will help the company to achieve the set goals and stay a leader in its industry. Apple is suggested to retry focusing on desktop computers. Even though portable computers and devices are the latest trend, yet there is huge demand for desktop computers in the corporate world. While introducing new product lines, desktop computers can be a great product to invest in. Additionally, the company can improve its overall performance if it conducts proper strategic planning (Mickalowski, et al., 2008).
Apple should also adopt the practice of reducing the price of its existing products while introducing a more innovative, but similar product in the market. For instance, the company should decrease the price of the iPhone 6 when it introduced iPhone 7 in the market. Thus, Apple Company needs to work on its weaknesses and it can be done by using various strategic tools. Such tools help to analyze the problems and weaknesses which can be quickly worked upon.
Strong brand image is Apple’s biggest strength and the company is recommended to safeguard it at all times. Apple should stay away from issues and controversies that could put the brand image of the company in any kind of potential risk. Most of the controversy these days are happening on social media isites, hence the company should use this platform very carefully while interacting with the users. Another way to keep the company’s brand image strong and gain public trust is to indulge in social welfare activities. The company should be socially responsible while conducting its business operations. The company should provide a healthy and cooperative working environment to its employees as the employees can be an important source of promotion for the company’s image and products.
The company should also clearly recognize its target customers while launching a new product. This will help the company to define the needs and expectations that people have from its products and services in a very clear way. Identifying the target audience can help to study the values and demands of the company in detail. The company should also make customer satisfaction as a top priority. No business can be successful without its customers and customers can only be retained if they are happy with the products and satisfied with Apple’s services. The company should also open separate service centers that deal with the problems of the company’s products, so that the customers are encouraged to buy its products since the day assistance is readily available. Apple should indulge in staff training to help its employees understand how to deal with the customers. The company should speed up their internal management by encouraging teamwork in the organization. The employees should made to understand the importance and benefit of the knowledge sharing and working together (Sawayda, 2011).
The company has a Premium Pricing Strategy, which makes it less accessible to people belonging to lower and middle class. These people, however, form the majority of buyers all over the world. The high price strategy of Apple makes it products to stay out of reach of a large volume of potential buyers. Many people tend to buy older models of people’s products since the price becomes more affordable after the company launches the upgraded version of the same product. This squeezes the market for the newly launched products of the company and has an adverse effect on its revenue. In order to combat this, Apple should make its pricing policy a little moderate in order to expand its customer base. The company may also introduce new and improvised installment payment plans to make the pricing strategy more flexible and allowing more customers to be able to afford the products of the company.
Apple should try to incorporate product differentiation in its business operations. A number of companies have been copying the physical and technical features of Apple’s products. Also, these companies are selloing their products at a very cheap rate as compared to Apple. Apple should indulge in achieving product differentiation and also get its unique features patented. This will help the company to minimize the fear of imitation. Also, the company can introduce other demanding features in its products that will not let the customers to switch to other substitutes available in the market. For example, Aplle can introduce its products in a wider range of colors in order to attract the customers who are fond of vibrant colors.
The company could also provide some free facilities to the customers to make them stay loyal to the brand. Due to rise in competition, the customers have a tendency to shift to other brands if they are offered cheap offers and discounts. In order to sustain in this environment, Apple should introduce a variety of offers to new customers and free services to its existing customers. This will help the company to stay the customer’s favorite (Lazonick & Tulum, 2013).
Apple could expand its operations in Asian markets as the region has a huge volume of potential buyers. This will help the company to increase its customer base and sales revenue. Geographical expansion will also help Apple to fight its rising competitors. The company can additionally open its manugfacturing units in these regions due to the presence of highly skilled manpower and lower labor rates.
The company should hire young people as they are highly innovative and energetic. This will make the organizational culture at Apple very vibrant. Also, since the internet is becoming more accessible and popular everyday, the company should design its website in a way that customers can find information about its various products very easily. The company should try to interact with its customers on social media in order to gather effective feedback and better insight into the customer’s needs and expectations.
Conclusion
Apple is one of the top companies when it comes to sales revenue and innovation in the industry. The company has been working very efficiently to increase its profit percentage and market share. The company has a very clearly defined mission and vision statements, which gives each employee a clarity about what is expected from them. All these factors have contributed greatly to the compay’s successfullness. Apple still faces a number of challenges which are directly related to intense competition, premium price starategy and limited distribution network. These factors are acting as a hurdle in the path of the company. The suggestions provided above can be used by the company to make changes in its operations and strategies in order to maximize the companies profit.
References
Apple Inc., 2017. Apple official website. [Online] Available at: https://www.apple.com/
Gosnar, A., 2012. The classification of innovations: The case of Apple, Available at: https://www.cek.ef.uni-lj.si/magister/gosnar795-B.pdf
Hanson, A. & Giannantonio, C., 2013. Academic Reflections on the Life and Career of Steve Jobs. Journal of Business and Management, 19(1), pp. 1-76.
Jinjin, T., 2013. A Strategic Analysis of Apple Computer Inc. & Recommendations for the Future Direction. Management Science and Engineering, 7(2), pp. 94-103.
Johnson, K., Phan, H. & Singer, J., 2012. The Innovative Success that is Apple, Inc., Available at: https://mds.marshall.edu/cgi/viewcontent.cgi?article=1420&context=etd
Jung, S., 2014. The Analysis of Strategic Management of Samsung Electronics Company through the Generic Value Chain Model. International Journal of Software Engineering and Its Applications, 8(12), pp. 133-142.
Khan, U., Alam, M. & Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc.. International Journal of Economics, Commerce and Management, June, 3(6), pp. 1-13.
Lazonick, W. & Tulum, O., 2013. Apple’s Changing Business Model: What Should the World’s Richest Company Do with All Those Profits?, Available at: https://www.theairnet.org/files/research/WorkingPapers/LazonickMazzucatoTulum_AppleBusinessModel_AIR-WP13.0701.pdf
Melnychuk, D., 2011. Apple’s IPad – VRIO Analysis, Available at: https://dimitriymelnychukstrategyjournal.blogspot.in/2011/02/apples-ipad-vrio-analysis.html
Mickalowski, K., Mickelson, M. & Keltgen, J., 2008. Apple’s iPhone Launch: A Case Study in Effective Marketing, Available at: https://www.augie.edu/sites/default/files/u57/pdf/jaciel_subdocs/iPhone.pdf
Mrak-Blumberg, E., Renery, A. & Bundgaard, T., 2006. Strategic Report for Apple Computer Inc.: Pandora Group, Available at: https://economics-files.pomona.edu/jlikens/SeniorSeminars/pandora/reports/apple.pdf
Nagaraj, S., Patterson, L., Schildhorn, B. & Thacher, J., 2013. Global strategy: Apple Inc., Available at: https://community.mis.temple.edu/shashanknagaraj/files/2014/04/Apple-Strategy-Paper-Group-4.pdf
Sawayda, J., 2011. Apple Inc.’s Ethical Success and challanges, Available at: https://danielsethics.mgt.unm.edu/pdf/apple%20case.pdf
Xue, C., 2016. An Examination of the Strategic Use of IT Applications in Achieving Competitive Advantages. International Journal of Advance Research in Computer Science and Management Studies, July, 4(7), pp. 1-10.
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