In order to succeed in the business domain, it is very important for any organization to ensure that it forms an extensive marketing plan and strategies which shall cover all the aspects of the business enterprise and assist the firm in gaining a sustainable competitive advantage (Eden & Ackermann, 2013). However, in order to ensure that the marketing plan of the organization is successful in nature, it is very crucial for the business to ensure that it engages in extensive Situational Analysis. A Situational Analysis will go a long way in assisting the business to perform well in the long run and also to assess the firm in understanding the different aspects of the business environment. The report is based on the strategic situational analysis of Apple Inc. and will be covering aspects like Company Summary, Production Analysis and Market Analysis.
The organization registered as the AAPL is one of the biggest companies present in the United States with a market capitalization more than $958 billion as calculated on 31 July, 2018. The company is very popular in the market and around 21 million shares of the company are traded daily. There are various owners or shareholders of the company along with certain institutional investors as well (Annualreports.com, 2018). The main owners of the organization are Tim Cook, Arthur Levinson, Ceaig Federighi, Jeffrey Williams, Bruce Sewell and the rest of the shares are owned by the institutional holders like State Street global advisers, Berkshire Hathaway and Vanguard Group Inc.
The organization is headquartered at California and has more than 500 stores worldwide. The head office of the organization is located at 1 Apple Park Way. With its main office present in Cupertino, California, the organization has facilities in various parts of the globe like Maiden, North Carolina where its Data Center is located (Apple.com, 2018). Another data center is also located at Newark and Reno respectively. Moreover, the organization also has its facilities in various other parts of the globe like Munich in Germany, Australia, China and others.
The management team of the company comprises of the board of directors who make the primary executive decisions of the company at large. The first one is Arthur D Levison. Arthur D Levison has been serving as the non-executive chairman of the firm since the year 2011 and oversees all the work which the committees take care of and serves as an advocate for the issues of the shareholders. The next person in position is Tim Cook who serves as the CEO of the firm. He sets the strategic vision for the company at large and ensures that all the key decisions of the market are taken by him (Vogel & Güttel, 2013). The third person in the board is Jeff Williams who has been the chief operating officer since 2010 and reports to the CEO of the organization (Apple.com, 2018). The director oversees the different aspects of the firm like the customer service and supply chain management along with social responsibility initiatives taken by the organization.
Strengths
The primary strengths of the company are as follows:
Weaknesses
The weaknesses of the firm have been given as follows:
The product mix of the organization comprises of the following categories:
The supply chain of Apple can be described as one of the best supply chains in the globe. Around 97% of the procurement expenses which the firm engages in comes from materials, manufacturing and other products. Most of its phones except that of vital components are assembled in China.
Apple decided to outsource its production line to countries in Asia because their existed the efficiency of the operations in Asia and the production rate was much faster. One of the well-known suppliers of the firm is Foxconn which is in Taiwan. The cost at which they produce the good is also considerably lower. Moreover, apple has been increasing its number of Suppliers and this has been due to wide number of reasons like the risk diversification factor, capacity management and related burden, it also has a lot to do with Margins Sustenance and lastly, it is also a contribution of the Supplier Innovation whereby the new suppliers are more willing to invest in better technology in order to be associated with Apple (Lasserre, 2017). However, due to its sourcing strategy, Apple also faces a certain number of risks which happens because of the problems which take place in different parts of Asia like political issues related to lower wages, dangerous conditions and other calamities.
The distribution strategies of any organization form a major key to the success of the firm and assists the firm in maximizing the sales and improving the profits (Wheelen, Hunger, Hoffman, & Bamford, 2017). Apple makes extensive use of the distribution strategies by ensuring that it is able to successfully make use of multiple channels and other direct as well as semi direct sales for different types of products. By using the distribution strategy, Apple will be successfully able to increase its market coverage and incur lower channel costing and improve custom selling (Sava, 2017). As stated earlier, the firm has more than 301 retail stores and this helps it to gain a larger crowd. On top of this, there are more than 5000 distributors of the organization. Various poplar brands like AT & T, Walmart and Best Buy sell Apple products. Moreover, in certain countries even Apple has its stores and recently it has increased its sales on the online domain as well.
Apple Inc. makes use of extensive technology while engaging in the production of the products and uses an e-supply chain as well. Moreover, the organization makes extensive use of technology in its marketing, distribution and other such operations. The technology used at Apple is understood to be one of the most popular technologies used around the globe.
The Macro environmental analysis of Apple will help in understand the general environment in which the company operates. Furthermore, this shall also contribute towards the understanding of whether there are any factors influencing the performance of the organization or not. The given section will be using the PESTEL tool in order to understand the macro environment of Apple:
As Apple is one of the growing American technology companies, it has accumulated a large amount of income and this often leads to issue regarding taxation. In addition to this, as Apple is greatly dependent on China for its manufacturing, any political unrest in China also has a huge impact on the overall performance of the organization and restrictions on the Chinese imports have had an impact on Apple (Johnson, 2016). In addition to this, there have been various anti-trust concerns with respect to the political pressure in various fields like music.
The increased labor cost in China has had a huge impact on the operations of the firm. It has snatched the cost advantage of Apple. Moreover, the income in the developed countries has become increasingly stagnant in nature which has limited the potential market for the consumer goods. However, a strong U.S Dollar has increased the exchange rates which has made business difficult in China as well as Europe.
It has been estimated that the largest consumer spending will take place in the country of Africa, however the consumers in the continent are not aware of the products which are sold by Apple. In concern with markets like United States, there has been a lack of strong emotional attachment with the products. In addition to this, the ethical concerns in regard to the manufacturing conditions in China has limited its consumption among the socially conscious crowd (Rothaermel, 2015). In addition to this, the marketing strategy of the firm has led to public criticism which has tarnished the image of the organization.
The competitors of Apple like google and Samsung have developed an ability to duplicate the products of the organization and hence, Apple has been losing out on its differentiation strategy with respect to this. Moreover, Apple`s portfolio can be stated to be very limited in nature with aa limited functional operating system. With the increasing cybercrime capabilities, the systems of Apple can be deemed to be less secure.
The regulations and government rules relating to Apple Pay has increased considerably as Apple has entered the financial sector and thus the operations of Apple have become highly regulated in nature. This has also increased the litigation costs at Apple.
The biggest issue related to the environment which is being faced by Apple includes the issue related to the disposal of the Apple products which comprise of lithium batteries. Moreover, the pollution of the environmental in relation to the manufacturing facilities in China have been a growing considerably (Apple.com, 2018). Moreover, the climate change can also cause global warming which can disrupt the transoceanic shipping and supply chain activities of Apple.
The Market segmentation allows an organization to drive complete and unified solutions which agree with the customer outreach and help them to reach out to the consumer base of the organization (Stead & Stead, 2013). Apple is not only very innovative in product development but also in their processes of market segmentation (Warner, 2014). Apple operates in different market segments and Apple applies the extensive strategy of making a thorough study of the market and then targeting specific users. The types of market segmentation as followed by Apple are as follows:
Demographic The products are supplied to individuals and families of all age. For example, there is MAC for children and the younger generation has an access to iPhones as well as iPods. Along with this, with features like digital watch and iPads children with the older generation are also targeted (Jennings, 2018). Hence, the demographic segmentation follows age, lifecycle and the occupation of the customers.
Behavioral: The behavior of the different customers is the primary segmentation base of Apple. These behaviors comprise of usage, product knowledge, responses and attitudes of the people. Moreover, Apple has a strong social media base with the help of which it innovates new products and makes their products user friendly in nature.
Psychographic: In this segmentation base, Apple has developed the products based on customer lifestyle (Apple.com, 2018). Mac Book serves as a good example of it and thereby is generally meant for the younger generation and the phones with other items relate to the fun loving adults.
Geographical: Apple sells its products in different geographical areas and thereby it has retailed in 45 out of 50 states in America. Along with this Apple also has operations using the online stores which assist the firm in selling its products around the globe. Moreover, Apple has been planning to expand its stores around the globe and reach the maximum number of customers.
The threat of competition is moderate in the industry of Apple and the company requires high capital with high value of brands.
` The threat of substitutes is low because Apple offers differentiated products to the customers.
The bargaining power of the customers is very high and they have a huge impact on the products and services as provided by the firm.
The bargaining power of the suppliers is quite weak in nature because the number of suppliers is large (Apple.com, 2018).
Along with this, the competitive rivalry in the industry in the industry is quite high as the number of competitors of Apple have increased considerably.
In the first quarter of 2018, Apple has had a market share of 15.6 % of all the smartphones in the global market. Since the year 2009, Apple has been one of the top five smartphone vendors since 2009. The company faces competition from Samsung which has owned around 20 to 30 percent share since 2012 (Jarzabkowski & Kaplan, 2015). The sale of Apple`s iPhones have increased considerably and the firm has incurred a sales of 216 million phones in 2017. In the last quarter of 2018, iphone sales reached almost 19% of the market.
As examined from the given figure, an ideal customer profile is of one who is comfortable with a changing operating system. The individual is comfortable with additional advertising techniques, more than 90% of the users have used the Application store and around 50% of the users are below the age of 30 years (Hubbard, Rice & Galvin, 2014). The iPhones are generally suitable for the younger generation of people who are heavy web and email users and quite comfortable with mobile finances. They have a high income base which makes the phone quite affordable in nature.
In regard to the Mac Book products as offered by Apple, the direct competitors of the firm are Dell and HP. With respect to indirect competition, the substitute products like tablets act as the substitute of Apple Mac Books (Reed, 2015). Although Apple has its own series of tablets named iPads which have itself had an impact on the sales of the company of its Mac Book. With respect to the phone section, Apple faces competition from Samsung, Xiaomi and other popular brands.
Opportunities
The different opportunities as possessed by the company is as follows:
Threats
The different threats as faced by the company have been given as follows:
Conclusion
Therefore, from the given analysis, it can be stated that the organization has been performing considerably well with respect to both the internal and external environmental factors. The report was divided into three parts. The first part discussed the company summary which comprised of the internal operations of the firm and its product portfolio. The second part discussed its production facilities with the next part discussing the external environmental factors like macro environment, industry, market share and competitor analysis along with Opportunity and threat analysis. (Refer to Appendix 1 for the Marketing Strategy Development Structure).
References
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Apple.com. (2018). Apple Inc. [online]. Available at: https://www.apple.com/retail/ (Accessed on: 15 Sept. 2018).
Apple.com. (2018). Investor Relations. [Online]. Available at: https://investor.apple.com/investor-relations/financial-information/default.aspx. (Accessed on: 15 Sept. 2018).
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Jennings, R. (2018). Why Apple Will Lose China Market Share In 2018, Despite The Success Of The iPhone X. Retrieved from https://www.forbes.com/sites/ralphjennings/2018/02/25/why-apple-despite-the-iphone-x-will-lose-china-market-share-in-2018/#348483ab462e
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