Apple Inc is an international company operating in the information and technology industry. The company is widely known for producing different consumer electronics such as computers, software’s, and servers. Founded by Ronald Gerald and Steve Jobs in the year 1976, the company revolutionized the technology with its Macintosh computer. That company has since grown to be one of the largest in the industry.
The general business environment has six segments, which include sociocultural, demographic, technological, economic, legal, and global segment (Al-Refaie & Bata, 2016). For Apple, the two segments that would rank highest in their influence include technological and global segment. Being in the information technology industry, Apple Inc depends on technology for competitive advantage. The company is always innovating new technologies to solve day-to-day problems. The company purposely depends on technology to survive in the ever-competitive market.
Apple Inc operates globally. The company products reach all corners of the world through a network of suppliers. The company has retail stores in more than 45 states in the United States only. Its stores exist in more than 18 countries all over the world. With the emergence of online business, the company has taken the chance to sell its products online through registered online sellers. The online platform has enabled the company to reach many people all over the world.
Both the technological and global segments are crucial to the company. Competition in the IT industry increases every day. There are many players in the industry and technology combined with global presence is the major competitive force. Computers and mobile phones revolutionize very fast, and Apple Inc has to develop new technologies for it to maintain the market share failure to which others players will take over. With its global presence, the company easily maintains its lead in market share in the industry.
There are five forces of competition. These include substitute goods, new entrants in the market, bargaining power, supplier networks, and competition. The two significant forces for Apple Inc are competition and threat of substitutes.
A substitute is a product that the consumer can purchase in the place of another product. Apple Inc manufactures computers, mobile phones, software and serves. Other companies such as Samsung, IBM, and Lenovo manufacture similar products. These substitute products offer similar benefits to Apple products (Joan, 2012). Also, most of the other companies in the industry operate globally meaning that their products are all over the world.
Consumers have some choices to make when purchasing electronic products. Though Apple products have high functionality, their prices are high as compared to other players in the industry. This makes the threat of substitute to be high given that a low priced product can serve the same purpose. In the past, Apple has managed to maintain a low threat of substitution by maintaining high functionality in the products. In addition, Apple Inc products are more secure as compared to other players in the industry.
Similar to all other industry, the competition forces in the IT industry are high. Many players are producing similar goods in the industry and selling to a limited number of consumers. The switching costs in the IT industry are low given the many substitutes available (Joan, 2012). Given that, Apple offers the highest prices considerably in the industry; the risk of substitution is high. However, some consumers are loyal to a brand, but change is inevitable. Consumers can always switch to other products when they feel the price is high or the functionality is low. With the revolution in technology today, there is a future technological advancement in the industry to watch out for.
To maintain its competitive advantage and market share, Apple Inc has to address the competitive forces that influence its performance most. Among them is the threat of substitution. When a product has many substitutes, consumers have a wide range of products to choose from. Different consumers are looking out for different products based on price, functionality, ease of access and security features (Joan, 2012). Surely, Apple has to address this threat. The Information Technology industry is expanding fast, and there are new entrants into the industry every day. The increase in the number of consumers is insignificant as compared to the number of substitute products out in the market. To increase its ability to address this risk, it is more likely that Apple will strive to invent new technologies and applications to maintain high functionality. The company depends on new technologies to improve on functionality and security features.
Competition is inevitable in the global economy. It serves to protect the consumers against scrupulous monopolists. A company like Apple has many competitors who are out to capture more market share. To maintain its competition, the company has to maintain its market share. It is agreeable that Apple has to address the competition risk. In its reports for the year 2016, net sales were down, and this is just an iceberg (Apple, 2017). It is predictable that the company will try to solve the competition issue by increasing on advertising and supply networks. The company has to advertise more especially outside the United States. In addition, Apple supply networks require to be revolutionized. The company depends on specific retailers to supply and sell its products. Though it has stores, most of them are in the United States and just a few in other countries. Though the company operates globally, some countries have no Apple stores. People in such countries depend on online platforms to purchase Apple products, which can be expensive considering the shipping costs and taxes.
Apple Inc faces several external threats. These are threats that come from outside forces. The biggest threat is the rapid change in technology. Consumers have become more accustomed to technology, and they are demanding new products in a short period. This has increased competition and if Apple fails to meet the expectation of the consumers, then they face the risk of losing market share. The company has to keep up with technological advancement to maintain a competitive advantage. Differentiation is also a good way of maintaining a competitive advantage. By providing personalized services and products, Apple Inc will capture more consumers.
Another obvious risk is the increase in taxes. Countries such as the US have been debating around the idea of increasing taxes. This was a major issue in the campaigns this year. An increase in taxes will reduce the net income thus hindering the growth of the company. Apple has contracted Samsung to supply it with processors for its products. Some time back, Samsung demand an increase in price since there was no substitute supplier for the specific processors. Given that Apple is still in contract with Samsung, there is a threat that Samsung can demand an increase any time. In addition, the iOS is facing high competition from Android OS (Apple, 2017). Most of the other competitors in the market use the Android operating system on their smart phones.
Several opportunities are available for Apple Inc to utilize in increasing market share. The company is known to be very innovative and its every generation of a product increases market share. The release of the iTV was a nice move for the company. Currently, there is information the company is planning to release a 60-inch iTV (Apple, 2017). This will be a next generation Tv, and it is a good opportunity for Apple to increasing its decreasing market share and net incomes. The mobile advertising platform has evolved in recent times. Apple Inc has an opportunity here to increase its advertisements by utilizing mobile advertisement platform. The market for smart phones and tablets is on the rise as people embrace technology. Apple Inc has an opportunity to increase its market share by introducing more improved phones and tablets.
The major Apple strength is its strong market position. Over the years, the company has managed to maintain customer trustworthiness with its never inferior products. The company products, software, and applications are interlinked making it easy for consumers to maintain and update the products. By market capitalization, Apple is the largest company with $521.3 billion by the year 2016 (Nickolas, 2016). The company is also the market leader is some products and services. Among the competitors in the industry, Apple has a strong brand image with a brand value of $154.1 billion. Consumers are loyal to the company based on its brand image. The solid financial position is its other strength. The company maintains its financial position and controls debts. Though the company has been increasing its debts lately, it still has a solid financial position. To take advantage of its strengths, Apple should maintain its brand image in the market by continuously producing quality products and maintaining high-quality customer service.
The major weakness faced by Apple Inc is its high prices. The company has the highest prices in the industry than its competitors. This poses a threat of substitution in the market. The switching costs are low considering that other companies have the same products available at lower prices. Apple maintains that its brand is worth the high prices. Another weakness is the company’s lack of incorporating changes in its latest product generations. Most of the latest company products are similar to earlier versions rendering them useless to the consumers. The changes incorporated are small and insignificantly. The company has also experienced a decline in net sales, which reduced from $233.7 billion in 2015 to 215.6 billion in 2016 (Apple, 2017). To fix these weaknesses, Apple should re-evaluate its pricing strategies and improve on its innovations. Rather than improving on the already existing products, the company should introduce new and exciting products with new features and high performance.
Apple Inc has a wide range of resources. By market capitalization, Apple is the largest company with $521.3 billion by the year 2016. The company is also the market leader is some products and services. Among the competitors in the industry, Apple has a strong brand image with a brand value of $154.1 billion (Nickolas, 2016). Financially, the company is stable. Technologically, the company has a wide range of recourses. From the iOS to Mac, the company is home to some technological innovations. Its Macintosh computer revolutionized the computer section of the industry. The company’s human capital is high. Apple invests a lot in its employees through education and training. It ensures that the employees are independent and can design new technologies on their own or as a team.
Apple Inc has high capabilities. Through its financial strength, the company has the capability to engage in research and development. Research and development are key elements in the development of new technologies and their introduction to the market. The company has so far designed its operating systems for both computers and smart phones. Over the years, the company has designed complex supply chains enabling its products to reach a wide market. This gives the company the capability to operate globally.
Apple Inc has several core competencies. From quality customer service to strong marketing teams, Apple can maintain a strong brand name in the industry. Its innovation of mobile devices technology keeps the company on the lead not to mention its strong financial performance. Customer loyalty is a major competitive advantage enjoyed by the company. The company portrays creativity in its commitment to serving its consumers.
Apple Inc is dedicated to its operations right from the acquisition of raw materials to the final product. By outsourcing, resources that are available in the company remain competitive in the market. Currently, Apple has contracted Samsung to supply some core processors. With its high financial capability and core competencies, the company can set up its industry to manufacture the processors. With this, it can also supply to other companies adding to its wide range of products.
In recent years, the company has amassed some debts. By the end of the year 2015, the company debt to equity ratio was 128.65% (Nickolas, 2016). This shows that the company had more debts that equity. With its technological capability, the company can create new technology in a wide range of products to generate more income. Its financial stability can enable the company to invest in research and development of new products.
By market capitalization, Apple stands as the largest company. Its financial capabilities, core competencies, and a respected brand image enable the company to be competitive in the market. Though Apple has the highest prices in the industry, it still has the largest market share in the industry partly due to its high-quality products. Its strengths overcome its weaknesses keeping it balanced. The company uses its past failures to plan. When it comes to employees, Apple allows employees to develop technologies on their own or as a team and then present it to the management. This enables the employees to feel part of the company. The employees also develop individually. The company has a respected brand keeping its consumers loyal thus shielding it from the risk of substitution. However, with the high competition experienced in the industry, the company has to device ways to remain highly competitive.