Apple Incorporated

Paper Outline:

• ·         Introduction and Thesis Statement

• ·         Historical Background

• ·         Mission

• ·         Vision

• ·         Stakeholders and Competition

• ·         Porter’s Five Forces: Apple Inc’s Industry analysis

• ·         SWOT Analysis

• ·         Business Strategies

• ·         What the Future Holds for Apple

• ·         Conclusion

Introduction and Thesis Statement

Is it not adequate enough to, arguably, state that the modern generation relies on technology for the smooth running of vital life situations? Apple Incorporated is a highly valued American computer giant responsible for the production of personal computers, software, and mobile phones. This company is notable for the existence of designer commodities such as Mac computers, Apple laptops, iPod music players, IPad tablets, and iPhones. Additionally, Apple Inc prides itself in the production and distribution of computer software such as iTune, iOS, OS X, Safari browser and iLife. Currently, the company operates more than 300 specialized stores worldwide that deal in various software and hardware goods and services. The past decade has seen Apple grow into one of the most respected global brands not only in market capitalization, but also consumer satisfaction. This research paper attempts to prove that besides having acquired a formidable reputation in its industry, Apple Inc promises a future growth in market size, revenue generation and profitability based on sound strategic management.

Historical Background

Founded in 1976, Apple Inc owes its existence as to three individuals: Ronald Wayne, the late Steve Jobs and Steve Wozniak. For the next semi-decade, trading as Apple Computer Inc, the company begun producing and distributing two computer models branded: Apple One and Apple Two. With the rise of computer hardware and software designers, Apple created all new Apple Three computers as an answer to similar products from Microsoft and IBM (Linzmayer 2).

Since its formation, the period 1980-1986 proved as the company’s first take at a war of production choice with Macintosh and Apple Lisa. Strategic decisions made in favor of Apple Lisa saw it become the company’s first distributed computer. Although equipped with a graphical user interface, Apple Inc limited the Lisa’s marketability by trading it at high prices. Similar pricing strategies tagged along with the launch of the Mac in 1984 hence limiting its market presence. The rise and fall of Apple Inc as a computer giant can be best described by events that followed the period 1986-1993. For instance, the introduction of PowerBook, and System 7 OS in 1991 saw Apple generate increasing profitability (Linzmayer 34).

However, this time also led to a number of misguided investments and unfeasible market forecasts leading to further drops in market presence. Through public announcement made by Steve Jobs on January 2007, Apple Computer Inc became known as Apple Inc. This meant that they had switched from being a computer-only company by incorporating other electronic devices such as the Smartphone into their brand. The following decade saw its return in market dominance with the introduction of the online Apple stores, iMac, iPod, iPhones, Apple TVs, an iTunes store integrated into the iPod, and the iPad. Presently, Apple Inc is not only home to over 60000 employees but also the world’s most admired corporations (Nagel 17).

Mission

In an industry of its kind, Apple Inc manufactures, innovates, and sells computer hardware and software products, and other related software. Therefore, its mission states as:

“Bringing the best personal computing, potable digital music and mobile communication experience to students, educators, creative professionals, businesses, government agencies, and consumers through its innovative hardware, software, peripherals, services, and internet offerings (Schneiders 3)”

Vision

Apple Inc aims at being a leader in modern technology innovations that will change people’s perspectives of their daily lives. Hence the company’s vision states as:

“Striving towards continual environmental, health and safe management improvement of [Apple Inc’s] products, services and general processes (Schneiders 3)”

Stakeholders

Stakeholders work independently in realizing an organization’s mission and vision statements. They are the fundamental factor behind the company’s success and failure stories. Apple Inc’s ethical and social awareness depend on their operation ability in the interest of their stakeholders. Following its approach to the business environment, Apple Inc displays a worldwide perspective of its stakeholder environment. Therefore, its primary stakeholders are as follows:

Employees: Apple Inc owns manufacturing, sales, service, and marketing firms in feasible regions such as the United States, Japan, France, China, Paris, Australia, and India. In these global stations, Apple Inc employees over 60000 people worldwide (Schneiders 27).

Independent Software Designers and Developers: These individuals use available resources when developing new software for Mac and iOS brands. Most Apple Inc’s developers work as freelancers with the help of certified apple engineers and a well equipped library stocked with software development tools and other technical manuals (Schneiders 28).

Customers: These are individuals who buy and use Apple Inc’s final products and services. Presently, this corporation enjoys a large customer base of over 150 million users worldwide.

Suppliers: Apple Inc insists on dealing with suppliers who ensure a constant supply of high quality products. Additionally, suppliers must have displayed exceptional standards of ethical and social responsibility. Desirable suppliers should be flexible enough tackling dynamic business environments. It is, therefore, expected of them to be aware of increasingly competitive nature of business conditions. Following its transcultural operations, Apple Inc’s suppliers meet different amounts of challenges in their line of duty (Schneiders 26).

The Music Industry: Through iCloud, Apple Inc offers artists and consumers a chance to upload and download music at reasonable prices. With reference to iCloud, Steve Jobs said: “…people think that the cloud is just a big disk in the cloud. Here at Apple Inc, we think, it is more than that.” Additionally, iCloud allows customers to sync third party applications. Music saved on a cloud such through iPhones can be replayed on the iPad by the use of cloud sync. As a supporter of intellectual property rights, Apple Inc ensures legal acquisition of content through authorized purchases. For instance, financial reports reveal expenditures of over 100 million US dollars on songs from large music producers such as Universal Music (Nagel 102).Other stakeholders include: Founders, Stockholders, the Media, Governments, Society, Competitors, and Environmental Organizations.

Competition

As earlier stated, Apple Inc has become a household name in the electronics industry. This achievement is through the creation of mobile phones, operating systems, computers, and user interfaces. Apple Inc’s products and services enable their users manage, share, assemble and distribution of personal and corporate content. Although it has created a domination that makes it almost immune from competition by similar firms, Apple Inc recognizes their market presence. For instance, Apple Inc begun its mobile operations as a partner to Google Inc, however, the two grew into immense competitors. In a perfect example where they worked together is Google Inc’s creation of Gmail for Apple Inc’s Smartphone (Nagel 99).

However, the recent past has seen Google develop the Android OS as a direct competition to Apple’s iOS for Smartphone. Moreover, Google not only introduced its own line of Smart phones such as the Nexus, but also allowed other phone manufactures free access to the Android OS. Mobile phone manufacturers Samsung and Sony Ericson have utilized this opportunity and come up with devices such as the Galaxy and Xperia series respectively. Trading at relatively lower prices vis-à-vis Apple Inc’s iPhones, Samsung, Google and Sony Ericson are gaining ground on a once Apple Inc’s market (Nagel 111).

Apple’s current competition for market position does not end with the OS and smart phone environment. It exceeds into the provision of online content such as applications, movies, document readers and music. In the personal content industry, Apple Inc faces stiff competition from web content sharing sites such as Google’s YouTube and Amazon. These two are commercial websites that provide users with access to music, movies, electronic books, and television shows. Amazon is the easiest way possible for acquisition of digital content with the aid of a straightforward user interface. Unlike Apple, it fails in the provision of services across a wide range of products such as digital music carriers (Nagel 90). Other sources of competition include IBM, Microsoft, Gateway, Acer, Adobe Reader, Toshiba, Dell, among others.

Porter’s Five Forces: Apple Inc’s Industry Analysis

•         Rivalry

Apple competes in three principal sections of the electronic hardware industry that is portable music players, mobile phones, and personal computers. Since each of these three areas is fairly developed, Apple Inc’s market growth is forecasted as steady and moderate. In the personal computer industry, the product market is dominated by heavy competitors with ample capital investments, including, Dell, Gateway, Apple, HP, Compaq, Samsung, IBM, and Toshiba. In the presence of virtually identical computers, this market segment is characterized by highly competitive prices hence reduced profits. In the recent past, Apple was placed, along with Dell, as the most market potential brands with increased market presence and profitability (Gitman 46).

Therefore, the increased spending ability of Apple Inc on product research, development, and marketing would enable them gain dominance. In the mobile phone industry, Apple’s iPhones are placed second after the Samsung’s smart phone based on the latter’s high sales volume. On the other hand, Apple Inc enjoys massive market dominance in the portable music industry. Such an advantage enables them utilize different levels of price dictation and product differentiation. Consequently, rivals such as Sony are striving to create products with the technological equivalence of Apple’s iPod. However, Apple Inc displays continual market domination in this part of the industry through iPod’s brand innovation and differentiation (Gitman 47).

•         Threats of New Market Entrants

A few notable manufacturing companies dominate the personal computer and mobile phone market. They include: Dell, Gateway, Apple, HP, Compaq, Nokia, Sony Ericson, Samsung, IBM, and Toshiba. However, due to legal barriers and large economies of the scale, there exists a substantial limitation to new market entrants. In addition to heavy capital investments, new companies need to create equally competitive computer hardware and software products.  Apple Inc displays leadership in market dominance where portable music players are concerned. Since this industry is relatively new, the main competitors include Apple, Nike, Sony, and Dell. While portable music products require heavy capital outlays, the World Wide Web has opened up platforms for online music websites. This exposes Apple’s iTunes to new threats in undesirable shifts in market shares. However, the innovativeness of the Apple team in developing and differentiating the iPod makes the most sought after portable music player in the global market (Gitman 47).

•         The Threat of Product Substitution

Each of the mentioned competitors has its own range of computer products for potential consumers. For instance, computer manufacturers produce both desktops and laptops for a customer base with diverse wants.  Majority of these manufactures rely on Microsoft OS and Intel based CPUs. Apple Inc’s preference in using their OS X and Power Processors from IBM ensures uniqueness and inter-industry product differentiation. Similar software employment is present in their iPhones, as opposed to rivals such as Samsung who rely on Google for Android OS. In the music market, the iPod faces possible substitutes such as Jet audio, AIMP, portable CD players and Creative Nomad. However, these players are USB-based, revealing their incapability in holding immense music files (Simon 33).

•         Buyer Bargaining Power

Apple Inc employs the aspect of product differentiation in its computers, iPhones, and iPods. For instance, the iPod has exclusive Apple innovations that differentiate them from potential competitors. Since it is hard to stumble upon products with similar features, this strategy reduces the buyer’s price sensitivity. Furthermore, buyers of Apple Inc’s products display relatively low bargaining power as a result of purchasing in high volumes. Finally, purchasing an Apple Inc’s product ties a consumer to product servicing and maintenance from certified company dealers. This encourages their customers to get favorable price tags for their product needs (Simon 33).

•         Supplier Bargaining Power

Apple uses a large number of suppliers in product manufacturing, assembly and marketing processes. This encourages lower supplier bargaining abilities regarding input prices. For instance, Apple Inc uses display units from Samsung, Toshiba and IDT, and DVD drives from Sony, Samsung, LG and Phillips. This equips them with the ability of switching in between suppliers where desirable. However, an exemplary example of a lock-in situation exists between IBM and Apple Inc. IBM has had its power processor so essential for Apple that a switch to other suppliers would lead to high production costs (Simon 45).

SWOT Analysis

Apple Incorporated is a worldwide organization that is proudly viewed among most individuals. Consequently, the company’s marvelous mouthing attracts excellent pricing strategies and higher demand for its goods. Additionally, the competitive advantage gives Apple a mile ahead of local and foreign competitors. However, the rise of Google’s Android OS has drastically affected the market share of iOS and iPhones. This SWOT analysis serves as an analytical section that will evaluate the external and internal factors affecting Apple Inc (Gitman 50).

Strengths:

These are the internal factors that give Apple Inc a competitive advantage over the rest. They include:

•         Well reviewed and recognized amongst existing and potential product users.

•         Apple is the second largest manufacturer in smart phone manufacturing- slightly below Samsung.

•         With a strong brand name, Apple is miles ahead of relevant competitors.

•         Great financial history has helped Apple achieve adequate investor confidence for capital accumulation.

•         Investments in product research, development and marketability drives team innovations hence strengthening its market availability.

Weaknesses:

These are internal factors that place Apple Inc at a disadvantageous position when compared to competitors. They include:

•         Persistent lawsuits affect their financial conditions eventually poor operating results.

•         Apple product recalls injures its reputation as a reliable global Corporation.

•         The incompatibility of the Mac with other computers and software hinders Apple’s ability in acquiring a considerable market share.

•         High product price tags hinder their sales volume.

Opportunities:

These are outside factors that show an opportunity for Apple’s growth and development. They include:

•         Growing preference in smart phones and tablets could boost Apples revenues on iPhones and iPad.

•         Good mobile phone advertisement and marketing could lead to market growth.

•         The business world forecasts a steady increase in the demand of smart phones by the year 2014.

•         Apple remains the strongest provider of mobile phone applications with over 350,000 applications.

Threats:

These include the external factors that place Apple Inc at a disadvantageous situation in the industry, namely:

•         The rise of Google’s Android OS has adversely affected iPhones’ market attractiveness.

•         The death of Steve Jobs negatively affected Apple’s potential development plans.

•         High dependence on competitors such as IBM, Samsung, Toshiba and Microsoft for input supplies may increase production costs.

Business Strategies

Apple Inc displays the internal ability in developing and designing computer hardware, operating systems, mobile Apps, and other electronic devices. Indeed, Apple products are different from those of their competitors as they are innovatively designed, and easy to use. Apple’s marketing managers are trained in executing product advertisement using clear explanations on product designs hence generation adequate consumer interests. In an industry characterized by small profit margins, apple places emphasis on attractive product designs. This differentiation helps them in increasing consumer loyalty significantly reducing price sensitivity (Wozniak 23).

With many competitors copying a number of Apple’s successful productions it, timely, updates and improves its products. Therefore, Apple Inc recreates itself through new products thus cutting down on immature competition. Strategic management would demand that Apple Inc exploits the need for initial market entrances when distributing music, and video clips. As part of its secondary missions, this company alters individuals’ behavior independent of market competition. Its product development has taken a newer cause of converging computer devices, portable music devices and mobile phone devices (Brigham 54).

Furthermore, the employment of multiproduct market strategies ensures a decline in Apple’s over dependence on a single market returns. Product diversification provides room for merging resources, activities and technology hence reducing operation costs. Moreover, this strategy encourages the transfer of competencies leading to possible innovations. As a seeker of new business opportunities, Apple creates a global demand for its tailor-made products.

In the modern business environment, corporations expand into untapped markets thus diversifying their revenues. This may be because of matured local markets and infiltrated industries in the event of exposed product pricing strategies.  Indeed the market success of smart products such as the iPhones, iPad and iPod can be sighted in varied cultures, countries and societies. Lastly, setting up Apple stores in alien markets away from the US not only enhances its competitive ability, but also diversifies its search for innovativeness (Wozniak 160).

What the Future Holds For Apple Inc

The Apple Inc as a brand has enjoyed a considerable growth during the Steve Jobs era. Its innovative capabilities, marketing strategies, and strategic business partnerships are key factors that determine their market presence. In the realization of future development goals, Apple Inc is employing the following additional measures: first, it continually engages in product marketing, research and development for dynamic brand discoveries. Secondly, it ensures a timely entry and supply of existing products to feasible global markets. Thirdly, it reaches it engages in consumer identification, definition and outreach programs that research on ultimate user need. By expanding its market presence and creating unbreakable consumer relations in emerging markets, Apple Inc aims at securing new customer loyalties (Schneiders 456).

Conclusion

Nevertheless, Apple Inc remains a leading global Corporation in the computer, phone, and other electronic industries. Though it faces competition from companies such as Dell, Amazon, Samsung, Google, Gateway and HP, Apple’s strategies are considered as some of the most viable in the business. Therefore, Apple is enjoying sizeable market advantages following rises in consumer demand for computers, smart phones, and portable music devices. From the, above detailed, analysis, it is conclusive enough to state that besides having acquired an outstanding reputation in its industry, Apple Inc promises a future growth in market size, revenue generation and profitability based on sound strategic management.

Works Cited

Brigham, Daves. Intermediate Financial Management. Mason, Ohio: Thompson South Western Publishers, 2007.

Gitman, Lawrence J. The Future of Business: The Essentials. New York, NY: Cengage Learning, 2008.

Linzmayer, Owen W. Apple Confidential 2.0: The Definitive History of the World's Most Colorful Company. New York, NY: No Starch Press, 2004.

Nagel, Sarah. Analysis of Value, Image and Positioning of a Brand: An Analysis of the Brand Apple in Regard to the VIP-Criteria. Santa Cruz, CA: GRIN Verlag, 2010.

Schneiders, Sascha. Apple's Secret Of Success - Traditional Marketing Vs. Cult Marketing. Diplomica Verlag, 2011.

Simon, William L. iCon Steve Jobs: The Greatest Second Act in the History of Business. Hoboken, NJ: John Wiley & Sons, 2005.

Wozniak, Steve. iWoz: From Computer Geek to Cult Icon: How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It. NY: W. W. Norton & Company, 2006.

               

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