Apple Strategy Findings two Part Paper and PowerPoint

Apple’s Environmental Scan

Economic factors and trends

Apple is one of the fastest growing companies that had blossomed into a well recognizable consumer name for electronic devices globally. Apple operations depend and performance significantly on global and regional economic conditions (Apple Inc., 2016). Their components are manufactured in other countries. Some of these countries include, Korea, Japan and Taiwan, but their products are assembled in China (Wright, A., 2012). Even those Apple is seen as a status symbol of financial stability for the elite and others, there are many others that built their self-esteem off of owning Apple products. Unemployment is a big key factor in the financial dealing with Apple’s products. In 2015, economists are projecting that unemployment rate will fall to a low of about 4.7% by the end of 2016 (Zumbrun, J., 2015). Their predictions were close, as of the end of October of 2016; unemployment rate in the United States was at 4.9% (U.S. Bureau of Labor Statistics, 2016).

Political, Regulatory and legal factors and trends

Earlier this year, Apple wrestled with the U.S. Government over unlocking a suspected terrorist Iphone. The FBI and the U.S. Department of Justice, solicited Apple as the suspect has a code on their phone. Apple’s Iphones enables users to set up a passcode to lock out intruders. If the code is entered incorrectly in excess of ten times, then the phone will automatically delete the data on it. Apple’s fear was that by the government requesting them to unlock this one phone, that this was a privacy violation (Rash, W., 2016). These fears of Apples became the same-shared views among iphone users. Giving the government access would allow them to future access for any reason.

Societal factors and trends

A person’s family, friends and even colleagues can serve as a strong contributor to a person’s choice of mobile phone. Today’s youth are more into electronics. Teenagers have more economic clout than that of their predecessors (Grant, I.J., and Graeme R.S., 2006).

Technological factors and trends

The survival and the competitiveness of Apple Inc. is a result of its ability to innovate new technologies. Since the time of its formation, they have relentlessly developed new technologies. It started at the lowest point, but is now one of the top technology companies. The success of the company is attributable to strong and favorable internal environment, which entails such elements as the organizational structure, culture, mission and vision and also the coordination among different departments within the company (O'Grady, 2009). Apple Inc. has a culture of innovation and invention (O'Grady, 2009).

It is a company that is capable of producing a steady stream of innovative products and product improvements (Lashinsky, 2012). A list of notable innovations from the company includes the iPod and iTunes, the Mac Airbook, the iPhone, the Apple App store and the iPad (Lashinsky, 2012). The company still invents new applications because the technological department is fully dedicated to innovation.

Geographic factors and trends

Apple is not only good in terms of innovation but also in terms of the distribution strategy. Apple has one of the best distribution strategies for its products. Apple’s products are located in every geographical region of the world. The central headquarter is in Cupertino, CA. While Apple is enjoying market dominance in the United States, its growth depends on the production of new and improved technology emerging and developing in other markets. Initially, they use to target high-end US consumers, but now have innovated all types of products that suit both the high-end consumers and the low-end consumers. This increasing scale and scope has resulted in a transition from being US centric in manufacturing, assembly, and sales to being global.

In addition to distributing through outside retail chains, Apple operates its own retail outlet shops in 13 countries, which helps Apple capture full revenue advantage. Because the Apple brand has created incredible demand, these retail stores are sustainable. During 2013, the Company’s net sales through its direct and indirect distribution channels accounted for 30% and 70%, respectively, of total net sales. However, there are some geographical regions where Apple is facing new challenges. These include China and Germany. If Chinese and German governments restrict sales of foreign communication devices, services, and servers, it would have a direct effect on Apple’s sales abroad.

Five Porters Forces

Threat of new competition

The threat of new competition is high. The Apple Company needs to maintain its innovation strategy at very high level because the field of telecommunication is very competitive and volatile. The pie chart below shows some of the Apple’s Competitors

The success in the industry depends on innovation. Although Apple Company so far dominated the market; any of the competitors shown in the pie chart has equal chance of taking the market share depending on the innovation.

Threat of substitute products or services

The threat of substitute products or services is also very high. Different mobile vendors compete based on the type of application they have. Companies with phones with many applications are more likely to excel in the market because customers normally go for the phones with many applications. For example, it is clear that some of the iPod’s major competitors include Rio Karma, Dell Digital Jukebox DJ, Samsung Napster YP-910GS, and the Gateway Jukebox Player DMP-X20. Some of these products are better that iPod in many aspects. For example, some of them have a longer battery life. Dell MP3 player, for example, have a 16-hour battery life

Bargaining power of customers (buyers)

Buyers have high bargaining power. They have different options of products to choose from. This means that they can bargain and are free to select from other vendors if the price is not appealing to them. High bargaining power of customer’s means that the pricing of the Apple’s product should be done based on consumer’s expectations.

Bargaining power of suppliers

The technological industry is growing significantly. Supplies therefore have high bargaining powers. The companies are competing for reliable suppliers. That is why the bargaining power of suppliers is high.

Intensity of competitive/industry rivalry

The intensity of rivalry is very high. Every company is striving to introduce new phone. Some of the iPod’s major competitors include Rio Karma, Dell Digital Jukebox DJ, Samsung Napster YP-910GS, and the Gateway Jukebox Player DMP-X20. Some of these products are better that iPod in many aspects. For example, some of them have a longer battery life. Dell MP3 player, for example, have a 16-hour battery life.

A preliminary classification of the external factors and trends of opportunities or threats 

Key external factors that influence Apple’s performance include the political, environmental, social, technological, and legal factors. Political factors are favorable. Apple continues to expand the market to different regions in the world. The only threat related to political factors is that some countries such as China and Germany are planning to restrict sales of foreign communication devices, services, and servers.

The opportunities available to the company are made available to the existing weaknesses. Eliminating all the weaknesses will enable the company to take advantage of the opportunities that are in existence. Doing away with the limited distribution network will be a way of taking advantage of the opportunity related to the expansion of distribution network. Expanding distribution network will be possible through changing the distribution strategy (Helms & Nixon, 2010). The company should do away will its policy of exclusivity and an extensive selection of authorized sellers of its product. Expanding the distribution network will enable the company to reach a large customer base located in different parts of the globe.

Limiting sales of its products to high-end market is another weakness witnessed in the company. The company is only targeting middle and upper class customers. This is a weakness in the market of the company is very narrow. Other customers in the market can be targeted through the creation of a different product line that is directed to those not falling in the high-end market. Due to this, the organization will manage to take advantage of the opportunity related to creation of new product line. Having a wide range of products will ensure all customers in different classes, that is, upper, middle, and lower class customers.

With the strength of the company, it is possible to take advantage of the opportunities that are available. Apple has a very good research and development team that has been at the forefront of ensuring the company succeeds in its innovation (Heracleous, 2013). Due to the availability of research and development team, the creation of a new product line will be very easy. The creativity and innovation of the team will enable the organization to produce new products.

The company has enough resources to cater for expanding distribution network. This is attributable to its good financial performance and profit margin. It can easily open new retail stores in other parts of the world. Apart from opening retail stores, it can increase the number of its authorized sellers.

References

Apple Inc., (2016). Apple’s Financial Statement Form 10-K

Grant, I. J., & Stephen, G. R. (2006). Communicating culture: An examination of the buying behavior of 'tweenage' girls and the key societal communicating factors influencing the buying process of fashion clothing. Journal Of Targeting, Measurement & Analysis For Marketing, 14(2), 101-114.

Lashinsky, A. (2012). Inside Apple: How America's most admired-and secretive- company really works. New York: Business Plus.

O'Grady, J. D. (2009). Apple Inc. Westport, Conn: Greenwood Press.

Rash, W. (2016). Apple-FBI Wrangle Over Unlocking iPhone Strays Into Political Polemic. Eweek, 1.