EXTERNAL AND INTERNAL ENVIRONMENTS : Apple Inc.
Apple Inc.
Introduction
Apple is an American global company that has its headquarters in Cupertino, California. The company has been able to achieve great on the market. This has led to it being ranked second among valuable publicly traded corporations in the world. The company has continued to thrive on the market even when its competitors are struggling. The company has been able to capitalize on its internal strengths and the opportunities available on the market to remain competitive in its industry (Zylla-Woellner, 2013). This paper intends to examine the segments of the general environment that rank highest in their influence of the company. It will examine competitive forces that affect the company most and how it has been able to deal with the same. The paper will also analyze the company’s threats and opportunities as well as its strengths and weaknesses. Finally, it will also analyze Apple’s core competencies, capabilities, and resources.
Segments of the General Environment
There are various segments on the general environment that have an influence on the success of the company. This includes political, economic, legal, social-cultural, technological, and environmental. However, the most important segments that the company must always consider are economic and technology. Economic factors normally have a major impact on the strategies applied by the company to ensure its survival in the industry. Apple exists on the market to provide products and services to customers at a profit. However, this cannot happen if customers do not have the capability to purchase (Ireland, Hoskisson, & Hitt, 2012).
Economic factors such as inflation, exchange, employment rates, and interest rates affect the affordability of the products offered by the company. For example, high levels of inflation increase the price of the products offered by the company and vice versa. The economic performance of a country also affects the company’s ability to realize its goals and activities. For example, low levels of economic performances affects its capability to realize high profits hence low revenue. This makes it hard for the company to deal with its expenses with ease. Essentially, it is always essential for the company to analyze different economic factors to be able to develop strong survival tactics. The collapse of an economy can also lead to the collapse of the company in a certain market considering the fact that it may not be able to make any sales (Ireland, Hoskisson, & Hitt, 2012).
Technology is also an important segment from the general environment. Apple operates in an industry where continuous improvement on products and services is imperative to the success of companies. Organizations in the industry have invested a lot in research and development to ensure they produce superior products and services. This has led to continuous technological advancements. Products are being rendered obsolete within the shortest time (Ireland, Hoskisson, & Hitt, 2012).
Technological advancements have forced Apple to ensure its products are improved upon from time to time. Failure to ensure continuous improvement can lead to its products being rendered obsolete. With this being the case, the company risks losing its competitive edge considering the fact other companies will stop at nothing to attract many customers. Apple has to be aware of the technological changes and develop strong strategies on how to capitalize on the same. Basically, the only reason to why Apple has been able to remain competitive on the market is its ability to keep up with technological changes and remaining innovative at all times (Ireland, Hoskisson, & Hitt, 2012).
Forces of Competition
There are various competitive forces that significant to the company. This includes supplier power, customer power, competitive rivalry, threat of new entrants, and the threat of substitute products (Schneiders, 2011). The above forces have a great impact on Apple. However, competitive rivalry and customer power as the most significant. As such, the company needs to address them before thinking of the other forces which as are also equally important. Buyer power relates to how easy customers find to drive product prices down. High buyer power means that customers find it very easy to lower product prices. On the other hand, competitive rivalry relates to the intensity of competition in a particular industry (Schneiders, 2011).
Apple has employed different strategies to deal with competitive rivalry and buyer power. For one, the company has ensured that its products are differentiated to those provided by the competition (Lashinsky, 2012). This is one of the main reasons to why it has been able compete effectively in the industry. The company ensures that it offers what others cannot. As such, customers are more satisfied with what it provides as compared to competition. As a result, it has more power over its customers. However, the intensity of competition in the industry has given customers more power (Hasan, 2013).
Apple has also ensured continuous improvement on its products. This has been done to maintain the quality of its products. Apple does not wait until its products are rendered obsolete. In fact, the company has the tendency to produce products that serve needs even their customers did not know they have. Such innovation practices have not only enabled it to compete on the market but also gain some power over its customers (Zylla-Woellner, 2013).
Improving Ability to Address the Forces
There are a number of ways through which the company can be able to improve its ability to address the above forces. For one, the company needs to work closely with its customers. This will enable to learn customers’ needs as well as concerns. As a result, it will be able to provide products that reflect on what the customer wants (Hasan, 2013). This will also enable the company to avoid a situation where customers are attracted to products provided by its competitors. Equally, the company will also be able to increase customer satisfaction. This also implies that customers will be willing to pay more for the products offered by the company as they will find it hard to derive the same satisfaction from products offered by competitors (Zylla-Woellner, 2013).
Apple also needs to invest more and more in research and development. One of the main reasons to why it has been losing an edge in the recent past is the fact that its competitors have beaten it in terms of innovation. For example, Samsung has been on the fore front in taking Apple’s market share. The company needs to research more on how to improve on its products to ensure their continued competitiveness. This will also enable the company to provide products that are differentiated in nature hence the company’s ability to deal with customer power. Basically, there is now way Apple can be able to survive competitions without continuous innovation (Lashinsky, 2012).
Apple’s Threats and Opportunities
Threats and Opportunities
Apple faces many threats on the market. Competition is one of the major threats the company is facing. The competition in the industry has been intensifying on a daily basis. Initially, Apple used to enjoy a strong position in the industry. However, stiff competition has made it hard for the company to maintain its position. Another threat the company has been facing is rapid technological advancement. This also poses a threat to the company considering the fact that it is aiding other companies in the industry to produce high quality products that compete effectively with those offered by Apple (Zylla-Woellner, 2013).
The above threats can be addressed by the company ensuring that it develops superior products as compared to those offered by its competition. This is a strategy that has enabled the company to remain ahead of its competition at all times. The management in the company must ensure that it figures out what went wrong (Lashinsky, 2012). It is also essential for the company to research the industry to ascertain the strategies employed by competitors to survive on the market. This will go a long way in enabling it to develop better strategies. It is also essential for the management of the company to ensure the company keeps up with technological changes in the industry. It should avoid a situation where its products are rendered less superior as a result of the use of poor technology (Zylla-Woellner, 2013).
There are many markets around the world that the company is yet to exploit. For example, the company has concentrated more on developed market. However, it is yet to exploit many emerging markets. The world today has also been experiencing technological advancements. This is also provides the best opportunity to the company to improve on its products and services (Hasan, 2013).
Apple can be able to capitalize on the above opportunities to enhance its position on the market. For instance, the company can be able to enter more markets to enhance its customer base as well as sales hence high profitability. The company can also use technological advancements to its advantage by developing products with more features. It can also be able to develop new models (Schneiders, 2011).
Apple’s Strengths and Weaknesses
Apple enjoys high levels of customer loyalty. There are customers who prefer products and services provided by Apple as opposed to those provided by competition. This contributed a lot to its success on the market. In the same regard, Apple also enjoys brand reputation which enables it to attract customers with ease. Equally, the company also enjoys strong financial performance. As such, it is in a position to fund its businesses activities without a struggle. Apple has also used its financial might to invest more in innovation hence its capability to develop products that are more superior. The success of the company is also derived from its ability to engage in strong marketing strategies.
Apple also has a number of weaknesses that have affected its position on the market. One of the major weaknesses of the company is decreasing market share. This can be attributed to increased competition. Likewise, some of its products have been found to be defective or failed to meet customer expectations (Zylla-Woellner, 2013). The operating systems used in Apple products are normally incompatible with software provided by other companies, for example, Android and Microsoft. This is also a weakness as it has been luring customers away. Apple products are also expensive as compared to those provided by competition. Apple targets high end customers hence its products are priced high. This has become considering the fact that its competitors are providing similar products that are priced low (Hasan, 2013).
The company can be able to use its strengths to be able to deal with its weaknesses. For instance, the company can be able to use its ability to produce the best products to ensure the issue of incompatibility is longer a problem. Similarly, it can be able to use the same to design products that are more appealing to customers. This will enable it to attract many customers hence its ability increase its market share. It is also evident Apple enjoys strong financial position. The company needs to use the same to invest more in research and development as this is the only way it will be able to deal with the issue of defects in some of its products. Correspondingly, the company can also use its strong financial position to enter other markets to increase its market share (Hasan, 2013).
Apple’s Resources, Capabilities, and Core Competencies
Apple has unique resources that have contributed to its success. For one, the company works with the best talent on the market. It recruits its employees based on merit. Working with the best has enabled the company to develop the best products that serve customers in the desired manner. Apple also uses advanced technology when developing its products. The company has avoided the use of old technologies that might compromise of the quality of its products. Strong leadership is also a major resource to the company. Apple could not have been able to survive the market for this long, were it not for its strong leaders who are always committed to its survival on the market (Zylla-Woellner, 2013).
The company also enjoys a number of capabilities. Apple has over the years enjoyed engineering and innovation excellence. This has enabled it to ensure technological developments and inventions with ease. The company is also very capable in terms of creativity and design. This explains the reasons to why its products have been able to appeal to high end consumers for many years despite competitions. It has also enabled it to ensure product differentiation. Apple’s HR policy is also one of its capabilities. The HR department has been able to come up with strong policies on how to best manage employees to achieve high motivation hence high performance (Zylla-Woellner, 2013).
The core competencies of the company include highly skilled workforce. The company has a workforce with skills and knowledge required for it to serve its customers in the desired manner. Technological resources are also among the company’s core competencies. Equally, creativity and technological development capabilities are also ranked among its core competencies. Apple has used its core competencies to develop strategies that will enable it to compete as desired (Hasan, 2013).
Value Chain
Apple has used its technological might to ensure automated systems. Such systems have been used, for example, to receive materials automatically hence increased efficiency and effectiveness. They have also been used to speed up the receiving process. Apple has been able to capitalize on its talented employees to ensure inputs are transformed to outputs in an effective manner. The company has also used its advanced technologies to ensure efficiency and effectiveness in its operations. In the same way, the company also uses its technologies to produce the best products that meet customer needs in the desired manner. Apple has used it employees and advanced technologies to develop well designed products that can be recycled at the end of their useful life. The company is ever committed to coming up with new distribution strategies. For example, the company has seen the need to expand its distribution capacities to ensure customers are able to access its products without a hustle (Zylla-Woellner, 2013).
It is also clear that Apple has shown great performances in terms of creativity and innovation. The company has also used the same when dealing with the issue of technological development. As mentioned earlier, the company recruits and selects employees on merit. No one can influence the recruitment process. In the same regard no one can be favored during the process. The company understands the need to select the best employees considering the fact that its success is largely dependent on it (Ireland, Hoskisson, & Hitt, 2012).
Conclusion
Apple has been able to achieve great success on its industry. There are various segments on the general environment that affect its success including political, legal, economic, social-cultural, legal, technology, and environment. The most important segments are economic and technology. There are also competitive forces that affect the company. This includes threat of new entrant, threat of substitute, competitive rivalry, supplier power, and customer power. The company has a number of strengths and weaknesses as well as threats and opportunities. There are different resources, capabilities, and competencies associated with Apple. They have also contributed a lot to its success on the market.
References
Hasan, R. (2013). Apple Inc. – An Analysis: PESTEL analysis, Porter’s 5 Forces analysis, SWOT analysis, Comprehensive analysis of financial ratios, and Comprehensive analysis of share performance of Apple Inc. Munchen: GRIN Verlag.
Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2012). Understanding business strategy : concepts plus. Mason, OH: South-Western Cengage Learning.
Lashinsky, A. (2012). Inside Apple: How America’s Most Admired–and Secretive–Company Really Works. New York, NY: Grand Central Publishing.
Schneiders, S. (2011). Apple’s secret of success – traditional marketing vs. cult marketing. Hamburg : Diplomica-Verl.
Zylla-Woellner, J. (2013). Business Analysis of Apple Inc. Munchen: GRIN Verlag.
