Company Background
Incorporation of Apple Inc. took place on 3 January 1977 (Reuters, 2013). The company engages in designing, manufacturing and marketing of media devices, desktop computers, and mobile digital music players. In addition, they sell accompanying softwares, peripherals, networking solutions and other applications (Reuters, 2013). Some of the products produced by Apple include iPhone, iPad, iPod, Mac Application Store, iCloud as well as application software among others.
Apple Inc. has its headquarters in the United States of America but serves the whole world. As at December 2012, Apple Inc. had 72,800 employees spread all over the world. In the same period, the company collected revenues worth 156.508 billion US dollars and realized profits worth 41.733 billion US dollars (Strategic Management Insight, 2013). Apple Inc. has several competitors including Samsung Electronics Corporation, Amazon Inc., International Business Machines (IBM) Corporation, Google Inc., and Sony Corporation among others. For Apple Inc. to survive a dynamic and competitive market, a SWOT analysis is necessary (Strategic Management Insight, 2013).
SWOT Analysis
SWOT is an acronym that stands for strengths, weaknesses, opportunities and threats within a firm’s environment (Quick MBA, 2013). Strengths and weakness pertain to a firm’s internal environment while opportunities and threats pertain to a firm’s external environment (Quick MBA, 2013). A SWOT analysis therefore refers to the process of scanning an external and internal environment of a firm as part of a strategic process (Quick MBA, 2013). A SWOT analysis aims at gauging a company’s resources and strengths to a competitive environment. Strengths refer to a firm’s resources available for use in developing a firm. Weaknesses refer to lack of particular strengths. Opportunities refer to chances available for realizing profits in the external environment while threats refer to alterations in the external environment that may pose challenges to a firm (Quick MBA, 2013).
Strengths
Apple Inc. has several strengths. The company enjoys sterling financial accomplishment. As at the end of 2012, the company realized 41billion us dollars, which is available for such purposes like purchasing of shares (Strategic Management Insight, 2013). In addition, Apple Inc. had a gross profit margin of slightly over 40 percent, the highest among other industry players. Secondly, Apple Inc. has a brand distinction due to its ingenious and fully functional products as well as excellent business performance. As at 2012, Apple’s brand had a value of 76.5 billion US dollars (Strategic Management Insight, 2013).
Apple’s retail shops provide customers with excellent services owing to well-trained and knowledgeable customer care representatives who impart brand information to customers (Strategic Management Insight, 2013). In terms of office space, Apple Inc. shops remain the most profitable company. Apple Inc. has a strong sales and marketing teams as well as compelling advertisements, which lead to increased sales. Apple Inc. received an award for the most creative company for the third time in 2012. Lastly, Apple Inc. has acquired and sustained customer loyalty, which enhances its competitive edge (Strategic Management Insight, 2013).
Weaknesses
Apple’s products are expensive compared with products from rival companies. This makes some potential customer opt for products from other companies at lower prices. Secondly, most Apple Inc. products are incompatible with various operating systems making users stick to Microsoft softwares and Intel hardwares (Strategic Management Insight, 2013). Thirdly, Apple Inc.’s market share has declined over the years making it hard to maintain a closed ecosystem for its goods. Drastic change in management after the demise of Apple Inc.’s Chief Executive Officer, Steve Jobs in 2012 marks one of Apple Inc.’s weaknesses since such untimely demise will certainly affect its operations (Strategic Management Insight, 2013).
Some of Apple Inc.’s products suffer defects. A case in point is Apple Inc.’s iPod and iPhone that had clear defects leading to decreased sales for the company’s products (Strategic Management Insight, 2013). In recent past, Apple Inc. has suffered several suits arising from its infringement on other companies’ patents. This has led to reputational and financial losses for Apple Inc. Due to rising part prices and fierce competition, Apple Inc. gross profit may be unsustainable according to analysts pointing to future financial gloom (Strategic Management Insight, 2013).
Opportunities
Apple Inc. has several products, which makes it possible to net different types of customers. Among the products, Apple Inc. produces Macs, iPods, iPhones, iPads, and iTunes (Reuters, 2013). Various manufacturers of application processors are coming up providing Apple Inc. with an opportunity of pulling out of Samsung’s deals since Samsung is Apple Inc.’s direct competitor (Strategic Management Insight, 2013). In addition, prices of such processors will definitely decline. Apple Inc. has a chance of widening its market share due to increased demand for tablets and smart phones (Quick MBA, 2013). Overall, Apple Inc. has an opportunity of avoiding patent issues by acquiring firms that hold such patents. Such patents would lead to sustained growth at Apple Inc. (Strategic Management Insight, 2013).
Various companies infringe on Apple Inc.’s patents and the company has an opportunity of suing such companies and getting damages channeled to the growth of Apple Inc. In addition, this would be an opportunity to destroy rival firms’ reputations (Strategic Management Insight, 2013). Apple Inc. has introduced mobile-based advertisement platform, which allows customers to place adverts on Apple iPhones, iPad and iPods. With sustained growth in cellular phone business, Apple has an opportunity to expand its advert business. Lastly, there is marked increase in demand for cloud-based services and this is an area that Apple Inc. can expand its software business (Strategic Management Insight, 2013).
Threats
Tax increments in the United States of America in 2013 are bound to affect Apple Inc. operations and financial gains. It is hard for Apple Inc. to realize higher profits than those of last financial period (Apple Inc., 2012). Secondly, Apple Inc. and other companies face a threat because of continuous technological changes. It becomes hard for companies to develop new products within a short period but if a company has to remain relevant, it must quickly innovate (Apple Inc., 2012). Workers at Foxconn, the company that manufactures Apple Inc. products, have demanded increased pay. Foxconn is likely to pass such expenses to Apple Inc. and most likely lead to increased prices of Apple Inc.’s products (Apple Inc., 2012). Apple Inc. gets most of its processors from Samsung, which has adjusted prices for such processors upwards. This will force Apple Inc to raise prices of products such as iPods and iPads. Lastly, Apple Inc. realized much of its profits in overseas markets due to a depreciated dollar. The dollar has appreciated and this is likely to erode such gains in overseas markets (Apple Inc., 2012).
References
Apple Inc. (2012). Form 10-K. Web.
Quick MBA. (2013). SWOT Analysis. Web.
Reuters. (2013). Apple Inc (AAPL.O). Web.
Strategic Management Insight. (2013). SWOT Analysis of Apple. Web.