The purpose of this report is to analyze the competitive and strategic analysis of Apple’s business model. Apple Inc is a business organization that is respected globally. It is an acknowledged pioneer in its areas of operation, in the technology sector to be precise. As a manufacturer and a marketer of computers, softwares, peripherals and networking solutions, its product line includes the Mac OS X operating system, the Macintosh range desktop and notebook PCs, the IPod digital music player, the IPad tablet, the ITunes music store, X serve storage products and X serve G5 servers. Apple sells its products through third party wholesalers, its chain of retail stores and online channels as well. Its vision statement is elaborated as ‘man is the creator of change in the world’ which depicts that it should always be above structures and systems and not subordinate to them.
Apple Inc is among the largest global corporations in regards to market capitalization. In areas of personal computing, it has very important products including portable music and mobile telephony. Apple’s mission statement is ‘to bring the best personal computing experience with students, creative professional , educators and consumers around the world through its innovative internet offering, hardware and software.’ To analyze its market strategy, few structures will be used to justify its diversification and market development. Apple Inc originated from the mutual interests and friendship of Steve Jobs and Steve Wozniak. The two worked together in the development of ‘Apple I in the early 1970s. It has today grown to be among the perfect example of online professional branding. Apple’s marketing has been a success; it has revolutionized the mobile phone industry to a great extent (Goldfayn 586).
One of its products ‘iPad’ has made the front page of numerous newspapers in America and across the divide. Apple plays a different game from that of the gadget industry. Apple has really come a long way from what it used to be. Over the years, the computer market has normally been a PC based system which has been pushed by the Microsoft software platform. However, despite its tremendous growth over the years to being the leading technology company in the world, its financial analysis indicates that seemingly, its strategies have not offered a tactical fit with decisive success factors in the industry. If faster implementations of recommended strategies are ignored, the company could come to bankruptcy. In addition, it may appear profitable due to its high borrowing rates and its profits cannot be reinvested to back up the company’s status and competitive advantage.
Apple’s strategy for growth has been the desire for it to increase its availability and distribution by introducing clones. However, this strategy has not given good yields to the Apple. Its reputation is that of quality and reliability and it ought to exploit all these characteristics. Largely, it’s pure performance is seemingly attributed to it failing to match its strengths with its strategies. It has therefore been recommended that there is need for Apple to refocus on its strength which has taken it years to sustain. This will be achievable through product differentiation. In addition, immediate attention should be given to its high cost structure which it currently has. Apple Inc has quite not been in a position to fight in a price war and also the possibility of it to recurry the price way is quite high. In order to combat this, it has to create a function market where it can compete while still reducing its cost through merging its facilities economies of scale.
Apple Inc faced major difficulties marketing the new iPhones and Ipads two years after Steve Job’s death. Apple’s current CEO Tim Cook has faced great challenges in only two years after the death of Steve Jobs. His biggest challenge has been to maintain the momentum at the world’s most famous and largest technology company. After Job’s demise, the company has had-high flying stock price that has shed a quarter of its value. This has resulted from the company’s market segmentation difficulties especially with the new iPhones and Ipads. As a very highly regarded brand, Apple ought to have changed premium prices for its newly launched products the new 2 new IPhones 5s and 5c. It appears that the simultaneous production of the iPhones was wrong in the first place and misappropriation of resources. Money cautious individuals had the plastic case ‘the iPhone 5c’, while others wanted the iPhone 5s so as to get the top notch experience. For these reasons, the two phones were available for all classes, specification and the money consciousness factor.
Towards mid 2013, in the 2nd quarter, Apple shipped approximately 14.7 iPads which were less than for the previous time in the 1st quarter. Much of this decline was majorly caused by its marketing strategies, for instance, regarding the tablet, it did had not launched a new tablet towards or in the 1st quarter as it has always done in the past. However, completion also played a role in that. At this time, Apple did not get any boost from the new version of the tablet because it released it actually released a new iPad in March 2012 and still released the 4th generation iPad in November. Apple has been losing revenues simply because it lacks major updates unlike its competitors Samsung and Microsoft. At that period, Apple’s market value droped $60 billion following iPhone 5 quality control issues. The pieces of handsets sold after iPhone 5s was released were not encouraging at all. It sold 5 million smart phones on its opening weekend in September but astonishingly, this figure was not as expected, it actually was below analyst expectations. Analysts were expecting Apple to sell about 7 to 9 million iPhones on the 1st week, however this shortfall resulted to apple running out of stock and loosing $60 billion (Ferrell 285).
In the previous years, Apple’s products have been winning there now there are clear signs that its rivals are catching up. The reason for Apple to decline is due to its relatively weak cloud services. It doesn’t have sufficient cloud talent inside the company to develop iClous. Secondly, due to mismanagement, it had begun developing a go slow so as to approach a new target though this plan ever worked. To add on to that, Apple had a bad track record with social products and difficulties with big acquisition. An apparent lack of awareness that Apple had while releasing the iPad and the iPhone 5S and 5C landed it into big problems. Its DNA at that time was simply working away from the eyes of others in silence. This was quite unexpected because for the first time ever, Apple incurred losses. It ended up spending a lot of cash marketing its newly released products thereby loosing revenue, time and resources as its competitors took advantage of it.
It is after realizing that its problems are; overpriced products with super high margins and competitors that Apple has resolved the matter and started working handily on price, functionality and performance. From early 2013, Apple has solved its high class problem and avoided market confusion. Apple has lowered prices to act as an inexcusable solution to revert the situation. In India for instance, it is selling its iPhone for 275 Euros thereby entering into the some kind of coupon competition. Secondly, it has its iPad from 16-gigabyte to 32-gigabyte costing it seventeen dollars more, setting customers back some extra $100. Subsequently, as a result of the upgrading, Apple’s profit margin 53% more while for the iPad Mini fetches 40% margin a figure that remains unsurpassed in the market. Going by this strategy, there is indeed a logical resistance for Apple to join any sort of price wars. It plans to launch a cheap iPhione in Asia in 2014 where 75 units will be sold (Gitman 346).
As the pace for new devices accelerate due to demands from consumers, demand for these products also raises leading to fierce competition. Also, a greater dependence on outside suppliers will help leak information regarding new products which is unthinkable and about orders and sales figures. Another solution to its problems is by not setting agendas which are bound to fail. Apple has set other new strategies for instance; lagging behind in a connected world is a thing of the past. Apple’s iOS is now upgraded and steadily competing with Android. It is after profound thoughts, research and involvement on the ground that Apple decided to try something different that would outdo Samsung’s android. It has quite been an uphill battle for Apple trying to compete with Samsung. However, after a though analysis, Apple realized that Samsung had copied their iOS applications and upgraded them in android. They filed a case against Samsung who were found to have faulted laws concerning copyright in technology. Apple was compensated much adding them more in their corporation. Such interventions have enabled it work more on its products, for instance, oit has upgraded iPad Mini rumour and this has created room for more advancement in the future.
Apparently, Apple has enough cash to grow organically. Through investments and proper management, it is currently investing $2.4 Billion to fund innovative designs and this represents a mere 2.6% of its cash balance. It has been in a position to change drastically by simply avoiding market confusion which has for long been a stabling block for the company.
Works Cited
Ferrell, O C, and Michael D. Hartline. Marketing Strategy: Text and Cases. Mason, OH: South-Western/Cengage Learning, 2013. Print.
Gitman, Lawrence J, and Carl D. McDaniel. The Future of Business: The Essentials. Mason, OH: South-Western Cenage Learning, 2009. Print.
Goldfayn, Alex L. Evangelist Marketing: What Apple, Amazon, and Netflix Understand About Their Customers (that Your Company Probably Doesn't). Dallas: BenBella Books, 2011. Internet resource.
