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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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Introduction

Apple was founded in 1976 by Steve Jobs & Co whose original Idea was to start a company dealing in Computers, this was later names Apple Inc. famous for its amazing product designs, state of the art technology and its Visionary Pioneer in Steve Jobs.

Apple began purely as an IT company, but quickly progressed to focus on consumer products due to the intense competition in the Tech Sector

Through its diversification strategy, Apple has successfully gained high customer loyalty as well as Global Brand recognition through its products, such as Mobile telephones, music players, televisions, tablets and laptops to name but a few.

Apple base their products designs on the needs and wants of their customers, which has allowed Apple as a brand, to be amply accepted.

The aim of this report, is to analyze Apple's environmental analysis using SWOT analysis to anylise both Internal and External Factors, Pestle Analysis, and Porters competitive five forces model

I will also incorporate which strategic approaches Apple Inc. has been following, and how successful the organization has been in its strategic development and implementation.

I will discuss what performance measures Apple should adopt in the future

Question 1 – What significant changes have influenced the organization over the last 10 years and how has the organization responded to the external changes?

There have been a number of external changes which have influenced Apple Inc. over the last 10 years. To analyze the external environment, I have chosen to apply PESTLE Analysis to Apple Inc. PESTLE Analysis highlights that the key drivers of change are the most likely factors that will affect business operations of an organization, however organizations have restricted control over this. (Hambrick and Fredrickson, 2004). These restricted forces are of politics, economics, socio-culture, technology, legalities and environment (Porter, 2006)

PEST ANALYSIS

Political

In 2005, 52% of Apples sales were from outside of America. Due to America's war on Terrorism, they at this stage had no control over relations with any other countries. Apple produced a large number of their products outside America, including countries such as Ireland, China, Czech Republic and Korea therefore political conflicts with any of these countries will have a knock on effect with sales at Apple INC.

Economic

Apple's product range have been viewed by some as a ‘luxury' spend, and as the Economic depression is currently having serious impacts on consumer spending trends, this may impact on Apple Inc. sales, and stall improvements in the company. At present the inflation rate is extremely high, income and unemployment rates are low, which may also impact sales within Apple. Apple's revenue on the market has increased at this stage due to their purchase of foreign currency at a time where the US Dollar has lost value.  Apple as a corporate would not risk economic breakdown

Socio-Cultural

Today's world is very much technology driven, with Apple at the for front in the sense It is the leader in computers, software, and mobile phone technology. This is largely down to the quality and designs of Apple products. Another factor to play a role is the music industry, which has advanced at an alarming rate and has now broken into the cyber world. The Apple product which is iTunes has no real competitor.

Technological Environment

The technological environment for Apple's market has grown at a substantial rate. Mobile Phones have become the must have product for all age ranges with Apple remaining top of the market for innovating products The life cycles of these products are very short, which results in an increase in competitors trying to improve their technology, which in turn then keeps Apple improving to remain ahead of the competition.

Legal Factors

Apple have been the subject of more than a few legal battles. In October 2009 they were sued by Nokia Corporation for Apple's infringement of patent in relation to Wireless Technology. Similar cases have been raised by Samsung and HTC. Apple Inc. have overcame this by following the Legal environment, which states that Apple must operate its business within special regulations such as consumer, health, safety, Intellectual property law and patents on company's products, and employment and competition laws.

Environmental Factors

Apple have been well known to take a comprehensive approach to environmental responsibility, and therefore follow all legislations and restrictions. Apple are committed to ensuring correct disposal of all electrical equipment when it reaches the end of its useful life. Computers and displays are recycled in the correct way.

SWOT ANALYSIS

By Applying a SWOT analysis to Apple Inc. over the last 10 years, it can be used to discover its strengths, its weaknesses, its opportunities and its threats, and how Apple has responded to them can be seen

Strength

Apples brand is based on producing innovative, simple to use products quality products which has made Apple an extremely powerful company in its own right. This is obvious after initially only making changes to its computers, in 2001 Apple produced the iPod. Between 2001 and 2010 We have seen amazing new innovative products introduced to the market, such as Apple TV, the iPhone, and the iPad. Each year Apple are responding to external changes by spending around £1.5 billion in developing new products to satisfy customer, and recruit new ones.

Apples real strength is its brand loyalty, which Is extremely powerful in making them one of the wealthiest companies in the world

Weakness

As Apple's hardware and software products and services are extremely complex as they are of the highest technology they can contain defects such as 'bugs'. When iPhone 4G was introduced, complaints were raised about the signal when making calls. Apple responded to this by introducing an update to fix the issue, however there cannot be guarantee that Apple will be able to detect and fix every defect in its products and services.

This failure could result in damaging Apples reputation and the loss of unsatisfied customers

Opportunities

Due to technology being one of the highest competitive market, Apple must introduce new products and services whilst enhancing existing products/ services so as to simulate new and existing customers to purchase the new and improved technologies and services

With the success of iPod and iTunes, Apple entered in to the Consumer Electronics market. By introducing iPhone, Apple has branched into the Mobile Communications market which will allow Apple the opportunity to branch into further markets, such as TV or even a gaming systems.

Apple and Intel have formed a contract that allows Apple to to install their processors to Apple computers which will prompt businesses to replace their Pc's with iMacs. They did this in order for their business applications to become stable and reliable. Apple have to create a strategy that will expand its product line to other products that is going to be less expensive.

Threats

The largest threat that IT companies will face is the huge level of competition within the technology markets. Price competition is the main threat. Competitors will almost always reduce their selling prices and sometimes replicate and include Apple featured into their products to allow them to attract more customers. Apple has not long branched into the telecommunications industry therefore had to quickly gain experience over rival competitors, to respond to this threat Apple began introducing their products to the market at a lower price with little or even no profit at all for the company. Apple realized they had to investing a lot of money to research and development, to gain a competitive position in the market.

Question 2 - What Strategy Approaches has the organization been following?

STRATEGIC DIRECTION

Despite Apple one of the largest brands in the world, it remains a rather simple company, one that's aim is to move with purpose. They produce a surfeit of marginally differentiated computers, they introduce devices at a broad range of prices, sizes, and capabilities that all point toward something bigger, which is Apple as a brand. They quickly recognize and process in three steps to allow the to:

• Envision the future

• Create the future

• Get rid of what isn't the future

STRATEGIC LEADERSHIP

Apples first visionary leader was Steve Jobs, who believed that in order to innovate ““You need a very product-oriented culture. Lots of companies have tons of great engineers and smart people. But ultimately, there needs to be some gravitational force that pulls it all together.” (https://wiki.shanti.virginia.edu/pages/viewpage.action?pageId=30514706). This gravitational force within Apple was Steve Jobs. Apple has a tight management structure in which leadership is based around, with managers leading their teams using a hands-on approach.

With Steve Jobs being the chief innovator, he was very much involved in the sourcing of the initial idea. Apples strategy used to solve specific customer needs, is to simply study new ideas and how they could promote customer interaction.  This shows apple taking this human-centered approach, and differently than that of their competitors to improves the customers experience at Apple.  

The Ansoff Matrix is a well-used marketing tool used by many companies nowadays in order to help them decide for the development of their product and the market share (see appendix 2). This frame work helps identify methods and directions by Apple Inc.

Market Penetration

Market penetration happens when a company enters a new product into the market. This allows them to gain competitors customers and raise their own market share. Apple follow this strategy when it introduces its new products and services into the market place to increase its market share and attract new customers. Apple have also introduced complimentary services which work with their products, such as iCloud and iTunes.

Market Development

An established product in a market can be tweaked to target new customers, and is often use as strategy to raise profits for the company. To allow Apple to increase its revenue for market development, they found they huge potential in emerging markets, like India and China. Apple used a differentiation strategy to develop their products into these markets with intense competition.

Product Development

A firm already with established products on the market, may use this strategy to develop new products that also cater to the same market. Apple used this strategy when it introduced its product ‘Leopard' which by 2010 was running on more than half of all Mac computers. This strategy has not always been successful for Apple, in products such as Apple TV and Mac Mini. Mac Mini failed in the market due to its limited memory, and little room for improvement.

Diversification

Diversification is the process of launching new products into the market. Apply initially stared by making the well know Mac computers, and have diversified into the launch of a huge range of digital products such as the launch of the iPod in 2001, iPad in 2007 and the iPhone in 2010. Apple have a huge competitive advantage of other competitors as their products and services allows them to differentiate themselves from other competitors on the market.

Question 3 – How successful has the organization been in its strategy development and implementation?

Apple's generic strategy, based on Porter's model, aligns with the company's intensive growth strategies. In particular, the intensive growth strategy of product development is key to fulfilling this generic strategy and supporting Apple's success.

Apple's generic strategy is broad differentiation. This strategy allows them to focus on the key features that differentiate the company and its products from competitors. Even though this generic strategy allows Apple stand out, the company can still widely have reached various other segments of the market. Apples products are designed for everyone, supporting a broad market reach.

Apple Inc. have successfully implemented a number of other strategies to follow, such as premium pricing, low cost, integrating products, low shareholder returns policy and global cheaper market. Although they are one of the most successful brands of world and marked performance of implemented strategies, although it has faced criticism on its use of strategies.  Apples pricing strategy has been widely criticized as Apples product market is higher, making it difficult for the average customer to purchase. Because of this, competitors are consistently working on their own pricing strategy to develop new products at a reduced cost. For example, Google have made plans to introduce to the market a £100 smartphone in India, with free android software, with availability to Samsung who is a strong competitor of Apples.   Apples Integrative strategy of complete hardware (mobile phone) ad software (iOS) has been proven to not be cost effective. Inn 2013, out of every smart phone sold, only 1 is an iPhone (Meyer 2013). Apple is believed to be a market trend setter in low cost of marketing via patent wars. Normal Businesses would require to spend millions of pounds on marketing their products, but thanks to Apples strategy their brand can be seen everywhere at all times for almost no cost.

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