Apple consists of significant resources and considerable potential in the business world. Even though it consists of such capabilities there occur various trends in the general environment that causes the threats which pull down the progress and success of the firm. These threats can be marginalised only with the help of appropriate planning and suitable action which concentrates more on the value added core competencies in the business. This may lead the company to produce valuable products and services leads to a mounting opportunity for the shareholders and customers.
Economic Environment
Booming Global Economy
On revising the past years of global economy the world has attained the complete progress from recession in recent years. This uncertainty makes people looming of the money. This makes people to depart from the quality to less expensive products. The Apple known for its brand, quality, Innovative technology and luxury has mislaid due to its supreme pricing position paves the way for its competitors the producers of less expensive products. However the consumers attracted more towards the valuable Apple’s premium products during the economic upturn than its low pricing competitors.
Chinese Economy:
Recent growth in Chinese economy catches the attention of several companies to sell their products in china. Due to the growth of the Increasing economy proportionally there is also increase in the labour wages. This may results the buying power which makes people to draw more attention towards the Innovative products such as Apple i phone and i pad.
Political Environment
Potential world-wide climate regulation
One among the serious threat to the potential environment is the global warming. Several steps have been implemented in reducing the global warming. The Copenhagen conference has been suggested norms to the companies for the low co2 emission products which may lead to strictly controlled environment. Thus in order to manufacture the less emission the Apple must transmits its products. Suppliers of the apple should have the provision to produce the low emission products or it has to switch to the other suppliers. This may lead to higher switching costs between the suppliers and bring changes to the margin of the products when the manufacturing costs getting higher.
Import taxes and duties
China poses superior government policies and low manufacturing costs in order to attract the more investors. These factors made Apple to manufacture its products in the various parts of the China. Even though Apple manufacturing lies in china the good market is positioned only in the countries like United States and the parts of Europe even though it has to offer more import duties. According to the current tax report produced by the Apple it pays around 32% of rate of tax in the year 2010.
Socio cultural Environment
Increasing desire for Wireless devices
Apple plays at the front position of the wireless transition. As there is a remarkable increase in the value of the Internet and the wireless connectivity creates a powerful demand comparatively to the other devices. This is due to its portability and accessibility everywhere makes these rapid speed wireless technologies valuable. The devices such as the portable includes the Smart phones and the tablet computers “wireless-connected devices” allows its user to perform several operation by the use of internet in the constant and secured manner as wherever they go. As these devices is highly received by the people than the traditional computers such as PC or laptops. This technology has been developed widespread by Apple and its competitive manufacturers such as Google. This technology has been faced al lot of relevance as all these manufacturers focussed on the consumer’s preference. Among them the Apple differs by its Innovative technology according to the recent technological landscape. Apple spends its extensive investment in the field of research and innovative development for the creation of highly well-liked devices such as the iPhone and i-Pad.
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Technological Environment
The world has been going behind the analogue music system Apple made a revolution through its innovation of iPod. This made a impulsive progress in the revenue of the Apple. Due its consecutive pioneering researches resulted in the creation of iPhone. Even though the Apple is younger in the mobile phone industry comparing the Giants like Nokia, HTC and Blackberry it poses a radical technology. To withstands its market Apple has been spend 3.1 % of its net sales i.e. almost $ 1,333 million for the Research and Development (apple). The world’s ongoing mobile technology is landed in 3G manufacturing technology. But Apple is been ahead of them by launching its 4G due to the supremacy of the Apple’s R&D. This makes the Apple withstand as a leader in its high innovation and portability.
Competitive Environment Analysis
Rivalry between Competitors
Technological growth has put forth the electronic industry ahead as it leads to lot of manufacturers. Due the entry of electronic industry in everyday life the PC’s, mobile phones and laptops has become a commodity product into the people’s life. Most users prefer the business cost than that of the performance of the devices. This may resulted in the various levels of provider strategies. The providers who provides at low price may not be able to satisfy the users with the best features. Whereas the providers such as Hp, Dell, Samsung and Sony Ericson offers the customers a wide range of options for the varying prices. Apple differs from those of the Providers as they provide a High Quality and High Cost products but without the diverse models. For example Apple consists of Single model iPhone varying only in its memory and its cost whereas the Samsung may vary its product options from the variable technology by varying its costs from 4£-400£.
Supplier Power
Suppliers are those who pose the entire control in manufacturing of computers as Apple’s Mac book or the mobile phones. Apple Suppliers also embark on the special responsibility for producing the best inputs which is the most challenging for its competitors. In the computer manufacturing industry Intel and Advanced Micro devices (AMD) are the two suppliers of the processors. Both of the chips have their own unified motherboard. They are incompatible with one another as they cannot be swapped with the other parts of the device. If Apple has to switch their processor it is also essential to modify their motherboards too resulting in high switching costs. This may results in high supplier power as the company has to rely on them.
Buyer Power
Almost all the industry consists of buyers who have high influence on thier manufacturers. Each buyer has their own choice of the product needs. This leads the company to launch the wide variety of products into the market. Thus power of the buyers has influences on the bargaining in the Quality, Price, and the Service. Apple exclusive products such as IMac and IBook are unique from its competitors in features of higly technological operation system, innovative functionality and brand value attracts the customers by avoiding them to switch to its competitors. Even though it has attracted the customers through its functionality there arose a chance to switch to its competitors if there is no product differentiation.
Threat of new entrants
Every business has own threat of new entrants. The field of Computer market have the highest possibility of new entrants. The portable pc’s market is widespread effortlessly paves the way for the new entrants. Despite the possibilities it also consists of several hindrances from its successful entrants. Apple have been deep rooted in field of computers and mobile products by its substantial recognition, own innovative technology and royalty among the other manufacturers. It has been a high challenging to the entrants in order to make its brand successful and stable in the competitive market. Apple maintains their price of the products based on the economies of scale which is not possible by the new entrants without the huge investment.
Even though it has the high possibilities of hindrances to entry it consists of some successful possibilities of entry which can be listed as follows.
1. There is a chance of suppliers to enter the field of manufacturing
2. A well established giants of some other field of computer can also deep routed in this field as they have a well established familiarisation in the market.
Threat of substitutes
Recent Development of the technology makes the computing products handy. As every features and functionality of the computers has been substitute by the tablet pc’s or smart phones. Time has changed where the users rely on the stable pc but now it has been grown substantially the computers are back behind the users and posses wide variety of application than pc’s by means of wireless internet technology. This occurs in the case of Apple as due to the entry of the Smart phones the buyers of Mac pc are apparently reduced. Thus these show the change for substitutes of the consumers. Considerably Apple has been analysed all these cases and introduced the iPhone and iPad to satisfy its consumers who are in search of substitutes to a new technology.
Value added core competencies
Value added core competencies of Apple includes its highly Innovative ideas, featured design, well known brand, and critical creativity as all these united to make the company a most competitive advantage among its competitors. Thus Apple has almost set all these strategies to the company in order to withstand its high position in the competitive market.
Risks of the apple have been initiated with its supplier and foreign factories. Apple has its own guidelines for its suppliers in manufacturing its product they don’t have the direct control of their suppliers. The suppliers derived their profits based on the high volume low margin. Thus in order to increase the profit the suppliers produces the goods by low quality raw materials. As a result of this the quality of the Apple products has been diminished. Thus in order to rectify these defects Apple have been undergone the mutual understanding of its suppliers to retain its quality
Administration
Eco- Friendly Apple
Apple has always been intense on the environment factors in its manufacturing. Apple has been taken several steps to avoid the usage of harmful chemicals in manufacturing of its product. Shipment of the products plays a vital role in emitting combustion during its transportation. Thus in order to reduce the emission of Co2 Apple considers the portable packaging result in the less transportation and less combustion.
Strong cash position
Apple has less long term debits and run its business efficiently without the financial intervention by means of its own cash. The financial status of Apple helps its business to run efficiently as it may not depend on any of the creditors in terms of the decision making such as the financial capital purchases, decision on expansion.
Human resource management
Hiring process
Apple recruits its employee by means of Selective hiring. It highly picks up the persons based on their innovative skills and high creative skills rather than by recruiting process. It focuses more on the well experienced professionals and innovative freshers rather by trainees.
Employ benefits and appraisals
Apple places a leading role in motivating its employees by means of high benefits and appraisals. It possesses a high role in the employee satisfaction. The benefitted employees provide full support and dedication to the company by means of their highly innovative ideas.
Technological Development
Research and Development
Apple believes the research and development is one of the key factors of the success of its organisation. As it believes analysis on various factors determines the current requirement of the product have been pushed towards the new innovative product which paves a way for non competitive industry. It has been estimated that Apple spends around $1.3 million for its research and development.
Procurement
Relationship with suppliers
Apple has maintained the good relationship with its suppliers. As it manufacturing its product based on the low cost and high quality. Despite it sets the high marginal cost for its product whereas in turn it spends its profit for the research and development. It also concurrently updates about its new technology to its suppliers by means of short courses and practical classes.
Inbound Logistics
Apple maintains a highly automated system for placing goods. The stock has been ordered to its suppliers in JIT process i.e. Just in Time when there is an reduction of the stocks it will be ordered automatically to its suppliers this may helps in avoiding the overstocks. Thus it hoard the cost spend for the stock management system.
Operations
Design of the product is been implemented by the Apple and hence it outsources its production to several factories in china by implementing its design. This may results in the reduction of risk factors as it is apart from its firm. Thus it modifies its management and Economy scale according to its outsourcing.
Outbound Logistics
Apple has its production department in china whereas the goods have been transferred to various countries from china rather than bringing to US the head office of the Apple. This may leads to the reduction of shipment cost and the warehousing cost.
Marketing and Sales
Apple uses the television advertisements as their marketing strategy by comparing its features and functionality of the product towards its competitive products. It also brings its own marketing strategy by means of the customer attraction towards the product. Apple discloses the new launch of the product which in turn acts as an indirect marketing which pulls the customers to know about its launched products.
Service
Apple genius is a person acts as a tech assistant in considering the consumers problem and rectify them. Apple provides a extended warranty to their customers within 90 days of product shipment also poses an opportunity of replacement within the given time.
Limitations
Recommendations
Conclusions
Value chain analysis
Recommendation
1. licencing of MAC software to other PC makers
2. Increase entertainment diet so that the acceptance of the apple product more among the customers
3. increase retail presence in developing economies
4. increase customer service capabilities
1. even though apple spending ore r&D nw it has design related antenna proble in iphone 4
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