Analysis of Apple Company
Apple Company was started by Steve Jobs and Steve Wozniak in 1976 (Mishra, 2011). It begun as Apple Computer and later changed to Apple Inc which is the name used currently (Mishra, 2011). It is a mobile and computer manufacturing company. It is located in the United States of America. Currently, it has been pushed out of the leading in the mobile market industry by Samsung Company. Samsung currently holds about 29.1 percent of the Smartphone’s market while Apple holds about 24.2 percent. Google Android companies are also threatening with their new software which is gaining popularity in the market.
This indicates a very stiff competition between the two companies as they compete for the mobile industry market. The main market target for the company is small and medium sized businesses, education, youths, home users and other people especially those involved in creatives and uses the Mac. Their products are made to be eye catching in order to attract customers from a distant in retail shops.
During the first quarter of year 2012, the company was able to make a profit of $11.6 billion which is an increase from the previous year, 2011, when the profits were $6 billion. The revenue has increased from $24.7 billion in year 2011 to $39.2 billion in year 2012. This resulted from the increased sales of I phones which were over 35 million and over 12 million I pads. This was a 128 percent growth in revenue in year 2012 against previous year 2011 and a 111 percent increase in profits at the same time.
The other products such as Mac and I Pods also experienced positive growth in sales during this time. With the new products introduced in the market by Apple Company such as new I Pad 4G LTE, I Phone 4 S, I Pod Touch among others will help in regaining the market leadership as they are the most advanced in technology especially the fourth generation faster internet speed.
In the SWOT analysis of Apple Company, we start with strengths. According to Mishra (2011), Apple has a strong brand name all over the world. Its brand name of Apple Inc makes its products to be easily identified by the customers. It is also very hard for counterfeits to get into the market under this brand name as they will be easily recognized from the original Apple product. It has advanced in research and development of new products in the market especially in I phone software. Apple leads in having the best I phone software that is easily compatible with other electronics such as computers. Also the research into new products that catch the needs of the customers such as the newly released products,
I Pad 4 LTE, I Phone 4 S, I Pod Touch among others which are installed with the latest fourth generation internet speed (4G) hits the market at a time when people want faster internet speed in order to improve their browsing. This continued research will make it remain in the market for a lifetime. The fact that Apple has been involved in one line of high-tech products offers it a better opportunity to dominate their markets. Products such as I Phone, I Pod and I Pad are connected with Apple Company as the inventor and best in quality. It also targets a certain group of customers in the society who have proved to be loyal to the company.
Apple customers’ have introduced their friends to the company products and also they have been coming back for more products after realizing how good the first product was. Apple Company has been having visionary CEOs from the time of Steve Jobs to the current CEO, Tim Cook. This has made it to grow steadily since inception as a computer company to the current state where it is competing for market leadership in the mobile industry.
The weaknesses of Apple Company as noted by Mishra (2011) include limiting I Phone to only one single operator. Many people preferred to have several operators in one phone while I Phone is only restricted to one. This limits it to the number of customers who are willing to purchase I Phone. Apple is highly affected by the economic trend in a country because of the high price of its products. When the economy is in recession, there are low purchases of the products and when economy is booming, they are likely to experience great sales throughout.
Recalling of the products has been common especially I Pod. Some I Pods produced earlier on in the past one year had problems with screens which results to added cost to the company. There was also a time when I Pods had faulty batteries and it had to replace them for their customers. There are also few products of Apple Inc Company in the market as compared to other mobile industries that it is competing with.
This leads to reduced market share for the company and a likelihood of making losses in case the products are not purchased such as during economic recession. The announcement that it would cut its relations with IBM Company posed a negative attitude to its customers. It was predicted that this could lead to confusion of customers and reduce the trust on the quality of the products that were expected to come thereafter.
According to Mishra (2011), the opportunities presented for Apple Inc Company include continued growth in mobile phone and computer industry. The growing market demand for mobile phones and computers is a good opportunity for apple company to invest more in. Customers are rushing for the new products in the market which are able to make their work easy. The increased demand for online music and other mobile applications presents an opportunity for Apple Company. The company should invest in this section by producing more of cloud based applications and also in producing more advanced mobile phones and computers that can access more advanced applications. There are also markets that Apple has not reached quite well like the Asian markets.
The company needs to ensure its products reach these markets and advertise them more in order to gain popularity and overcome the dominating companies. The good relationship with other international companies especially computer companies is an opportunity for Apple to merge with them in the market and increase their market share. This will also help Apple company to produce more dynamic products that fit in very many markets.
The growing market demand for energy efficient products presents an opportunity for Apple Company to invest in. Apple should come up with more energy efficient products better than other companies. This will enable it to have a cutting edge in the market. The new products should be able to use little amount of power and save more of it. The success of I Phones in the mobile market is an opportunity for it to reach out to other new customers who have not been buying the products.
Some of the threats of Apple Company according to Mishra (2011) include entrants of new competitors in the market. The entrance of Google Android software in the market posed a threat to Apple Company as the software is more advanced and compatible with many mobile applications. They have also started producing smart phones which are gaining market acceptance very fast especially the touch screen mobile phones. The current trends in the economy are likely to reduce the number of sales of Apple products as compared to other products.
Competitors are coming up with new and cheaper I Phone type products such as Samsung Galaxy S which an equivalence of I Phone and is cheaper than I Phone. This may lead to reduced market share for Apple products. In the current mobile phone and computer markets, there are very many products in the market. This presents high chances of substitution of Apple products for other products. It also poses a threat in the loss of market share especially due to the high prices of their products. The uncertainty of global economy is also a threat to the company as its sales are more dependent on the economy performance. This poses a risk as the company cannot predict its future sales because of the frequent fluctuations in the global economy.
The first recommendation is that Apple Company should increase its capital expenditures in order to remain more competitive in the industry. Other competing companies such as Samsung, Dell, Hp among others are continuously increasing their capital in order to be more competitive and produce better products. This poses a threat to the Apple Company such that if they manage to acquire more capital than it, they can easily push it out of the market as they will be able to pump more of their products into the market than Apple products.
The second recommendation is that Apple Company can either buy or merge horizontally with other companies especially those competing with it in the industry. This will increase its capital base creating a better opportunity for competition between Apple Company and other competitors. Teaming up with another company increases market share by acquiring the other company’s market share and its assets making it more competitive. For example the merging of Hp and Compaq computer companies enabled them to be more competitive in the computer industry. Apple Company will also be able to come up with better products as research and development department will also be strengthened through unifying it with the other company bought or it will merge with.
Since the market for Apple Company products is highly affected by the economic trend, it should therefore not risk increasing its leverage. The current economic trends are unpredictable of how the future will be in the economic world. There have been many cases of fluctuations in the inflation rates in various parts of the world since the year 2008 global financial crisis that affected the world economy.
Therefore, in case the company acquires credit to finance its expansion and the recession sets in, sales will reduce which will make it not able to repay the credit. The best source for its funds currently is ploughing back the profits it is obtaining from current sales until the global economy stabilizes by gaining a stable growth. The other source of funds can be from the company shareholders through sale of shares. Shareholders benefit from dividends of the company and therefore Apple Company can acquire funds from them buy selling more of its shares in the stock market.
Apple Company can increase market spending as it will enable it to acquire more market share. Other competing companies such as Samsung and Android companies are coming up with more close products to I Phone and I Pad which are very close substitutes of Apple products. These products can easily push out Apple products if the company relaxes in its marketing strategies. It should therefore continuously remind its customers about old and new products in the market through various methods of advertising.
Apple Company should increase the funding for research and development. This will enable continued production of new and improvement of existing products. Customers want newer products that are accordance to the current technological advancement. Also competitors are coming up with new products in the industry that are highly competitive to Apple products. For example, the latest Android software by Google is a threat to Apple Company software department. Therefore, Apple should come up with another product to counter the competition from such development which can only be through extensive research. The new products should also meet the current needs of the customers. For example, the new I Phone 4 S which is a fourth generation mobile phone comes at a time when consumers need faster internet speed to enhance faster internet browsing.
In controlling costs such as labor, pension liabilities among others, Apple Company should come up with ways of cutting costs. This can be achieved by investing in new technologies that are cost efficient such as use of machines that will help in cutting off labor costs. Another way of controlling costs is by restructuring of the company. This will help in reducing the number of departments by either scrapping off some of them or merging them will reduce the management cost for these departments. Salaries will also be reduced as some employees are demoted or transferred to other departments. The other way is outsourcing for various supplies such as labor especially casual labor, supply of raw materials, research and development among others will also help Apple Company to reduce cost of operations. Salaries, risk costs, asset costs among others are some of the costs that are reduced by outsourcing.
Apple Company should also increase the number of its products in the market. This will ensure continued sales throughout since most of its current products are highly affected by economic growth of a country. When there is recession, the company will still remain in the market while selling other products and therefore no losses will be experienced. This will also enable the company to expand to production of other products and thus increasing its asset base. For example, it can engage into the production of other electronics such as television, remote sensors among others.
References
Mishra, D. (2011). Apple Inc. SWOT Analysis and Executive Summary. Retrieved on 2nd May
2012 from http://www.slideshare.net/divya-mishra/midterm-part-ii