Strategic Management 2
A SWOT analysis of an organization is crucial in understanding its strategy and chances of survival in the market. The analysis reveals where an organization is performing optimally and where performance is not optimal. In addition, the analysis identifies possible opportunities and threats to an organization. This essay will conduct Apple Inc.’s SWOT analysis and base another company’s strategy on the results of the analysis.
The first strength that Apple posses is the existence of a large, loyal customer base and an expanding closed system (Tar, 2013). A loyal customer base is strength because these customers always prefer to purchase Apple’s products to those of competitors. Therefore, Apple is assured of revenue from these loyal customers. Conventionally, a closed system is viewed as a disadvantage because a company that uses it has little input from its external environment (Sekhar, 2009). However, the closed system at Apple has become an advantage because the company has continually developed both hardware and software that support each other. Once Apple manufactures superior products within the closed system, competitors have little information about the design.
Apple’s second strength is its ability to maintain a leadership position in manufacturing mobile device technology. In 2012, Apple was named the most innovative company in the world, which was a third time to hold that position. Therefore, its ability to produce cutting-edge technology products has enabled it to have a leadership position in the market.
A strong financial position is another strength that has enabled Apple to remain among the leaders in technology devices and services. By 2012, the company held ten billion dollars in cash. This money can be used to buy back the company’s shares and facilitate acquisitions. Buying the shares back and acquiring other companies increases the ability of the company to outperform its competitors.
The fourth strength is the presence of Apple’s retail stores in many locations. The company controls the service and every aspect of operation in these stores. As a result, customer experiences enhanced because of the knowledgeable staff at these stores. The company’s brand awareness is increased because the employees operating in these stores can deliver specific information to customers designed to increase brand awareness.
Lastly, Apple has a strong brand reputation that customers identify with and respect. The company is renowned for its well designed products that are functional. The functional aspect of Apple’s products ensures that customers’ needs are met, and their problem solved. The reputation of the brand is reflected in its value, which currently stand at $76.5 billion. The brand reputation increases its sales volumes and profits.
One of the most cited weaknesses of Apple is its high prices. Most of the Apple products are highly priced compared to similar products from competitors. The high prices have become a weakness because the competition in this industry is stiff. As a result, Apple customers may opt products from its competitors when they perceive the high prices as unjustified.
The second weakness is the incompatibility of Apple products with other operating systems. As a result of being a closed system, Apple manufactures devices and their operating systems. Therefore, Apple products can only operate using Apple operating systems. The operating systems used by Apple products are different from those used by its competitors such as Microsoft. This difference disadvantages Apple products because customers may opt to stick to their accustomed operating systems.
The market share is decreasing because of the increased competitors in the technology industry. This makes it difficult for Apple to acquire new market share. In addition, its existing market share is under constant threat as the competition tightens. The reduced market share, therefore, reduces Apple’s ability to influence customers to purchase its products.
The fourth weakness that is likely to affect Apple’s performance and strategies negatively is the change in management. Recently, the company lost Steve Jobs, its CEO and his place was taken over by Tim Cook. Moreover, Scott Forstall and John Browett (chief of retail) departed from the management. These changes may be interpreted as trends that will weaken the company’s performance.
The emergence of application processors’ providers is an opportunity that Apple can utilize to enhance its performance and effect its strategies. Currently, Samsung is the only application processors’ provider for Apple devices. In addition, Samsung is one of Apple’s competitors. The emergence of new providers can reduce Apple’s dependency on its direct competitor.
Another opportunity available for Apple to utilize is the growing Smartphone and tablet markets. This market is new and has prospects of growth. Apple can take this opportunity to increase its market share because it has the technological capabilities.
The frequent patent infringements by Apple competitors can be a crucial opportunity for the company. Collecting damages from such infringements can be an opportunity for any company to increase its cash reserves and taint its competitors’ reputation (Morden, 2007). Consequently, Apple can increase its sales and profits.
The fourth opportunity available to Apple is the increase in demand for cloud based services. Since apple already provides iCloud services, it can expand its service provision to cater for the extra demand. Such an expansion can be a crucial strategy for increasing sales revenue (Hitt, Ireland and Hoskisson, 2008).
The mobile advertisement market has experienced tremendous growth in the recent past. Apple has its advertisement platform for its products known as iAD. The increase in size of the mobile advertising market is an opportunity that Apple can seize by expanding its platform to offer services to other clients.
One of the greatest threats facing Apple is rapid technological change. When the change in technological innovation happens rapidly, products have a short life cycle and do not have enough time to fetch revenues for the company (Hill and Jones, 2008). Apple, therefore, does not maximize on the sales of its products.
The second threat facing Apple s the increase in the pay levels of employees working for Foxconn, a company that manufactures most of Apple’s products. This rise is likely to be reflected in the products. Any further rise in prices might be counterproductive while maintaining the price may render the company incapable of surviving.
The third threat that Apple face is increasing dollar strength. The largest proportion of Apple’s products is sold outside the United States. This means that a strong dollar value reduces the value of other currencies in Apple’s foreign markets. Consequently, Apple gets less profit than it would when the dollar’s strength is less compared to other currencies.
The increase in the popularity of Android OS has decreased the demand for iOS. This means that android operating system is a threat to Apple’s market because it reduces the demand for Apple products and its ability to persuade customers to become loyal.
The final threat facing Apple is the increase in the number of companies offering music subscriptions online. Companies such as Amazon and Spotify have reduced the online music market for Apple, threatening its sales and profits.
To increase my Company’s market share, I propose a strategy where the company’s new product, a Smartphone would use both android and Windows Phone 8 operating systems. The strategy would be based on Apple products’ weakness of using only iOS. The use of iOS for Apple has reduced the users flexibility to work with familiar operating systems. The ability of my company’s product to use two famous operating systems would be an advantage because customers will have a choice of the operating system to use. The product’s versatility will be an advantage that will enable the company to claim extra market share in the Smartphone industry (Henry, 2008). One setback related to this strategy is that the product will not be uniform because of the two operating systems and may confuse customers.
To implement the strategy, the company will work with renowned manufacturers of various parts and create an online platform where customers will provide their feedback. Before the product enters the market, the company will create prototypes and test its suitability in the market. Prototypes will ensure that the final product meets and surpasses the customers’ needs (Haberberg and Rieple, 2007).
In conclusion, one of the biggest vulnerabilities of Apple is the incompatibility of its products with other operating systems. To capitalize on this vulnerability, my company has designed a strategy to create a Smartphone that will use android and Windows Phone 8 operating systems. The versatility created by the use of these operating systems will increase my company’s market share.
Haberberg, A., & Rieple, A. (2007). Strategic Management: Theory and Application. Oxford: Oxford University Press.
Henry, A. (2008). Understanding Strategic Management. Oxford: Oxford University Press.
Hill, C., & Jones, G. (2008). Essentials of Strategic Management. California: Cengage Learning.
Hitt, M., Ireland, R.D., & Hoskisson, R. (2008). Strategic Management: Competitiveness and Globalization, Concepts. California: Cengage Learning.
Morden, T. (2007). Principles of Strategic Management. New York, NY: Ashgate Publishing.
Sekhar, G.V. (2009). Business Policy And Strategic Management. Amsterdam: I.K. International Pvt Ltd.
Tar, A. (2013). Apple SWOT Analysis. New York, NY: GRIN Verlag.
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