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Apple Inc Case Solution & Answer

Apple Inc Case Solution 

SECTION 1: Strategic Direction

Company:

Apple is a prominent and most notable largest corporation in the world, with a huge market capitalization. It was founded by Ronald Wayne, Steve Wozniak,and Steve Jobs. It is currently the richest and the most famous company.Apple is known for designing, manufacturing, and offering a single trendiest smartphone: iPhone.Apple is known for owning iTunes, and the most popular store and app from where the customers can easily have access to their favorite music and can download it.

It is regularly considered to be one of the top Big Tech companies among the giant players like: Amazon, Google, Facebook, and Microsoft. Apple has its official website and retail stores. It has also opened its retail stores in several countries throughout the world, including: France, Hong Kong, India, Poland, Sweden, Singapore, Turkey, Malaysia, Finland, Spain, Italy, Taiwan, Portugal, Greece, Germany, Brazil, Russia, Poland, India, and South Africa. There are several versions of Apple computers available in the market. The most popular version is MacBook, which is available in various colors and designs. Apple also has its line of iPods and cellular phones.

Apple Inc. is committed to offer the best experience to its users through innovative services, peripherals, software and hardware.In December 1978, the company had a successful Initial Public Offerings (IPO). Despite its robust growth, the company started struggling with the lack of software for its hardware and high-cost structure.

Mission:

The mission of the company is to bring the best user experience through its innovative services, hardware, and software. Furthermore, the company aims at making personal computer easily accessible to every individual. The mission of the company is to create products that could entertain and inspire its customers.The company has stated includes providing customers with an environment that allows them to have a wonderful experience while enjoying their computing experience. In other words, it means that users are provided with a computer that can perform all of its functions.

Objectives:

The main objectives and goals of the company are listed below:

 

SECTION 2: External Environment

Economic

The company could exploit the opportunity from the disposable and discretionary income, which would be spent by the customers on purchasing the products. It would allow customers to spend money on luxury products and services.

Similarly, the weak US dollar would create an increasingly favorable currency exchange environment, which in turn would boost the foreign revenues of Apple Inc., thereby the company could be benefited from currency devaluation as it would make it less expensive for the company to conduct business operations in the international markets.

In contradiction to the most important opportunities, the company could be threatened by the rising inflation rates, which in turn tends to impede the ability of the customers to make purchases. It is because the increasing inflation rates would reduce the purchasing power of customers. Moreover, the high unemployment level would lead to lower-income and output. Not only this, it would result in lower spending power of customers, thereby reducing the profit returns of the company to a greater extent.

Technological

Apple Inc. could exploit and capture the opportunity of focusing on technological innovations to lead the market. It is because of the reason that the company has already accelerated its efforts on each of its iPad, iPhone, iPod lines of business and followed up with incremental product innovation that extended each category of product. The company could also exploit the opportunity of bringing valuable improvements in the product through automation to increase profit returns. By investing in robotics and automation;the company would be able to improve productivity & increase the speed of production.

Despite the growing demand for investing in technology and innovation, the company would need to protect the patent to prevent competitors from commercially exploiting the patented invention. Additionally, the total industry spending for research & development would create challenges for the company for bringing new and innovative products in the market and lead the market by offering unique and innovative solutions.

Political-Legal

Apple Inc. could invest in green initiatives and environmentally sustainable operations to improve the competitive advantage and brand image and to increase the ability of a business to comply with the regulation. Additionally, the stability of the government helps in conducting business operations in a stable environment. Furthermore, economic stability would help to achieve various objectivessuch as stable prices and sustainable and stable growth. It also contributes positively to consumer and investor confidence as well.

In contradiction to the number of opportunities; the foreign trade regulations could impede the company’s ability to smoothly conduct the business operations in the international markets. Hence, the company needs to combat the laws and regulations in the international market, to fight for growing profit returns and market share. Similarly, the rise in terrorism issues and policies would hinder the company from generating profits from international business operations. Furthermore, the anti-trust laws would also prevent any abuse of power by a company from being valuable enough to operate as a monopoly. The anti-trust laws encourage competition from several firms due to which the company would be at the risk of losing its market share.

Socio-cultural

The change in the customer’s lifestyle could result in the opportunity of serving the customers with new and innovative products. In addition to this, an increased career expectation would allow the company to serve a wider range of customers and generate more profits.

On the other hand, the company could be threatened by a significant increase in the population, because the large population tends to create unemployment problems, which in turn would reduce the customer’s purchasing power.

Natural Environment

The company could capture the opportunity of investing in physical resources to facilitate the delivery of the services. Better quality resources would improve the quality of the products and services supporting differentiation.

On the other hand, the scarcity of valuable resources would lead to high prices and price volatility. The scarcity of reuses might put the company at the risk of losing its market share.

 

Factors Opportunities Threats
Economic Increase in disposable and discretionary income – allow the customers to spend money on luxury products and services.

Current devaluation – create an increasingly favorable currency exchange environment, which in turn would boost the foreign revenues of Apple Inc.

Rising inflation rates – impede the ability of the customers to make purchases

Rising unemployment level – lead to lower output and income

Technological Investment in robotics and automation – improve productivity & increase the speed of the production Patent protection – commercially exploiting the patented invention.

Total industry R&D investment– competitors bring and innovative products

Political-legal green initiatives and environmentally sustainable operations – improve competitive advantage and brand image

Government stability – lead to stable price and sustainable and stable growth. It also contributes positively to consumer and investor confidence as well.

 

Foreign trade regulations – impede organizational ability to smoothly conduct business operations.

Anti-trust laws – encourage competition from some firms due to which the company would be at the risk of losing its market share.

Socio-cultural Change in the customer’s lifestyle – serving customers with new and innovative products. Significant increase in the population – create the unemployment problems
Natural environment Investment in physical resources – facilitate the delivery of the services valuable resources – high prices and price volatility

SECTION 3: Industry Environment

Porter five forces

Bargaining power of buyers

Apple has been operating in the market for PC’s, mobile telecommunication devices, consumer electronics, and software products which are highly competitive as well as saturated. With the number of existing companies operating in the industry; there are many substitute products available in the market. In China, the buyer power is strong due to the availability of many products such as Oppo, Xiaomi, Huawei, and other similar products which impeded the ability of the company to sell a greater number of products in the Chinese market and generate revenues.

However, the loyal customer base and unique products had reduced the customer’s price sensitivity. A strong research base& innovation could allow the company to manufacture  ground-breaking products. Coupled with the strong brand marketing& successful pricing strategy, the customer is more willing to make purchases of Apple’s product. Hence, the bargaining power of buyers is a medium for Apple Inc.

Bargaining power of suppliers

As the bargaining power of suppliers tends to be low because of the highly saturated industry, it may cause the suppliers to remain price competitive. Since Apple Inc. has been considering the differentiation strategy, it has to ensure that its supplier provides high tech and high-quality components, which might drive the cost of the supplier.

The premium pricing makes the apple company rely on high-quality products even if the supplier cost last impact, the company is not partially insulated from the impact that the supplier cost can last. The company tends to purchase raw material components from its suppliers due to which the bargaining power of suppliers tends to be high.

The threat of new entrant

Apple is an established brand with a positive brand image and reputation in the market. It posesa substantial barrier to the new entrants. Due to the strong presence of the apple in the market, it may provide the differentiation factor to the company. The new entrants will not only strive to win the market share over but they also have to make significant resource investments to compete with the highly innovative products offered by Apple.

Threat of substitutes

The company is threatened by the local competition in China because the smartphone makers manufacturing phones with similar user-friendliness and similar capabilities for one-half the price or less. As a result, the market share of the company had fallen to 5 percent from the high of 13% in 2015 and 7% in 2018.As the competitors are highly eager to have a ride over the successive waves of Apple Inc., the competitor’s substitute products pose threat to the company. However the company had positioned itself in the market, the substitute’s products with the strong brand name had gained the market share and loyal customer base of the apple fanatics. Thus, there is a medium threat of substitutes.

Intensity of rivalry

Apple is facing stiff and robust competition from the local smartphone makers who are offering high-quality products at low prices to customers.Additionally, the international smart phone manufacturers have peaked and the company is facing competition from non-US-based competitors including Samsung, Oppo, Xiaomi, and Huawei. Even though, the products offered by Apple are highly differentiated in terms of its functionalities and designs. Apple would be able to strengthen its position in the market as long as it strives to innovate the products and meet the demand and expectations of the customers. Apple Inc. is facing robust competition from the competitors catering to customers in operating systems, entertainment, and smartphones.

Opportunities and threats – Operating Systems

Apple could exploit the opportunity of making the operating system more accessible for software providers. The increasing use of smartphones by local, state, and federal authorities makes it important to keep the mobile operating system up to date and patched.

The threat in the operating system industry is the security of the network. Another threat in the operating system is text messages Trojans which tend to represent malicious applications. Another threat is the rootkits which are malware that tends to hide its existence from a normal kind of detection. Furthermore, the criminals created the fake google play domains which enable users to download as well as browse television programs, movies, magazines, books, music, and other application.

Opportunities and threats – Entertainment

One of the possible threats and opportunities in entertainment is copyright infringement. When someone illegally copies a song or film and distributes it to the public, they have committed copyright infringement. This can result in a lawsuit, the possibility of jail time, and a serious financial penalty. And it seems like a given that the entertainment industry will be facing more copyright and infringement issues in the coming years. For example, new movies and television shows are being released every year with no credit given to the copyright holders of the material. Some films are even coming out with no legal rights to the film and the screen rights……………..

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