APPLE INC. CASE STUDY
Apple Inc. has survived in a competitive and dynamic market to become one of the leading companies in the electronics industry. This case study reflects on some aspects of the company including history, products, competitors, innovation strategy, business strategy, and strategic management. The study will then examine the key success factor of the company and conduct a SWOT analysis.
History and Background
Apple is an American company founded by Steve Wozniak, Ronald Wayne, and Steve Jobs in April 1976. Initially, the company was primarily involved in developing and selling personal computers. The company was then incorporated as Apple Computer, Inc. in January 1977 and renamed to Apple Inc. in January 2007. The current owners of Apple Inc. are the major shareholders such as Tim Cook, Arthur Levinson, Craig Federighi, Albert Gore Junior, Bruce Sewell, and institutional shareholders such as The Vanguard Group. Over the last six years, Apple's income has been consistently on the rise. In the year 2015, the company made $53.4 billion annual profits, the highest in the company's history.
It is not clear from Apple Company's Website what the mission statement of the company is. However, Steve Jobs' mission statement for the company in the 1980s was: To make a contribution to the world by developing tools for the mind that bring progress to humankind. A relatively new mission statement for the company states:
"Apple sparked the personal computer revolution in the 1970's by introducing Apple II and reinvented the personal computer in the 80s with the Macintosh. Apple Inc. is committed to bringing the best computing experience to creative professional, students, educators, and customers around the globe through innovative software, hardware, and Internet offerings".
You could be asking yourself what exactly the company produces. Apple Inc. has come a long way and is now a world leader in the electronics industry. The business has developed several products and services and has over 375 retail shops worldwide. The company is popular for its hardware products such as the Mac line of computers, the iPhone Smartphone, the Apple iWatch, the iPad tablet computer, and the iPod media player among others. Apple Inc. is also known for its software products such as iOS and OS X operating systems.
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Apple Innovation Strategy
To Apple Inc. innovation is more of a culture than a process. Apple has produced innovative products that have propelled it to the pinnacle of the information technology and electronics industries. However, the company does not just focus on developing beautiful and innovative products; they also have a very innovative business model. For instance, it is apparent that the success of iPod and iPhone can be attributed to the fact that these products were matched with iTunes and App Store respectively.
It is also interesting to note that Apple Inc. has crossed many industry-defined boundaries to establish an innovation-friendly business ecosystem. The business deals with hardware, software, entertainment, and logistics, and has made significant impacts in these industries. For example, App Store is the largest collection of mobile applications which makes the Apple iPhone even better. Apple iTunes which is an innovative business model provides an interface that is easy to use on which people pay for music they like if they get it at their desired prices. Apple Company has demonstrated, through their terrific innovation management, that product design and user-friendliness are major determinants of success in the modern business environment.
Apple's Main Competitors
Apple deals with many different products. As a result, the company has to compete in several different markets. Each of these markets has other big producers controlling significant market shares. For instance, Microsoft is the major competitor in the market for computer operating systems. Amazon and Microsoft have their own smart tablet and have carved out a significant market that used to be largely dominated by Apple. Samsung remains the biggest Apple's competitor in the Smartphone market. Google challenges Apple in different market fronts such as cloud storage where Apple iCloud has to compete with Google Drive.
Apple's Success Factors
Despite the nature of competition that Apple Company face, the company happens to be one of the most successful businesses in the United States and the world in general. So we seek to understand what factors fuel Apple's success. Below is a rundown Apple Inc. success factors.
1. Innovative Activities: Apple Inc. is successful because it has been consistent on the issue of innovation. Innovation is one of the strongest cultures of the company. Over the past decade, Apple Inc. launched the following game-changing innovations:
• The Apple iPhone
• The Apple iPod
• The Apple iTunes
• The App Exchange
• The App Store
Through innovation, Apple has managed to survive for 30 years in a market that is highly competitive and dynamic.
2. Retail Distribution Network: Generally, Apple distributes its products through direct sales, retail stores, online stores, and value added resellers. Apple opened its largest US retail store in Boston to increase its domestic sales. This comprehensive local and international market network is one of the factors that have significantly influenced the success of Apple Inc.
3. Well recognized brand: Apple is one of the most popular brands in the electronics industry. By focusing on customers and product quality, Apple has established itself as a reputable and respectable brand. As a result, it has millions of customers around the world who are loyal to the brand. To some extent, the brand sells the company's products.
4. Advertising Differentiation: Since the company was founded, Apple Inc. has been recognized for its creative approach to advertising. Its advertisements are unique in that they are planned in such a way that they imitate a setup of selling its products to creative people. The most noticeable advertisement campaign include the "Super Bowl Commercial" of the 1980s, "Think Differently" in 1990s, and "The iPod People" in 2000s.
Apple Strategic Management
At the core of Apple's strategic management is the customer. To compete effectively, Apple seeks to understand what the customer wants and responds accordingly. Apple has remained competitive for three decades because it has always maintained an open mind and created designs that meet or exceed their customers' expectations. Apple Inc. also embraces innovation and quality as important features of its strategic plan. A couple of years ago, the company reiterated that it would embark on a plan to compete on the basis of quality. Production of high quality and unique products has facilitated the establishment of a reliable brand which now has cult-like following around the world, and this has placed Apple at the top particularly in the Smartphone market.
Apple Business Strategy
Apple Inc. relies on Generic Business Strategy (Porter's Model) and Intensive Growth Strategy. These strategies directly influence the company's strategies when it comes to marketing and pricing among other areas of business. The Generic Model influences the features that differentiate Apple and its products from competitors. On the other hand, Apple Company uses innovation and product development as its core intensive growth strategy.
SWOT analysis highlights the key strengths, weaknesses, opportunities and threats that Apple Inc. faces.
- A strong brand image
- Financial strength
- Market leadership in several products
- High-profit margin
- Well-developed supply-chain infrastructure
- High prices compared to competitors
- Technical issues to do with product functionality
- Narrow product range
- Incompatibility of Apple products with other companies' products
- Product diversification
- Research and development
- Increasing product compatibility
- Establishment of strategic partnerships with other companies elsewhere in the world
- Intensified competition from China, South Korea, and India
- Loss of the company's innovative potential due to the demise of inspirational founder, Steve Jobs
- Increasing manufacturing cost
- How Apple Inc. Changed the World
It is apparent that Apple is now one the most profitable companies in the world. However, the company had to make radical changes in the world to get there. For instance, the Macintosh was the first mass-market personal computer to use graphical user interface. This innovation has had a major impact on how the world knows and uses the computer today.
From the foregoing discussion, it is clear that innovation has been core to the success of Apple Inc. Strong brand, a well developed retail distribution infrastructure, and advertising differentiation have also been key success factors for the company. Although the company has a number of weaknesses and faces several threats, the company also has many areas of strength, and the opportunities for growth are numerous. Thus, there is a potential for further growth in the future.