Apple Inc is a technology company that is known for its innovative nature in products like personal computers, watches, and mobile phones. It should be noted that the company almost became extinct in the 1990s but recovered its position in the global market through innovation which involves designing products and pushing their limits of marketing (Zhang, 2017). Apple Inc is identified by its ability to listen to customers and revolutionize market segments by providing modern designs and numerous features to target markets. The organization uses strategies like keeping prices high to build brand image while promoting its products using various methods.
Apple has 3 notable strengths which include a strong brand image, high-profit margins, and effective rapid innovation processes. Apple is currently one of the most valuable and strongest companies in the globe as it can introduce new products in the market which can easily attract demand due to its brand image. The brand image has enabled the company to have a loyal consumer base who prefer to buy from the enterprise regardless of the price. The company is also identified with a premium pricing strategy which leads to high-profit margins from large sales volume. Apple customers are always willing to spend more money on products which they find value for their money through improved features. Apple has a strong corporate culture of innovation that ensures it retains skilled and creative workers who can provide consumers with a new experience. It should be noted that the team in charge of product design in Apple are allowed to work out of budget, thus, giving them room for more innovation. The team is separated from management which might limit their creativity. As a result, the company is involved in effective rapid innovation which keeps the business with the latest technologies and maintains a competitive advantage.
It is worth noting that Apple Inc has some weakness in internal factors which limit its business growth. The weaknesses include limited distribution network, high selling prices, and over reliance on sales from high-end markets. Apple Inc has a limited distribution network due to the company’s policy of exclusivity. For instance, the organization has carefully selected authorized people who deal with its products. Alternatively, the company distributes its products through retailers’ online stores and Apple stores and has physical stores in 450 locations. Given the number of consumers Apple has, limits its market reach. Additionally, Apple’s premium pricing strategy limits it from exhausting the large middle-class consumers who recognize the brand but cannot afford the products. In this respect, the middle- and lower-income consumers are left for competitors who realize large profit margins from huge sales volume. High pricing strategy also limits the company to rely on high-end markets which is only a small fraction of the global market. These internal weaknesses limit the organization from reaching its full potential in the technological industry.
Apple has the opportunity to expand its distribution network, increase sales volume based on rising demand, and develop new product lines. The company has an opportunity in its weakness of a limited distribution network. Apple has a large consumer base globally but most of them are not reached due to lack of an effective distribution channel. In this regard, the business change and expand its distribution strategy to reach more consumers which are likely to increase sales volume. The company also has an opportunity to increase its sales volume by employing aggressive marketing strategies. Even though the company uses hit products and high-impact rollouts that stimulate emotional buying, it should encourage media advertising using celebrities to gain more popularity in unreached markets in sub-Saharan Africa. Public figures can act as corporate evangelists to convince their followers to identify themselves with the brand. Apple engages in products like iPad, iPhone, Mac computers, and iTunes but it can increase its product line to other household appliances. Since the current product line is already highly successful, Apple can achieve the same success with new innovative products to support its growth in international markets.
The threats that Apple is facing include aggressive competition, imitation of the business model, and the rising cost of labor in various countries. There is stiff competition in the industry and the organization has to compete with technology giants like Microsoft, Sony, and Samsung who are also using rapid innovation strategy. Each year the companies have to provide their consumers with new experiences to stay competitive in the global market. Due to the aggressive nature of the competition, Apple needs strong fundamentals to stay competitive. Even though the company has intellectual property rights, it is still facing a threat of competition from both local and international companies who are trying to imitate the design and features of its products. Additionally, there is also a rising cost of labor in countries like China where the organization has outsourced its production. In this respect, the contracts involving manufacturers have to be reviewed which in turn reduces profit margins and increases selling prices.
Assumptions and Missing Information
Apple Inc products are special and incompatible with other software technologies. Once a customer buys an Apple product, he or she enters the Apple universe. Since Apple products do not support software or other technologies, their customers have to buy applications and accessories from the company to continue using the products (Dudovskiy, 2018). As a result, the company generates more revenue. The company is also entering areas where it lacks competency like video content streaming, game streaming, and credit card to compete with organizations like Netflix, Disney, and PayPal among others. It is also worth noting that Apple is under investigation for unfair business practices. It is alleged that the company received payment to make Google’s search engine as a default search engine for its Safari Web Browser product line (Dudovskiy, 2018). Apple Inc has not been able to venture into green technology which is becoming a major competitive advantage. The company has not launched products that are produced using green technology or implemented eco-friendly and sustainable technology. China and the United States have been engaging in trade wars since 2016 and it is assumed that high tariffs have increased the prices of apple products (Dudovskiy, 2018). It should be noted that the organization outsources its production to factories in China.
For a long time, Apple has outsourced in production activities in Asia but it is currently facing a lot of pressure from politicians who feel the company is making tremendous profits and needs to bring back production jobs to the United States. Constant trade wars between the United States and China are affecting the company’s pricing model and sales in global markets.
Solutions I Propose
Development of Alternatives
Outsourcing some production of certain products in China has caused Apple In a lot of problems with both the United States and the global markets. One of the options that Apple can consider is shifting its manufacturing process to the United States which will reduce expenses associated with trade tariffs imposed on imports by the United States. Apple could leave its manufacturing in the Asian continent but in a country like Japan which has good relationships with the United States. Japan’s growing technology could have the ability to handle the production of the iPhone and Mac Book components. Additionally, Apple can also set up other manufacturing centers in Europe and Australia where it serves a large market share.
Evaluation of Alternatives and Recommendations
Shifting the manufacturing process to the United States can help Apple Inc to avoid expenses associated with tariffs from trade wars between the United States and China. The move can also relieve Apple from the pressure from politicians who are demanding that the company brings job opportunities to the United States. Moreover, Apple will have moved its manufacturing to the largest consumer base which is the United States (Myftari, 2017). The second alternative of moving production to Japan will also eliminate expenses associated with trade wars and ensure the organization enjoys large profit margins. However, Japan’s technological capacity cannot match that of China and is likely to compromise the quality of Apple products. The third option of establishing production in various global markets also has the advantage of making the product more affordable to global consumers (Myftari, 2017). However, establishing and running many manufacturing sites can be very expensive and not viable based on the company’s financial position. Therefore, Apple should move its manufacturing process to the United States since it has more benefits and will keep it out of political tensions.
Setting a manufacturing factory requires the company to assemble a great team of engineers to design the plant and its operations. Apple’s success depends on the quality and it is important to have skilled labor before setting a factory. The location of the firm is also critical as it determines how the organization will secure raw materials and support infrastructure to make operations possible. Apple needs to put the right support network in place to prevent the project from stalling.
Evaluation and Control
The implementation of setting up a factory is evaluated by quality control to check whether it meets the technical requirements needed for the manufacture of Apple products. At the same time, the organization will also try to use whatever, it has at its disposal. The company can also employ evaluation methods like return on investment and payback methods to establish whether the idea of transferring manufacturing plant is worth investing (Myftari, 2017). Engineers need to have total control of the project to avoid compromising the manufacturing ability of the factory.
Apple Inc has based its business model of rapid innovation to stay competitive in the global market. Apple is currently one of the most valuable and strongest companies in the globe as it can introduce new products in the market which can easily attract demand due to its brand image. The brand image has enabled the company to have a loyal consumer base who prefer to buy from the enterprise regardless of the price (Zhang, 2019). The company is also identified with a premium pricing strategy which leads to high-profit margins from large sales volume. Nevertheless, since the organization outsourced production in China, it has faced political challenges which makes its products more expensive (Zhang, 2019). Therefore, it appropriates if the organization considers setting up production factories in the United States to avoid the effects of trade wars between China and the US.
Dudovskiy, J. (2018). Apple SWOT Analysis. Research Methodology. Recuperado de https://research-methodology. net/apple-swot-analysis.
Havráneková, M., & Dvorský, T. (2019). The United States-China Trade War. Policy Paper, Institute for Politics and Society.
Myftari, O. (2017). Apple–40 years Product and Service Innovation, Lessons Learned from their Success. The Student Researcher, 4(1), 69-82.
Zhang, Q. (2017). Research on Apple Inc’s Current Developing Conditions. Open Journal of Business and Management, 6(01), 39.