Apple Company External and Internal Environments
Apple Computer Company started operations in the personal computing field in 1978, but because of administration alterations, lost chances and variation of views, the company lost its competitive edge to corporations like Dell and Microsoft. Apple, however attempted to make a differentiation of its brands to restrict customers from switching to rival brands. Presently, the company is faced with the challenge to sustaining its central marketing competencies, originality, brand administration and affiliation building as it operates a wider brand variety and expounds to more markets (Naraine, 2004). This paper is an analysis of the factors that influence the internal and external environments of Apple.
General Environment Analysis
Ever since 2000 there was subversion of the financial system, the electronic computer business has been scrambling. The legal and economic segments are the major environmental sectors influencing the company.
The 2003 U.S population census statistics were concluded at 281, 421, 05 citizens and in 2007 estimated at 294,444,407 people. This was an increment of 13 million citizens in a span of less than 4 years. Increment in residents compounded with technological improvements will continue to drive improved transactions in the arising technology markets. Americans begin using computer in early years. Figures analysis easily remonstrates a great number of American residents are of age to use computers in various styles or ways. Still, some of these aged generations are using computer applications for research. Local population is comprised of 85% of people who are aged over 24 years with minimal senior high school qualifications and 28% who have had first degree or masters (Hitt, Ireland, &Hoskisson, 2013). It was conceived that 12% of the population was living in poverty. The assessment of world population for 2005 was 6,450,000,000 inhabitants and for 2010 it was 6,810,000,000 (Rezvani, Gilaninia & Mousavian, 2011). Statistics indicate that in future, there will be a further increase. This population increase forces Apple Incorporation and the entire computer world to ensure they boost production in order to meet expanding demand. The industry of computers is rising swiftly in the Asian continent and according to statistics, a great section of the population increase will be within that region.
Legal and Political Segment
Apple is faced with legal segment challenges at a national and overseas level. Nationally, the State and Federal administration continues to stiffen on matters of environment which hamper the manufacture and dumping of units. Environmental matters are issues that affect all computer companies straightforward. The Environmental Protection Agency, in 1995, October modified the Report of the Computer Industry Policy. The report provides declarations that must be followed by companies that deal with the manufacture of computer parts. Apple, intentionally encourages the buyback as well as appropriate dumping of computer components in the attempt to support stewardship production from the viewpoint of the environment. Different countries also enforce restrictions on computer parts and their applications once set. China is a good example that provides clarification of some of these matters. China, begun allowing computers into the country during the mid-90s but it has restrictions on applications (Rezvani et al., 2011). Apple also faces the struggle of overpowering market domination of personal computers though it does have a great chance in the world of music. Apple and other corporations dealing with computers in the US have come to the realization that doubling and pirating are quite prevalent in the United States as well as other states. This action which is unlawful directly affects successful operation of corporations in electronic industry.
All markets, and the business world, are assessed through use of Porter’s five force hypothesis. Porter’s applies 5 forces; obstacles to entry, provider power, extent of competition, purchaser power and risk of substitutes as elements that help in examining the status of a company alongside contenders. The risk of substitutes as well as extent of competition are some of the most significant factors that affect the operations of Apple currently.
Threats of Substitute Components
Apple Corporation faces the high risk of substitute components that are obtainable promptly. Rivals like Dell and IBM persuade buyers that they have brands that are of quality that is better compared to those of Apple. Apple, has however made the attempt to differentiate its brands in order to restrict customers from making a switch to rival brands. Apple’s brands, additionally command a market price that is high when compared to other competing brands. Even though the prices of Apple are higher, the company provides justification for the prices. Apple’s operating system specialization command, however skyrockets costs when delivered to inventive population designer when compared to purchasers of individual computer except where they seek graphic capacities that are superior (Boutellier, Gassmann, & Von Zedtwitz, 2008).
Competition with other Companies
Apple is in competition with companies that enjoy the benefit of a bigger market portion. The company therefore is forced to compete with companies like IBM, Hewlett-Packard and Dell. Still, minor firms such as Gateway also present a huge risk. In the manufacturing industry of computers, rivalry is vicious and expenditures switching is low. Apple as well is dependent on advancement of its individual operating system. The possibility of success is minimal as contestants chase niche markets rather than make attempts to contend with larger firms. Apple placed itself years’ before the competition as such, it has made room in the industry of computers like Dell, Gateway and IBM (Naraine, 2004).
Strategies to Address Future Competition Forces
Apple is supposed to persist with the promotion of inventive expert and educational markets. Apple is a firm with the best systems in position for such markets as such, it should concentrate on unrelenting funding for every regulatory approach. The backing outlay in the perspective of a market niche is supposed to get reexamined economically so that Research and Development expenditures do not drag into a situation that is unfeasible in making a return (Boutellier et al., 2008). Apple also has the option of incorporating its operating systems so it can work within Wintel operating program but this is not supposed to be limited to Wintel setbacks. Apple has also proved to be a controlling system that is superior and less susceptible to hitches that Microsoft faced and its operating system software (Naraine, 2004).
Key External Threats
The technological revolution speed and competition are threats that are most serious that Apple Computer Company faces. Its strategy shifts into communication gadgets and mobile entertainment that is portable placing the firm in situations that are competitive from varying sides. New contestants, prospective brands as well as opponents that are lowly prices threaten to lower the worth of Apple brands and its policy success.
Apple’s Diverse Operating System
Apple can use its operating system variations by spinning it into a chance formulating perfections to Macintosh program in order to achieve greater design and optional benefits over its rival software. Different computer viruses as well as cyberpunk irregularities present quite impressive prospect for the company to embellish and benefit some small sections of such an upset market.
Apple’s Engagement into the Music Business
The investment of the company in the world of music with its iTunes is a presentation of good prospect to enhance the knowledge of the brand. Introduction of iPods Music Shop also fronts fetches in excess of 2 million downloads in 15 days. All downloads were run on Macintosh mainframes. The establishment of the company of its international music shop would be an ideal prospect.
Microsoft Upgrade Expenditures against Advantage
Microsoft customers find it is less practicable to upgrade software programs except in instances when they can actually perceive a gain for the spent. The latest improvements by Microsoft are beleaguered with bugs which present a major magnificent prospect that Apple can use its benefit only if it avoids making the same mistake with its upgrades.
Apple’s Greatest Strengths and Significant Weaknesses
In the mid-1980s when the company was new in the market, its brand distinguished it from other company brands and up to date, it has capitalized on this fact for its products. The system is still a strong point for Apple since its operating system is not in any way susceptible to computer bugs and espionage invading other systems. The limited portion market that is held by Apple is enlarged whenever Microsoft is faced with setbacks.
Brand Identity and Reputation
Product brands aids in keeping the customers updated of company merchandise. Whenever a firm institutes fashionable brand name or reputation, it obtains several advantages. There are a number of advantages related with brand reputation and these include, capacity to trim down on production from acknowledgment viewpoint. Apple computers have obtained business identity from Steve Job’s and this has borne fruits.
Dealing with Software and Hardware
The top management of Apple is acting on blend of software and hardware development and it does not make any proposals to dismiss its workers since employees contribute to the company’s success. Apple will continue to operate in an excellent manner while management practices of the business of manufacturing software and computers that even some of the tough opponents deem finest. The company does not make software and computer components for its machines as such it has capability of regulating its design with the purpose of conforming it to operational applications as well as artistic wanted by the customers.
Financial and Political Ambiguity
The functional operations of the company are influenced by political and fiscal ambiguity that glooms the US. Educational institutions at times defer procurement due to budget deficits and restraints. Business enterprises also are not expanding and employment cutbacks experienced render less disposable income therefore reducing sales. Failure in recovery might persist thus impacting the firm as well as providers unconstructively. The entire market has been greatly undermined by the political and fiscal vagueness as well as other restrictions.
Research and Development Expenditures higher than of Business Rivals
Apple has operated exceptionally hard in order to attain this and as such, incurred more costs for development and research than contestants. The heightened expenditure unconstructively impacts income margin and with contestants reduction to product prices, it becomes complex to contend on the same playing field.
General and Administrative Expenses are more than their Rivals’
Growth into international outlets has led to an increase in the company’s expenditures. Marketing expenses for promotion of its exceptional operating system and its innovative equipment also impacts the bottom line, though the costs are essential. Contestants also have the capability of benefiting from comfort of application of operating systems that manage substantial quantity of market share therefore, they fail to use as such for purposes of advertising operating system.
Apple has the ability to enhance diversification by introduction of new products into the market. By ushering new products, it will be able to edge its market share since majority of people have the desire for attractive and the latest products in the market. Apple is also renowned as a trendsetter in fields of personal computers, operating systems, individual music machines, software applications, cell phones as well as advertising and retail. Apple is committed to concentrate its central strengths with senior leaders in management of iPods, Macs, software applications, international marketing and computer engineering. In the approach of differentiation, Apple attempts to be exceptional in the industry about aspects that the purchasers esteem (Moriane, 2004). It picks on one or more features that majority of purchasers in the industry consider significant and positions itself exclusively to fulfill such wants. Apple has also formulated its core strength of understanding purchasers and formulating products in order to improve digital ways of life. Through persisting to devote in raising customer insights, the company transforms the lessons into products presenting exclusive attributes and requiring a high price.
Company’s Resources, Capabilities and Competencies
The competencies of the company are focused in markets of learning and innovative expert fields. Apple has already established supremacy in both fields and continues to concentrate on them. It has already started enlarging its retail channels in order to get its products to the people and is achieving great steps in the world of music. These improvement also keep the clients focused and deliver sizeable revenue. Apple’s engineering, innovative capacities as well as scientific Advancement abilities are highly significant aspects that are competitive assets of the company. The outstanding creativity is the most noteworthy source of the company’s competitiveness in the long term. The most significant abilities and resources of the corporation are the top leaders in the company, Steve Jobs and the incorporated software and hardware system the company has efficiently promoted and established to acquire value. Whilst the designers of the company, engineers and IT experts comprise the major resources, the capacity of the company in exploiting their talents to build products is its main capability (Zhouying & Ying, 2011).
Assessment of Apple’s Value Chain
The main actions of Apple in its value chain differ slightly from the conventional model where materials get worked into finished products for retail to a buyer, earning value in every step of the process. The major activities of the company in its value chain are reliant greatly on reinforcement activities of human resources and management. Apple also constantly attempts to employ the most experienced and capable individuals to guarantee it shines at development and research of its programs and technology (Naraine, 2004). As a matter of fact, Apple repeatedly offers examinations and skill challenges to help recruiters sort through enormous curricula vitae they receive. Next to employees, a large section of expenditure structure goes to systems and infrastructure. Apple’s in-house software and computers make it possible for it to carry out service, operations, sales and supply. Every action adds to the value chain by increasing the company’s income.
Through transferring activities geographically, Apple is able to take advantage of diversity from the viewpoint of human resources, lowering wages in other countries apart from the US. Application of the competencies of Apple in different product markets lowers the reliance of Apple on profits from one market. Related diversification makes it possible for the company to share its activities, technologies and resources across different product lines and transfer of skills and intangible core competencies also offers successful avenue for acquisition of significant market share. On top of this, affiliations with other powerful brand names helps boost the promotion experience of Apple and it boosts customer confidence (Zhouying & Ying, 2011).
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