Introduction
Apple Inc. has a rich history. Although the first products were conceptualized and manufactured by Steve Wozniak, it was Steve Jobs who introduced the business aspects of the organization. Wozniak was used to making technology products for fun. When Jobs realized this, he pleaded with him to commercialize and sell the products. Incidentally, this is how the company was born. Its first product was Apple 1, followed by Apple II and then Apple III, which did not do quite well.
Jobs ensured that the best brains in the management organization steered the company. He went to great lengths in convincing John Sculley to head the company. Sculley had already succeeded as the Pepsi CEO, and Jobs was keen on leveraging his experiences to lead Apple. Ironically, it was Sculley who would later kick Jobs out of Apple after he became unbearable to other employees. To his credit, within his stint at the company, Apple grew in assets and revenue. The company took a downturn trajectory thereafter, leading the Board to consider bringing Jobs on board. Later on, Jobs was brought back to the company after the Board unanimously decided so.
Although many attribute the company’s successes to iPhone, there were several products before it that put the organization on the global map. The iTunes and iPad were some of its signature products. The company would later change its name from Apple Computers Inc. to Apple Inc. following a dispute, it had with a popular music group, the Beatles. The very first retail store of the company was opened in the year 2001 in San Francisco. Since its establishment, Apple has always maintained a closed-door policy that has hindered its prospects of working with third-party applications. In 2008, this policy was, however, relaxed.
Organizational Analysis
The organizational analysis of Apple entail analyzing the internal factors that are responsible for its business operations. Specifically, the company has always relied on its strengths to overcome its weaknesses. It can maximize its growth prospects by leveraging its strengths. First, this comes from the many products and services offered by the company. To effectively deal with its internal matters, it is significant to analyze the company’s organizational architecture. The CEO, Tom Cook and his team of management rely on these internal factors in his decision-making.
Strengths
Apple has carved a niche as a company dedicated to the design and production of innovative products. Its products are highly valued and loved for their sleekness and simplicity in sophistication. Indeed, multiple sources such as Brand Finance and Forbes have consistently ranked Apple products to be the most valuable brands. The Apple brand is recognized globally, a factor that has earned the company a huge mass of loyal customer base. Many would like to be associated with the company, partly because of the prestige attached to it. Moreover, Apple deploys some of the best marketing and advertisement juggernauts in the industry. The company is always prepared to spare huge sums of money to pass its message across.
Apple has a wide range of ecosystem products that it leverages to reach a wide market segment. Recently, the company has sought to expand its services further by incorporating more new products, services, and technologies. Apple has expanded its music portfolio and movie streaming services in addition to the introduction of the Apple Watch and other technology products. Moreover, the company is also planning to introduce Apple cars to respond to the rising demand for green products. There are also possible opportunities for sustainability that the company can take advantage of. The company banks on its dedicated team of researchers and innovators to design and manufacture cutting-edge technology consumer electronics that have continued to appeal to customers across the world.
Weaknesses
Although the company manufactures several products and gadgets, the iPhone is its most valued product. In 2020, 50% of its $274 billion revenue came from iPhone sales. If for some economic, social, or even political reasons, the company cannot produce a high number of phones, the results would be catastrophic. Several companies are emerging that manufacture high-quality smartphones but at prices that are cheaper than those of Apple. China which used to be Apple’s biggest market share is witnessing the emergence of rival smartphone companies such as Huawei, OPPS, Vivo, and Xiaomi. This, together with a preference for local brands, is making Apple’s global market share continue to shrink. It must also be noted that since the death of its founder, Apple has not produced a significant product in the market. It appears that Steve Jobs was the sole innovator in the company. In addition, its strict end-to-end user encryption makes it hard for other players to come on board for joint partnerships.
The company’s policy of exclusivity ensures that its distribution network remains slim despite the rising number of competitors. For one to be authorized to sell iPhones of MacBooks for instance, he or she must be thoroughly vetted. This limits the company’s products from reaching the market since their presence is limited to a few outlets carefully selected by the organization. The premium pricing strategy employed by Apple for its products also works against the wide reach of its products. Only the high-end market is targeted by expensive Apple products. This means that customers from low-income brackets are locked out of Apple products. It must, however, be noted that only a small fraction of the global population falls within the high-end market segment. This means that the company is intentionally overlooking a very big market base for no apparent reason.
Environmental Analysis
Like many other industries, the consumer electronic goods manufacturing field is growing rapidly. Many players are entering the industry, while those already in the industry are also expanding their scope to include consumer electronics manufacturers. This implies that competition within the industry is getting stiffer. Conversely, the industry is also rife with limitless opportunities that can give an organization a fair competitive edge. To survive in this highly competitive industry, Apple must devise strategic moves that will enable it to exploit its opportunities to defeat its threats.
Opportunities
There exists a massive opportunity for Apple to expand its network of product distribution to reach wider markets. The company can modify its distribution strategy and ensures that it reaches out to as many customers as possible. By conducting an aggressive marketing and advertising campaign, Apple can massively increase its volume of sales. This is specifically to respond to the rising demand of internet-enabled mobile phones across the world. In addition, the company has an opportunity to explore wider markets for its other products, such as Apple Watch. Moreover, the rise in online shopping presents many opportunities for the organization as it saves it the hurdles of navigating through complex distribution networks. Against this backdrop, the company will be well-placed to reach many customers without having to establish physical distribution centers.
For several years now, Apple has continued to dominate the technology market, thanks to its cutting-edge technology and quality products. The company can always rely on partnering with other companies to expand its customer base. Although talks about green technology have gained traction over the past few years, mobile smartphones and most consumer electronic products have not taken up the challenge. There exist massive opportunities in green technology, like manufacturing smartphones powered by solar energy. This is an area that the company can explore for its expansion. In addition, the use of artificial intelligence can also increase Apple’s profit margins. For instance, a string of commands can be used to arrange features and photos. Customers will find this appealing and want to own Apple products.
Over time, the business world is increasingly witnessing the creation and improvement of trade policies. This creates a conducive business atmosphere for Apple to distribute its products across the world. In addition, the stability that characterizes most developed countries positively impacts on business operations in those nations. There is a growing middle class population with more purchasing power in developing countries. This presents more opportunities for Apple to expand in those markets. Apple’s growth prospects are also likely to be enhanced by the rising reliance on mobile devices by many people across the globe.
Increasing digital systems access leads to an increase in demand for digital devices. This will be a good business prospect for Apple. Other opportunities for growth present themselves in the form of growing cloud computing demand and a rise in business technological integration. Since Apple offers technological goods and services, it is prone to expand its customer base and increase its revenues. The company also stands to get more revenues, thanks to the growing mobile market trends across the world. The App store offers more opportunities for developers to respond to customers’ demands, which also enhances mobile phone intake.
Threats
Over the past two decades, the mobile phone industry has witnessed a rise in the number of players leading to cut-throat competition. While competition is good for the business, some of Apple’s competitors are engaged in unfair business practices. Samsung has been highlighted to be stealing Apple’s patent, which it used to manufacture imitated products and sell them at lower prices as compared to those of Apple. Several features of the iPhone have been imitated by rival companies around the world. Moreover, the rising costs of labor, especially in regions such as China, have led to a reduction in profit margins for the company through a reduction in sales.
Any disruption of the global supply chain can have colossal and devastating consequences on the movement of Apple products. Examples of such disruptions include bad weather patterns or blockage of sea routes by stalled ships as happened in the Suez Canal a few months ago. The United States was embroiled in endless trade wars with several countries, including China, during President Trump’s reign. This has devastating effects on a multinational corporation like Apple. In other regions, the operations of the company are affected by punitive tax regimes that ensure that the company pays enormous amounts in taxes. This cuts into its profit margins.
Strategic Issues
Many governments are imposing strict privacy policy regulations, and this has huge impacts on companies such as Apple. Moreover, there are mounting anti-Apple sentiments that seek to question its business operations. For instance, when the company-initiated lawsuit against its third-party service providers, many held it in contempt. Potentially, this can injure its brand image and erode consumers’ confidence in the company’s products. In addition, when other firms advance their technologies, new players are prone to enter the market. This will further increase competition for the company. Apple’s after-sale services and other business areas have been the subject of legal challenges across the world. Particularly, the company’s third-party repair services have been criticized and legally challenged in the United States, Australia, and the European Union. This play against the company as it ruins its name.
Recommendations
The company should capitalize on its strengths to overcome its weaknesses. For instance, its narrow distribution network can be resolved through the adoption of online shopping to reach as many customers as possible. In addition, since Apple already boasts of an excellent brand name, it should expand the scope of its consumer electronics and services to capitalize on the brand identity. More aggressive efforts should also be put into continuation.
One of the greatest threats facing the company is increasing labor costs, particularly in overseas manufacturing destinations such as China. This problem can be resolved through the use of artificial intelligence, where the company adopts automation to do some of its work. Moreover, by partnering with other distributors, the company will ensure that its products reach wider market segments. This will require revisiting its partnership restriction policies that forbid it from outsourcing some of its functions.
Conclusion
Many business magazines have ranked Apple as the most valuable company in the world. This is because of its track history of manufacturing cutting-edge technological devices that have earned it a strong brand identity. The success of the organization relies on its ability to use its strengths to overcome its weaknesses. Organizational analysis is a decision-making tool that determines the internal business issues that are most pressing. On its part, environmental analysis helps in identifying the most significant external factors that it needs to exploit to stay in the industry.
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