Apple Analysis Executive Summary In week 8 of AMBA 640, we will be analyzing the Apple case located in chapter one of Management Information Systems: Business Driven MIS Inc from an information systems management perspective. Our analysis will look at some of the common tools used to analyze competitive intelligence such as Porter’s Five Forces Model, the three generic strategies for choosing a business focus and the value chain analysis. We will also discuss why and how data, information, business intelligence and knowledge are important to Apple. This analysis will also include how Apple identified areas where it achieved a competitive advantage using management information systems and why competitive advantages are temporary. …show more content…
Threats of Substitute Products or Services Substitute products or services are a result of competition and can limit the profitability in that industry. Threat level is considered high when there are multiple alternatives for the product or service. The threat level for Apple is high due to the numerous options that consumers have to choose from. Amazon and Android both offer buyers the ability to download digital content, i.e. books, music, movies, and etcetera through its online store. Samsung, Sony, Motorola and Microsoft sell various products (tablets, mp3 players, cellular phones) that directly compete for the same consumers as Apple. Threat of New Entrants The threat of new entrants into an industry is largely dependent on the barriers to entry. Baltzan defines an entry barrier as “a feature of a product or service that customers have come to expect and entering competitors must offer the same for survival (Baltzan, 2012, p.17)”. Porter identified six barriers (http://www.referenceforbusiness.com/management/Or-Pr/Porter-s-5-Forces-Model.html): •Economies of scale, or decline in unit costs of the product, which force the entrant to enter on a large scale and risk a strong reaction from firms already in the industry, or accepting a disadvantage of costs if entering on a small scale. • Product differentiation, or brand identification and customer loyalty. •
Click here to unlock this and over one million essaysGet Access
Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:
Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:
The threat of new entrants is measured by the level of entry barriers, brand reputation and customer loyalty, potential for existing competitors to expand, growth of buyer demand,
The multi billion-dollar corporation, Apple Inc., designs and manufactures some of today’s highest technological gizmos and gadgets. Among their best known products are the Apple and Macintosh computers, iPods, iTunes, iPhones and iPads. Apple is one of the most powerful and influential high tech companies in the world. The success of Apple Inc. stems from the innovation and visions of co-founder and entrepreneur, Steve Jobs, the excellence of the stylish, user-friendly products, and the ability to create innovative products that consumer’s desire.
Porter (2008) argues that the threat of entry “puts a cap on the profit potential of an industry … [and] incumbents must hold down their prices or boost investment to deter new competitors” (p. 81).
Threat of New Entrants: The threat of new entrants is very low in this industry. Most of the companies have over a hundred year’s history and their brands are based on their heritage and tradition. Even a new company with a large amount of initial
The threat of new entrants refers to the threat posed by new competitors within an industry. If it is easy for new firms to enter the industry barriers to entry are low and the threat of new entrants is high. A profitable industry attracts more competitors. Economies of scale, learning curve effects and other macro factors impact the nature of an industry 's
Apple, Inc. (APPL) operates under a fiscal year accounting period. This period consists of the 52 (or 53) week period that ends on the last Saturday of September. September 25 was the specific date observed as the end of the annual reporting period for 2009 and 2010. Every six years Apple adds an additional week in its first fiscal quarter in an effort to realign its fiscal quarters with calendar quarter.
Threat of New Entrants – The threat of new competitors entering an industry is high when initial
The threat of new entrants: According to our text, the threat of new entrants is the possibility that the profits they make in an area may be eroded by new competition. The McDonald’s by me competes with Burger King, Wendy’s, Dairy Queen, and other smaller places like Zel’s. Each time a new place opens the less business they will have. For the other company, there will be a barrier to entry. They will have to use product differentiation to bring in the customers…to make them overcome their loyalty to McDonald’s (Dess, p. 53).
Barriers to entry- there can either be high barriers to entry which makes the market unattractive and hard for new entrants or there can be low barriers to enter which make it easy for new entrants in the market.
Apple Inc. has launched its iPhone in January 2007 (telegraph) as a new product in the market with latest technology and it was the first multi touch smartphone adding the feature of iPod and received an overwhelmed response by selling 270000 units. It had created a new record for a new company like apple, iPhone had laid a stepping stone for the success of Apple and till this time iPhone is the best seller product of Apple Inc. during first quarter of 2016 apple has sold over 74 million iPhones worldwide. (statista, 2016).