Apple Case Study 8

It is quite obvious from the case that Apple is facing many obstacles. It has way more competitors today than it had two or three decades back. Part of it has to with the highly globalized environment that companies are operating in these days. Another major obstacle is the technological environment which is rapidly changing compared to the one that Apple experienced when it first emerged on the global scene. But the most important of it all seems to be a mental thing. It appears that Apple, over a period of time, developed a rigid mental model that related success of Apple with sheer innovation. This same mental model has lead to demise of many companies in the past, Xerox Corporation being the prime example of that.

One key element of Apple’s strategy in computers, personal media players, tablet computers, and smart phones is product innovation, diversification and development. Over the years Apple has been very successful in integrating software and hardware in new developing products. Despite the struggling economy in recent years, Apple has been able to grow their market share and stay ahead of the game.

* Apple’s niche audience provides the company with some lagging from the direct price competition.

Apple has prospered internally and it is necessary to consider both strengths and weaknesses. Apple has lots of strengths, the major of them being it’s impressive brand reputation, Apple managed to position the brand as “premium products” for “elite” people. Customers are loyal and tend to stay in Apple’s ecosystem. Apple’s self-reinforcing ecosystem, it has a diverse ecosystem which integrates various hardware and software products into one large interactive space. Status of top innovator, Apple is perceived as the leading innovator and its products are highly anticipated. Apple’s very strong financial performance, high profit margins and very high liquidity. It’s network of retail stores, high-quality customer service helps to create advanced user experience. A powerful marketing strategy, Apple’s team masterly uses various marketing techniques to create a hype for their products and to strengthen the brand.

Apple is a fierce competitor in several industries, ranging from personal computers to entertainment media to mobile payment systems.

introduction of the Apple II, to the Mac, to its more recent iTunes and iPhone, Apple has managed to maintain a competitive advantage and in recent years been able

They need a computer for everything. Even a student could not go to school without a computer because homework/tasks are given through the Internet. This improvement of Internet has a big influence on Apple, Inc.. They always have to innovate and to invest a lot in their research and product departments to stay on the top of the market.

Even though Apple has encountered many setbacks, it continues to bring new and improve products to the market. Apple’s competitive strategy has been innovation. They have made an extraordinary effort developing, implementing, and executing its very unique strategy through innovation which has resulted in new product, and the enrichment of the existing ones. More specifically, Apple attempts to meet and supply the needs of a global market, by offering eager and enthusiastic consumers with innovated and high-quality products and services. Apple has employed a differentiation strategy linked to innovation with its three core products (computers, personal media player, mobile phones, tablets and other accessories). A key piece of their strategy involves meeting the needs of the converging digital electronics and computer markets. Apple has elected to implement its strategy by designing and developing proprietary operating systems and software technologies, thus allowing for strict protection of its intellectual rights.

“Rivalry in this industry is expressed by aggressive pricing policies, profound product innovation and design, online intensive marketing, direct selling, and afterscale services (Forbes, 2012) The Table below shows the current market cap Of Apple Inc. with its main competitor being Google Inc. Apple Inc. secures its market leadership by providing products and services with unique attributes using differentiation strategy. They also implement focus strategies such as instead of targeting business users, targeting consumer users with the IPhone.

Apple’s root problem is the ability for competitors to drive product prices down through the creation of comparable devices or software. Apple is known for aspiring to bring innovative products to market at a premium quality and accompanying high price. Gaining high profit margins on the sales of their products has counteracted the lesser global market share percentage Apple has compared to other leading PC vendors. Exhibit 3b in the case study shows HP and Dell with more than double the market share in the year 2002-2014 in the United States alone. Apple did not make the top list of market share percentage on the worldwide market comparisons. In the more recent years of 2012-2014 Android became a top competitor with Apple by competing with comparable devices and operating systems. Apple cannot afford to let competitors have the opportunity to control their pricing strategies and affectively decrease customer perceived value.

Apple also has a reputation of overpricing their products, and so this may be a major weakness, but at the same time is just a part of their marketing. Apple offers a small range of high quality products for a higher price. Apples main competition tends to have very competitive prices, which Apple seems to be

Apple Inc. is one of the leading companies in the communication market and because of the rapid growth in technology the global competition is very tight. Telecommunications, globalization, technology, the Internet, and e-commerce have an increased amount of change. Due to this increase companies need to keep up and make changes in their technology, which also means they need to increase their supply, relations, labor, rules and regulations within the company to maintain their

Apple Inc faces great competition form other companies in the PC industry such as Dell, Compaq and Gateway. This forces Apple to come up with competitive strategies which

“The cost of Apple’s product differentiation acts as a barrier to entry, thus preventing the threats of new entrants.” (Kelvin, 2012) Apple also applies patent for its inventions which in turn, helps Apple to limit the new competition. Apple targeted on customers with high salary range and priced its products at a highly price due to the high quality of products. Yet, new entrants usually will target on the market towards customers with a lower price range as they are using market penetration pricing in order to gain more market share. Therefore, Apple no need to worry the new entrants may threaten their market share because the targeted market are different. “There are several large, well entrenched players that have high brand recognition and loyalty, including Dell, HP, Lenovo, and Apple among others currently in the market.” (Brian, 2009, p. 4) Through profound R&D and an emphasis on product innovation, Apple also successfully developed its brand name and achieved high brand recognition. When new firms enter the market, they might have difficulty to develop a successful brand in the market. “Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion.” (Justin Horn, 2010) With the economies of scale, Apple is able to keep its cost of production down by producing the next unit of output at lower cost. Economies of scale state that by expanding the scale of production, the

Apple Inc. is the most revered corporation of the USA, both in terms of brand equity and market capitalization. The company’s international competitive strategy is focused on the innovative product development, which Apple controls through its eight business segments: Portables, Desktops, iPads, iPhones, Music related products and services, peripherals and hardware (Lam et al. 2005).