Apple Inc. Case Analysis Essay

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Threat of New Entrants: When Apple first began in the early 1980’s, the threat of new entrants was significant. PCs were a relatively new commodity with little distinction, few competitors, and no government regulation, and although initial R&D was complex, assembly was simple. Unsurprisingly, new firms emerged quickly and forced Apple to differentiate its product over time. This push continued through the years, and ultimately, Apple was forced to create more innovative, unique, and quality products—a dynamic favorable to both Apple and the industry. At the same time, the industry’s dominant players were becoming established, reducing the threat of new entrants and solidifying Apple’s position. Bargaining Power of Suppliers: To build a…show more content…
Although buyer’s bargaining power increased, it forced Apple to make profitable changes to their business plan, resulting in a positive dynamic. Rivalry Among Existing Competitors: Although the number of PC manufacturers has increased since the 1980s, there still remain only a few dominant players who fight hard for market share. Many firms have chosen to compete in price, but Apple has competed with innovation. This is shown in Apple’s high R&D/Sales ratio in Exhibit 5, which routinely trumps that of Dell and HP. This is a mostly negative dynamic for Apple, because even though they spend more, they can’t charge significantly more on this price sensitive product. In the past, Apple struggled in the PC industry because of several factors. First, Apple’s slow speed and a lack of competitive software limited sales, and their software was incompatible with other computers. They also failed to adapt to the market’s need for a lower cost PC, thereby losing the bulk purchases made by businesses investing in new technology. This also had first-time computer users adapting to non-Apple technology, thus instigating a switching cost to buy Apple in the future. In recent years, Apple has adjusted their business strategy, improved their software, and created new technology that has customers willing to pay a premium. To remain successful, Apple must continue doing this. Evidence of success is depicted in Apple’s market value over time (Exhibit 1),
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