Also the assignment covers the programs and strategies followed by Apple and their effect on the company’s position. Through a careful industry analysis , we have tried to bring out the best practices followed by Apple and the areas it needs to work on. Table of Contents Topic Page Number Introduction 4 Porter’s Five Forces Analysis 5-7 SOOT Analysis 7-11 PESTLE Analysis 11-12 Business Strategy 13 Recommendations 13-15 Conclusion 15 References 16 1. 0 Introduction Apple is a California based corporation founded in 1977.
The products and services offered include Phone, Pad, Mac, Pod, Mac, Apple TV with each irking on the company’s unique business strategy of designing and developing its own operating system, hardware, software application and services. With the launch of Pad in 2010, it became a huge success overnight as millions of people bought pad during the first few months. However, in recent years, the market for pad is said to be contracting, despite all the innovation and designs. Apple Annual Reports, 2013) Source: The Business Insider (2014) 2. 0 Discussion and Analysis 2. PORTERS FIVE FORCES ANALYSIS This model will help to analyses the various factors which help to frame the equines strategy for Apple and identify the key drivers. When Pad was launched in 201 0, it had a strong market position but due to the change in market conditions and technology, there are many factors which need to be considered before Pad can retain its position as a market leader. . 1. 1 Bargaining power of customers. According to a report published by PEW Research Centre, fifty percent of the adults in US own either a tablet or an E-Reader, which looking into the current population accounts for a combined devices ownership of 179 million devices owned by 121 million adults. (Zurich & Rainier 2014). Particularly in the US, the customers of Pad are a mix of network providers, retailers, business and household users.
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Due to the higher price of the product, customers usually intend to buy it under a contract offered by the network provider which usually lasts over several months. As such, customers have a little or no power over the prices for Pad as the switching cost comes ATA greater price. 2. 1. 2 Bargaining power of suppliers The business strategy for apple is to design its own hardware and software through components provided by various suppliers. Among the major suppliers re Foxing, AAU, Foxing, TAP and even its competitor -Samsung.
When, with the launch of Pad Mini, Foxing reportedly lost nearly 50-60 percent of the product production to another supplier named Positron who faced issues with working conditions, Apple immediately employed monitors and control system into both the overseas factories. It also became the first technology company to join Fair Labor Organization. (James & Assistant, 201 2) Thus Apple has the power to swap between the various component suppliers so as to gain the demands of the consumers. . 1. 3 Threat of new entrants: As stated earlier, Apple only designs the product and gets it manufactured through its component suppliers; hence there is a possible threat for market entry of its competitor suppliers Samsung or Foxing. However, some of the following techniques could work towards its advantage: Differentiation: Apple has always relied on the strategy for constant improvement in the product offer: smaller, simpler, more features, less expensive. (Asker, 2014).
As patents and copyrights are a way to restrict new entrants, thus pad’s continuously improving technology (Tunes, the Pad mini with retina display, ISO 8, Pad Air) alps to overcome this barrier. Distribution Channels: Apple has strong connections with various network providers at the national level. This helps to increase the sale of products when customers are connected through their internet providers. Capital investment: The cost of an Pad is huge both in terms of manufacturing and buying.
Thus to achieve the breakable point and a good margin of safety, the company has to sell a large number of products which would be very difficult for a new entrant to achieve. 2. 1. 4 Threat of Substitute products: The use of Pad is similar to using smartness or other tablets. Comparing with smartness which provide for testing and calling features, the cheaper priced notebooks, the notebooks with larger screens or e-book readers for book reading, Pad is always under threat of substitute products. 2. 1. Competitive rivalry: Due to the vastness of the tablet industry including Google, Acre, Toshiba, Samsung, LOG, the competitive rivalry is really strong because each of the companies are determined to achieve a greater market share. The ease and familiarity of using Android software, together with lower prices have helped Samsung and Leno to increase their market share. Forbes, 2014) The results of the above analysis indicate that despite the entrance of new competitors, Apple still holds a dominant market position in the e-tablet market in the US.
Although the market on the whole indicated a downward trend for the 2014, the proportion of Pad users is still the highest because of its strong bargaining power of both customers and suppliers. 2. 2 SOOT ANALYSIS: The SOOT analysis includes the analysis of strengths, weaknesses, opportunities and threats, both external and internal, and the impact they have on the marketing and the business strategy of an organization. Farrell &Hartline, 2012) 2. 2. 1 strength Strong brand awareness- the name APPLE is well known in both present and the potential market segment.
Pad is generally viewed as a tablet with majority of adults in USA own Pad due to the head start it has in the tablet industry. (Forbes, 2014) The apple operating software keeps on upgrading itself with the now latest ISO 8. The Pad Mini with 7. 9 inch retina display PIPS technology for the LED -backbit-Multi Touch display Fingerprint resistant coating In-built Peacetime HAD camera/ sight Camera Sir – the assistant for using own voice. Pad Air – the lightest pad Strong and varied list of network providers – Automobile, Sprint, Verizon. Phone APS – over 3500 different APS to download. (whom. Apple. Mom, 2014) Also, the product is echo- friendly and Apple has researched and taken care of the environment affects its production would involve which opens a huge market for environment conscious consumers. (Apple Annual Reports, 2013). When the product was launched in 2010, it created a ‘halo effect’ in the market, cannibalizing the sales of other Apple hardware which came through strong publicity and the additional floor traffic at the Apple stores. Seizer, 2010). Apple has been continuously involved in innovation and up gradation of its software technology by launching new models with improved features.
This helps the company to enhance its product awareness and keep a strong hold in the industry. Apple -IBM venture Apple has announced its plans of partnering with IBM so as to launch a whole new series of business APS and services which work on the ISO devices. This venture would surely be targeting the corporate segment as IBM is said to be selling the ISO devices to the corporate customers. By doing so, it is said to create round 1 00 industry-specific APS for the phone and the pad which are based on the grounds of device management, security and device integration.
Apart from this, Apple has plans to offer a completely new Applecart service which will be focused on meeting individual enterprise needs. The customers and the IT team would have benefit from the 24/7 assistance and support from apple and an onsite-service facility through IBM. (Hunter, 2014). This strategy of Apple is bound to leave behind its competitors for the corporate sector including Google, Microsoft and blackberry. Supplier Diversity Program: Apple’s supplier diversity program was established in 1993 which is intended to maintain a strong and lifelong relationship with its diverse base of suppliers.
Under this program, apple diversifies its suppliers into various categories based on their businesses like minority – owned, women-owned, small disadvantaged businesses and the like. By doing so, Apple is able to procure products with the given time frame and at a cost which offers best value to the customers and shareholders. (www. Apple. Com, 2014) Advertisement : In the US, T-mobile has just launched as a new carrier with the launch of Retina Pad mini and Pad Air, Automobile announced “free data for life” which guaranteed its customers 200 MBA of free data every month with their Pad even if they are no longer T-mobile customers.
In addition, all the four carriers: T mobile, Verizon, AT and Sprint carry LET coverage which make a great difference to data performance in this internet age. (Cohen, 2013) 2. 22 Weaknesses Product Line: The product line for the Pad is very narrow and is limited to one particular market. Also the product life is shorter, usually 6- 12 months. This poses a problem with customer familiarity, where consumers are not even fully indulged n the previous version wherein a new version is launched as well. This gives an opportunity to competitive rivals to capture the niche market.
High Price: Due to the higher price for the Apple tablet, its switching cost is very high. The competition in the US is really strong and the competitor with reasonable price alongside good features wins the race. Features: 1 . One of the greatest weaknesses for Pad in terms of its features is the missing flash player as most of the games and videos work through the flash player. 2. Memory space is another issue because there is no provision to insert SD card for extra memory space. 3. There is no provision to import pictures from camera as there is no USB port. . The non- existence of HIDE (High Definition Multimedia Interface) is another disadvantage with Pad since the user cannot uncompress the digital information. 5. The limited multitasking needs to be improved and it needs to have a capacity to run more applications at the same time. 2. 2. 3 Opportunities Given the brand name and awareness, Apple has lot of opportunities within the industry New Product Market Entering and introducing a new product within the same industry can be a really good opportunity for Apple.
For instance, in the US, it can introduce e- reader with a lower cost so as to capture a wider market. This would not only work towards gaining a strong financial position but also help in expanding the product line which is at present only restricted to four versions. Developing market trend As seen over the years, Apple has the power to influence market trends, it can going forward build a strong position in the market. For instance, Apple was the first one to launch tablet after the Phone, followed by Samsung, Sony and Blackberry.
This first mover advantage can help Apple to develop the e-tablet rend in the market through rigorous advertising, branding and using non price competition. Integrating the unique functions of other tablets: Due to the strong brand recognition for apple, it would be a great opportunity for the company to integrate and combine the unique features of all the other e- tablets so as to establish a product which would make it an augmented product like for instance the provision for flash player and an excellent book reading at the same time.
Due to the decline in the market, it would be a good time for Apple to capture and push up this entire market. . 2. 4 Threats Strong competition within industry Apple has strong competition within the industry as well as with big partners like Sony, Samsung, HP who have their own unique products with little difference and offered at a comparatively lower price. Due to the short life span of the product, it also has the threat of being captured or seized by the other stable competitors.
Strong competition intra-industry For any e-tablet market, the greatest threat is the use of laptops or phones, the latter being able to fit in the pocket and thus being easier to carry around. Therefore, the whole purpose of using an e-tablet gets defeated if the Phone or any other smartened like Samsung has almost the same features. SOOT Analysis indicates a strong market position of Apple in the US with most of the tablet users owning an Pad. The extent to which Apple uses its strengths tends to overshadow its weaknesses which only seem too little looking at the bigger picture. 2. PESTLE ANALYSIS – Analyzing the key drivers 2. 3. 1 Political factors Having specialized operating system software in their devices, it is leading company in the market. This company was continuously improving its market ales target with innovative applications, improvised design and software’s. pad provides different types of political applications for enthusiastic public. APS like political concepts, health care Reform bill, pocket justice, political fury, campaign tracker 2010 etc. So these APS continuously update people about the political movement. These sorts of strategies are trying to make pad stable in market. . 3. 2 Technological factors Google’s Android operated Samsung tabs run with varying operating system in Android market whereas Apple’s pad works with similar ISO and assist the application store. Sizes and display of pads are similar while Samsung tabs always renovate their designs, sizes along with their technological configuration. With liberality of Apple’s pad for public in 2010 , Samsung captured 61 percent of sales market of media tablet, as calculated in 2012 through changes in specification and design of Android tablets, it is gaining the market sales competing Apple. Edward, 2014) 23. 3 Economic factors There are three economic factors that every company faces- inflation, recession and currency. In inflation period the people purchasing power wildcatters, o the sale of pad will decrease. People will buy less because price of pad will go up. The normal offering cost of the pad likewise dropped strongly year over year, because of the mix of lower-valued and higher-estimated adaptations. Apple’s pad unit sales jumped 84% year over year, but revenue only rose by 52%. (Blooded, 2012) 2. 4 Social Factors Lifestyle and standard of living of the people are social factors that cause a huge impact to pad Apple business development. Technology had turned the most imperative media that makes this globalization quicker and more extensive into he Virtual world that we get to these days. Technology is utilized by Apple as a huge business opportunity by creating numerous virtual media forms. Pad is changing the way individuals have pondered over the item, with the help of the extra 19 million pad clients whom the organization is giving a new chance to roll out improvements in their life.
The image of Apple additionally goes up and numerous individuals have begun utilizing it and have turned it into a lifestyle. Therefore social factors have positive effect on pad apple. (Management of Apple, 2013) 2. 35 Environmental Factors Apple pads are not environmentally friendly as compared to Samsung. Apple pad consume more energy as compared to desktop or laptop. As compared to the traditional media Apple digital media is not sustainable or green. As compared to other competing brands the battery life (lifespan of battery will last before it may replaced) is very short.
It is important to keep the pad in moisture free and cool environment (less than 30 degree C). (Arthur, Here, Gibbs & Gassier, 2013) 2. 3. 6 Legal factors Legal factors affect the marketing of apple pads. It should include the following: International trade related issues Corporate and consumer tax Health and safety Government rules and regulations We can use pad as a phone, gaming devise and a computer. So it act as a telecommunication device supported by wife. Trading agreements are required to be signed with in the rules and regulations of the state. . 4 Business Strategy of Apple to gain competitive advantage Apple follows simple rules to retain its position in the e-tablet market besides delivering quality to its customer. These rules are: Apple has created its image as a brand. To retain this, it follows the policy of non-price competition with its competitors. That is when the Amazon entered the US tablet market with its offering of Kindle Fire for $199, Apple did not alter its own prices as it knew its strong market hold and product quality.
Despite of the overgrowing tablet market, Apple decided to target the audience with its own unique features including cloud and tunes. To make profits in the unstable tablet market, Apple is following a key pricing policy which is to ensure that the body or the hardware of the product is profitable for the company and additional content it delivers serves as additional revenue. As through the years, Apple has been launching different versions of Pad, it clearly indicates, Apple’s strong focus on research and development. This department intends to launch the newer versions with updated functions and high performance. Pad also benefits from its unique network feature named Peacetime which it intends to deliver the use correctly so as to gain the maximum revenue. Apple’s business strategy focuses largely on the principle that it has got the largest app base than its competitors. This Application software is free from any security threats and addresses the issue of privacy. Apple puts strong value for social security and concern. It was during when the company faced accusations of poor working conditions in China, Tim Cook himself visited the place and did the security checks. Lashing’s, 201 2) 3. 0 Recommendations: Apple is widely known for the kind of innovation and technology it uses to launch new products every year. The US market, in particular is highly dynamic and uncertain. The needs and the likes of the people change rapidly. Thus even though the world shipments for tablet is rising, the rate of growth is on a slight decline. Due to the high rate of penetration Apple has achieved in the US with charity of adults having pad as their tablet, it is difficult to further increase that penetration.
Following are some of the recommendations the company should follow in order to retain the strong hold in the US market and make customers want their tablet. 3. 1 Pricing the product Due to the strong competition from other players, the price of the product should be able to meet the market. Though there is sudden and a slight decline in the tablet market, however, the proportion of Pad users is still the highest. As such, to maintain that market position, Apple needs to launch products to suit he needs at the right price. 3. Cannibalizing itself One of the main weaknesses of Apple is that it does not look at its products by placing them in different strategic product groups. By doing so, it tends to cannibalism itself over its own products. For example, The launch of phone cannibalized the pod. And now, with the fall in the trend for e-tablet market, there is an underlying threat if the phone would cannibalism the use of Pad in the future. 3. 3 Improving the interface for content providers For people who love reading, pad is not the best solution to provide an excellent eating experience.
Now looking at the price and features of Kindle, Reading lovers will buy it. Thus Apple needs to come up with an tablet that provides the best quality interface for both reading and the use of other multimedia features in this overcrowding e-tablet market where variety of options are available. 3. 4 Teaming up with mobile platform entities To retain the market position, one of the recommendations for Apple is to team up with various mobile platform entities and publishes like newspapers and magazines to take advantage of their visual orientation and smart designs in order to enable advertising personalization.
For instance, Apple can charge the publishers for delivering targeted personalized advertising messages to the customers through APS. However there needs to be a strong importance of identifying the reader and then responding to his profile and preferences in the desired manner. By doing so, Apple would be able to reach out to the public at large and kind of connect with them. 3. 5 Improving some aspects of its technology AS discussed earlier, Apple needs to incorporate a flash player in its pad to enable videos and games, thereby targeting the youth market.