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Apple, Inc is a well known name in the computer technology world; Apple, Inc leads the computer industry in innovation thanks to the award winning desktop and notebook computer known as OS X operating system (Yoffie & Slind, 2008). This paper will focus on Apple Inc., strategic management and why is it critical to the success of the organization in meeting its goals and mission. It is therefore important to define strategic management, according to Certo, Peter & Ottensmeyer, (2005), strategic management is a continuous process that directs an organization to be appropriately suited to its internal and external environment. Strategic management benefits organizations by providing personnel, capital, helps to set standards and most importantly activates people. For an organization to have a successful strategic management plan, the mangers must learn to think strategically and have the ability to evaluate their environment and develop new ideas. Steve Jobs one of the founding fathers of Apple Inc used strategic planning to his advantage by making Apple’s mission a simple one- bringing easy to use computers to the general market, revolutionizing the computer market.
In 2007, after thirty years, the organization changed its name from Apple Computer to Apple Inc., this was a significant move because the organization became more independent, and it was no longer known as a vendor to Macintosh personal computer line (Yoffie & Slind, 2008). This strategic move paid off; a year and half later, Apple Inc.’s third quarter net profit of $1.07 billion on a $7.46 billion in revenue (Yoffie & Slind, 2008).
SWOT Analysis of Apple, Inc.
Strengths (Competitive Advantage)
The Apple brand name is a household name, the brand value of Apple, Inc. improved to $13,724 million in 2008 from $11,037 million in 2007 (Datamonitor PLC, 2009). Apple is different from its competitors because it produces high quality products, its products are also unique and attractive and this has helped to increase its market shares. Since Apple is known globally, 54% profits come from foreign markets (Datamonitor PLC, 2009). Apple products are easy to use and carry around, majority of its products are light, small and very easy to carry around and it has a major advantage of product diversity, there is something for every one of all ages.
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The innovation of Apple products has led the organization t increase its expertise in I-Pod, I-Phone, I-Tunes and I-Works products. Over the years, Apple has been able to design products that are almost impossible to imitate and this has placed the organization in an advantageous position over its competitors. Apple’s PC is still one of the best desk top computers because it has a close operating system that is virus resistance.
Apple invests heavily on research, a lot more than its competitors; even with that, the organization’s products and services experience quality problems from time to time. In 2005, some consumers reported that the IPod Nano had faulty screens, when it was first introduced, iPod users complained about faulty batteries. Apple replaced the entire product free of charge at the expense of the organization. In 2008, Apple Ultracompact USB Adapter Exchange Program was introduced, almost immediately consumers started complaining; adapter’s metal prongs were breaking off and getting stuck in the power outlet, creating the risk of electric shock. Again the organization exchanged all ultracompact power adapters for a new redesigned adapter, free of charge. Product defects can ruin an organization’s reputation, warranty and other expenses.
The lack of debt mentioned earlier can also constitute to a weakness because the organization is extremely susceptible to stock acquisition by other organizations. Some investors lost their interest in the organization due to the debt/equity issue and the fact that Apple has not issued any dividends to their shareholders.
Apple Inc. is famous for its innovation way of thinking. They were able to develop product lines that are both functional and attractive in design. The iPod communicates with Nike running shoes by receiving data such as how many calories burned and the distance ran; this boosted the demand for IPods and gives the organization a great advantage over the MP3. Apple’s latest invention the Leopard OS received rave review by selling 4 million copies nationwide, in additional, Apple integrated with the automobile makers and now many American cars models carry the IPod connectivity (Datamonitor PLC, 2009).
In 2007, Apple in conjunction with its distributing partner AT&T began the sale of iPhones and as predicted by Jobs, the IPhone “reinvented the phone” and “the internet in your pocket” (Yoffie & Slind, 2008, pp.12-13). The iPhone is a combination of mobile phone, a widescreen iPod, and the internet functionalities and applications that support email, web browsing, and maps on a mobile phone (Datamonitor, 2009). Even though the iPhone came with a very steep price tag whuch did not deter its consumers from buying it. In addition, AT& T made a concession with Apple, this was unusual because no other handset maker had ever made such concessions- AT &T gave Apple Inc, “near complete control over the development and branding” (Yoffie & Slind, 2008, p.13).
Apple faces intense competition from Dell, HP, Acer, Lenovo, Samsung Electronics, Sony, and Toshiba, among others. The acquisition of Gateway by Acer also created a large player in the PC market. Dell’s low budget gives the organization a competitive advantage in the personal computer market. HP however is the current leader in the industry with a gross revenue of 88.89 billion dollars (Datamonitor, PLC. 2009), notwithstanding, Dell still has the highest net income.
Another threat to Apple Inc is the ever changing technology, the iPods and iMacs are being constantly updated. There is also the real threat of other devices replacing the iPod and iMac, this would change Apple’s role in the computer industry and will also force Apple to develop better products.
The global economic crisis is also another threat. The uncertain global economic conditions, obviously has a negative effect on the demand for Apple’s products and services. Apple has a large international market and their revenues from outside the country would be affected by the exchange rate; the dollar has depreciated a lot causing a reduction in Apple’s net receivables.
Apple Inc. relay on the third party suppliers for assorted parts used in its products. In
the case of personal computers, Apple receives almost all of the general components from numerous sources and certain key components from single or limited customers. These key components are DRAM, NAND flash-memory, and TFTLCD flat-panel displays (Datamonitor, 2009).
Apple also faces some difficulties due to the frequent changes in strategies and leaders at the helm of business; this makes it difficult to implement a strategic management plan. Strategic management plan requires a long range perspective when done correctly (Swayne, Duncan & Ginter, 2008).
Recommendation For Action
There is no doubt that Apple’s successful name is one of the leading, innovative forces in the computer industry. Its sales will continue to increase, over the past five years; its net profit has increased 200%. Competitors find it difficult to imitate Apple product due to high security and virus free PCs; Apple still needs to work on its weaknesses. Apple is well known for its high quality products, but some components such as the iPod screens and Ultraconpact USB Adapter malfunctioning, it is evident that Apple needs to increase its R&D efforts to reduce faulty products. The high price of their product is another weakness. Such high prices discourages consumers especially with the economic recession, people are looking to save. The solution would be to reduce its price to the point where they can still make a profit.
The lack of paying dividends to their stockholders, Apple has not paid dividends since 1995, even though the organization has the financial capability to pay; this writer believes this would a smart strategic move because there will be an improvement in stockholder loyalty therefore an increase in shares.
Apple’s threats are numerous but one that can easily be resolved is the frequent changes in strategies in management and leaders at the top. This is not an effective management strategy, because strategic management requires that everyone within the organization should be involved in the decision making and thinking which needs to be reviewed very often (Swayne et al, 2008).
Certo, S.C., Peter, J.P. & Ottensmeyer, E.J.(2005). Strategic Management. Mcgraw-Hill-Irwin
Datamonitor, PLC. (2009). Apple Inc: Company Profile. Retrieved on March 2, 2010 from
Business Source Premier Database, Kaplan University Library.
Swayne, L.E., Duncan, W.J. & Ginter, P.M. (2008). Strategic Management of Health Care
Organizations. (6th.ed.). San Francisco: Jossey-Bass: A Wiley Imprint.
Yoffie, D.B & Slind, M. (2008). Apple Inc., 2008. Harvard Business School.