Independent Project: Apple, Research Paper Example

Abstract

A SWOT analysis of Apple was conducted wherein 5 of the company’s strengths, weaknesses, opportunities, and threats were identified and substantiated. Following this, strategies on how to take advantage of Apple’s identified vulnerabilities from the SWOT analysis were formulated and defended.

SWOT Analysis

Strengths

The strengths of Apple Inc. include its large size, exceptional financial strength, high brand recognition, diverse and highly adaptive products, and diverse media tie-ups. Apple is considered one of the largest information technology hardware manufacturers in the world (Sobel, 2007). As thus, it has extensive human, structural, and logistic resources that enable it to manage the manufacturing, distribution, and marketing of its products at a wider scale than its smaller competitors. Second, Apple’s financial performance has been well above average during most of its history (Sobel, 2007). This means that it can absorb more losses, gain larger loans, and generally survive for a longer time than its competitors. Third, Apple’s products are recognized by consumers as high-end information and communications technology hardware (Potter, 2006), which means that clients trust Apple products over other brands. Another of Apple’s strengths is that its products are diverse and highly adaptive. That is, they can be used to accommodate diverse media and applications, and can be modified with a variety of peripherals (Casadesus-Masanell & Hervas-Drane, 2010). This is related to Apple’s fifth strength, which are its tie ups with media companies such as iTunes (Sobel, 2007) and podcast producers (Sclimenti, 2010), which allow the company to tap both the patrons and producers of these products for even more revenue.

Weaknesses

Apple’s weaknesses include a history of faulty hardware, susceptibility to software security breaches, price, labor practice controversies, and declining R&D focus. Apple has had to face various incidents of its products malfunctioning (Connor, 2005; Helft, 2010), and of its products being susceptible to security breaches (Potter, 2006), which make the quality of its products questionable for consumers. This is compounded by another weakness, which is that Apple products are usually more expensive than its competitors. Having more expensive products naturally means having less consumers being able to afford such products. The next weakness is that Apple continues tohave generally negative media coverage when it comes to its labor practices (Chen 2010; Kahney 2006), which means that consumers who care about such humanitarian concerns as labor practices may not wish to buy Apple products. Lastly, Apple has been declining its focus on R&D (Linden, Kraemer, & Dedrick, 2009) which means that it may lag behind its competitors in producing new devices.

Opportunities

The first opportunity for Apple is the opening of more markets in developing countries such as India. As the income of people in these countries increase, Apple products become more accessible to them. The second opportunity is the increased globalization and development of a global community. This phenomenon increases the demand for telecommunication and data-sharing devices (Casadesus-Masanell & Hervas-Drane, 2010). Third is the booming market for digital products such as online music and ebooks which Apple can tap by extending and expanding its tie-ups with digital product producers. Fourth is the development of applications by independent programmers. Apple can increase its popularity by making its devices compatible with popular applications. Fifth is the growing technological awareness across the world. As people even from the rural areas become interested in ICT, Apple’s potential market expands.

Threats

The first threat is the continuing slump of First World economies, which is where Apple’s main markets are located. If the slump persists, Apple’s sales may be affected considerably. The second threat is the intense price competition. If Apple is unable to produce devices that can meet the budget of future markets, it would be unable to compete. Third is the high technology turnover. With new technology being assimilated by mainstream consumers at a fast rate, Apple may find its products obsolete if it does not keep up its R&D. Fourth is the legal considerations for digital products distribution. There are a variety of legal quagmires that Apple can become involved in because of intellectual property rights issues regarding online music and other digital products (Sobel, 2007; Sclimenti, 2010). The last threat identified is the growing consumer expectations. If Apple’s products are not able to meet these changing expectations, Apple may lose its industry standing.

Strategies

The following are strategies to take advantage of Apple’s vulnerabilities in order to increase the market share of Company X. First, the company can develop products with the same features as Apple, but include guarantees in its marketing that target Apple’s previous inefficiencies. For example, if Apple’s smart phone was recalled because of faulty LCDs, the new product should be marketed as being guaranteed to have durable LCDs. Second, products should be priced as competitively as possible, and marketed to fit the emerging market’s budget. This strategy takes advantage of Apple’s higher prices. At the same time, the product can be marketed to Apple’s current markets as a “more practical” alternative to Apple’s products. However, one ramification of these strategies is that they may alienate elite consumers. The observed increase in market share of Company X can be used as a direct feedback mechanism for the strategies.

References

Casadesus-Masanell, R., and Hervas-Drane, A. (2010). “Peer-to-Peer File Sharing and the Market for Digital Information Goods.” Journal of Economics & Management Strategy, 19(2): 333-373.

Chen, B. (2010). Workers Plan to Sue iPhone Contractor Over Poisoning. Retrieved November 2, 2010 from: http://www.wired.com/gadgetlab/2010/05/wintek-employees-sue/

Connor, D. (2005). “Apple swaps IBM for Intel processors.” Network World, 22(23): 15-16.

Helft, M. (2010). Apple Is Not Expected to Recall Troubled iPhone. Retrieved November 2, 2010 from: http://www.nytimes.com/2010/07/16/technology/16apple.html?_r=1

Kahney, L. (2006). Judging Apple Sweatshop Charge. Retrieved November 2, 2010 from: http://www.wired.com/gadgets/mac/commentary/cultofmac/2006/06/71138

Linden, G., Kraemer, K., and Dedrick, J. (2009). “Who Captures Value in a Global Innovation Network? The Case of Apple’s iPod.” Communications of the ACM, 52(3): 140-144.

Potter, B. (2006). “New threat of Apple Mac OS X.” Network Security, 26(2): 4-5.

Sclimenti, C. (2010). “PodWars: Too Big of a Bite or Free-Riders’ Red Herring?” Journal of Contemporary Legal Issues, 19(1): 315-323.

Sobel, D. (2007). “A bite out of Apple?” Berkeley Technology Law Journal, 22(1): 267-291.