Apple Study Case- Nov 20

Editor's Notes

• #4 Apple’s strong brand appreciation assists in creating barriers to new entries in the market, and allows it to command the best pricing of all its products. Its talented and innovative R&D team provides investors with the confidence to invest more in various products, ensuring that the firm cannot lack the needed capital for fresh ventures. However, Apple has been recalling a number of products because of risks posed to clients, which has created a negative image to the firm
• #5 The launch of products like iPhone 5 and recently iPhone 6 and iPhone 6 Plus are significant developments to demonstrate that Apple Inc. is still an innovative company and to strengthen its position in this segment of products. Apple is also focusing on changing its Mac market platform into a digital center which combines the content of iTune videos to customer’s portable devices and television screens.
• #6 Consistent with the 2009 financial report, over half of Apple sales come from diverse countries besides the U.S. Because of outsourcing in various countries, delays might occur in these countries due to political wavering and other events that can damage the company’s image in its retailers and consumers. China poses greater government laws and low costs of manufacturing so as to attract investors, which made Apple to establish manufacture of its products in different parts within China. While Apple manufacturing is in China, its good market is situated countries like the U.S. and sections of Europe although it has to provide extra import duties. Apple’s products are proved successful in diverse cultures since the products depend on technological advance, something which has been acknowledged in nearly all spheres of the world.
• #7 According to the 1995 to 2005 data, there is a tendency of moving from the PC demand in developed nations (like Japan, US, and Singapore to developed nations such as Korea, Malaysia, and China. Apple needs to respond to this shift in demand so as to better manage the resources, as well as its marketing strategy (Stovall, 2014). Apple, recognized for its brand, quality, luxury and innovative technology has been mislaid because of its strong pricing position, which allows its major competitors to produce less costly products. Nonetheless, consumers are more attracted towards Apple’s valuable premium goods during the economic improvement compared to its low pricing competitors.
• #8 since mid-July 2011, Apple’s biggest supporters are consumers 35 years and older. Meanwhile, the younger age group of 18 to 34 — once the demographic most smitten with Apple — has trended downward. This reverses the positions of the two age groups before last July. From early 2008 through mid-July 2011, Apple scored higher with the 18- 34 demographic but this group no longer constitutes Apple’s biggest banner wavers. There is another group, which may just need a “Genius” to help with their Apple products, as the new commercials imply. Apple considered as the market leader in innovation because part of its financial strategy is to spend a high amount of money on research and development; allowing it access to the latest technology. Rapid innovation from Intel generated strong hi-tech forces for Apple. Apple installs its own brand operating system in all of its products.
• #9 Microsoft remains the leader in the global market through its products and Apple does not permit any other business to use its operating system, thus limiting its use among customers. The recognition of Apple products has a lower consumer threat due to low bargaining power, particularly in iPhone and iPod. Direct and online stores are assisting a lot in achieving this goal. Nonetheless, the huge array of smart phones, tablets and PCs continue creating more consumer threat due to high bargaining power. Regardless, one an initial purchase is made, brand reliability can start forming. The Apple store presented on several platforms is not movable to a different brand, which might be considered increased exit costs.
• #10 The company made numerous contracts with various suppliers such as Hitachi Global Storage Technologies, Seagate, and Western Digital, as well as Texas Instruments—the main supplier of signaling chips to a number of handset and computer producers. In some situations, some important components are always hard to maintain when producers opts to produce the ordinary products rather than customized ones. As stated in Parsons (2012) case study, personal computer sector was to experience a retard in growth by end of 2009 and prevailing companies pushed out from this market. This demonstrates that new entrants into this industry are expected to be hard. Also, the threat of entrants into the smart phone, Pc and tablets market is low due to huge capital needed for marketing and R&D to bring these products into the market.
• #11 Rivalry among competing companies in a particular sector may be of diverse forms. Competing companies rival in terms of price wars, product development and product differentiation among other things. Thus, in the current market, the threat of prevailing rival is rather increased for Apple. Thus, it is clear that Apple faces strong threat of rivalry in the market as many companies are working hard to improve their products in line with Apple’s products. Apple has maintained a good market position through its OSX Operating System when other competitors are relying on Microsoft Windows OS. Apple’s OSX is its unique product, implying that the company can make some difference in software packages as well as general functionality compared to other products.
• #12 Regardless of the much observed success, Apple still needs to redeploy its effort than can only be realized through consistent expenditure on differentiation of its products. It is clear that the entrant of new products have reduced Apple’s market share and to address this challenge, Apple need to change its past strategy to the new approach, which is product differentiation with the premium pricing. Apple is also incapable of fighting the price war due to its high quality products in the market. Thus, to compete and win this war, the company should set up a niche market, which allows it to fight and also lower manufacturing as well as operating costs. This can be made possible through mergers or strategic alliances to gain economies of scale, boost its channels of distribution, enhance quality, as well as boost future market share.