Vision and Strategy.
Performance review of each year’s progress.
Porter’s five forces.
Threats of substitution.
Threats to new entrants.
Simulation performance results – Product development
Future Plans and recommendations.
Apple Inc. is one of the four major technology-based companies in the world. It was established in 1946, headquartered in California known for its innovative solutions in information technology, online services and software electronics. This report aims to conduct a business simulation of Apple Inc. The purpose of the report to simulate the result of the findings. The report identifies the vision, mission and HR strategy of the company. It contains performance review of each year’s progress including Porter’s five forces, market share, competitors, internal capabilities, industry trends and attractiveness. It further gives detail about simulation performance results analysing evaluation strategies and decisions of the company in the product development. It also describes plans and recommendations for potential growth in the international market.
The mission statement of the company is to bring the best user experience to its customers with the help of its hardware and software services. The CEO of the company Tim Cook states that with this mission statement the company is trying to offer the best services to its clients. The statement also describes how the company is going to achieve its mission (Engel 2018). The vision statement of the company is that the company believe they are on this planet to produce great products that do not need to be changed. This statement helps the company to provide quality products to its varied consumer. The components included with the statement are innovation, integration of partner's excellence and market specialization. These components help the company to operate in the market and become a dominant player in the sector.
The company’s strategy is based on differentiation. It is this strategy that helps the company to create distinctive products and design for supporting technological innovation. Apple Inc is known for its innovation and to improve its generic differentiation strategy, they must aggressively penetrate the market. This strategy would be helpful in the areas of developing the market. Another important strategy adopted by the company is the product development (Jansson, Olofsson and Salomonsson 2020). The strategies adopted by the organization like market development and market penetration have low priority in comparison to the innovative development of the products. Differentiation and growth strategy is helping the company in improving its resilience against aggressive competitors in the market.
Apple Inc. has a corporate culture in the organization. Its culture enables the human resource to achieve strategic objectives. The company's cultural traits are aligned with innovation. The main characteristics of the culture at Apple Inc. includes top-notch excellence, innovation, secrecy, creativity and moderate combativeness. The entire business depends on cultural support and coherence. The company's culture can be analysed by using Hofstede's cultural model. It is identified through the model that the company has the right balance between a goal and means to achieve those goals. Apple Inc.'s company culture is internally driven; it is due to this the company can use its ethical brand image as a tool in a competitive market. The company has a disciplined work culture and this promotes a positive attitude in employees (Rasul 2018). It has a diverse workforce to leverage the opportunities for constructive differentiation. It has an open work culture which facilitates open communication between employees. The company understands the importance of human capital. It is thus working on employee motivation and satisfaction.
It has been analysed from the reports that the share of iPhones in the market is less than the other smartphones. Majority of the people are using smartphones containing android as an operating system. Only 20 per cent of the iPhones are sold in the market containing iOS developed by the company to operate the devices. An android operating system is present on all type of smartphones except iPhone and thus it is a potential threat to the company (Le and Park 2017). There is an evaluation framework for identifying competitors of Apple Inc. These include weight, ratings and score. Weight shows how important the smartphone is to the company. The range of the weight starts from 0.0 that is least important to 1.0 that is most important in generating revenue percentage of the company. Apple Inc. has a lot of product category but the highest weight is of smartphone constituting 0.63. Competitors of the company are also given ratings from 1 to 4. The level of competition for these companies depends upon their market share. Rates of the companies are assigned subjectively. The score can be calculated by multiplying score with weights of the company. The company having the highest score is the most severe threat whereas the company which has the lowest score have a minimum threat on others (Raketić and Rašević 2017). The main competitors apart from Google include Samsung, Lenovo, Oppo, Vivo and so on. An iPhone is worth billions of US dollar thus the company needs to focus on it. It is the company's main source of income. Despite its competitors in the market Apple Inc. has its loyal customer base. Its proprietary OS and its ecosystem are enough to keep the customer attracted towards it.
It is a framework required by the companies to identify and analyse the competitive environment. It is essential to identify how different companies in the world can sustain themselves and increase their profitability (Juliana and Nyoman 2019). This concept was introduced by Michael Porter in 1980. This model is used for determining its industry-standard and corporate strategy. According to Porter, there are five forces which help the companies to measure competition intensity, attractiveness, profitability in the market and so on.
Here is the list of Porter’s five forces of Apple Inc.
Apple Inc. is in direct competition with Hewett Packard, Google, Samsung, and so on. These companies invest capital in research and development as well as in marketing just like Apple Inc. This is the reason why competitive source in the market is very strong. The companies are highly competitive in the market because the switching cost of the products is very low. Customer can switch to any mobile brand which is providing the desired features of the mobiles at low cost. Customers do not require the further investment they can switch to any product which appeals to them (Kabeyi 2018). The threat to the market place is a key consideration for Apple Inc. The company needs to deal with these by developing new and distinct products with ultimate features for the customer. It strengthens its market position with its unique product development strategies.
The bargaining power of the suppliers is low as the number of suppliers has increased in the market with ample amount of supply. The company is free to choose the supplier accordingly. They do not have any sort of bond with the supplier. Moreover, the switching cost of the supplier is low. The company can switch to any supplier at any time. Apple Inc. exercises his power of being an affluent customer of the supplier. This is why it has the power to negotiate with the supplier. The supplier agrees to the negotiation just because they do not want to lose a potential customer. The bargaining power of the supplier is not a concern for Apple Inc. and its competitors.
The bargaining power of the customer is high. However, it has been observed that the single customer bargaining power is a weak force. If the company loses a single customer it would have a negligible impact but if it loses a lot of customers together then it can have a negative impact. Thus, the organizations try to overcome this by investing in research and development of the company so that through their innovative products they can satisfy their customers (Ali and Mohd Rosli 2019). The company with its innovative product has created a large customer base. These customers are not going to switch their phones with the other competitors.
Threats of substitution
Substitute products are not those that the competitors of the organization have rather it is something which does not compete with the company directly. Web applications, landlines, CDMA are some types of phones which can be used as a substitution by customers (Feng and Yu 2020). The market for substitution is very low because customers mostly want features on their mobile phones. iPhone has a lot of unique features which other substitutes cannot provide. Thus the threat of substitutes is less.
Threats to new entrants
The threat of new entrant in the market is relatively very low it is because the cost of establishing a new market in a country of strong competition is very high. Any new entrant to the market place requires something new which can appeal the customers to purchase products. There will be no guarantee that the new entrant will be able to capture the attention of the Apple Inc.’s customer towards it. Thus, it can be said that there is no threat from the new entrant to Apple Inc. However, there are some Chinese firms which can be a challenge to the organization because they offer similar features at comparatively low prices (Danko et al. 2019). The company thus needs to keep on straightening its position in the market such that any new entrant does not diminish the revenues of the company.
The company in 2017 has sold 19 per cent of the total smartphones in the world. It has registered a new record by selling the highest per cent of the smartphones in the first quarter of 2017. Seventy-eight million units were sold by the company in the single quarter marking it one of the biggest sales of the company (D O'Rourke 2018). According to statistics of 2019, there is a fall in the revenue percentage of the company. Despite this, the company holds the world's third-largest market share. It was identified that despite a drop in the revenue, the company shipped 35.3 million iPhones in the second quarter of the year. The company has generated the largest revenue in the 2019 June quarter. The forecast about the company predicts that Apple Inc. will be able to generate revenue between 61 to 64 billion USD in the coming years. In the first quarter of 2020, iPhone managed to get 44 per cent however it still could not win the race as the android was leading with 56 per cent. It has been noticed that the company has gained more potential clients in the US in the past two years.
To identify the internal capabilities of the organization SWOT analyses has been conducted. It would help in identifying strength, weakness, opportunity and threats of the company and iPhone which is its star product.
The company has earned strong brand recognition because there is a large number of consumers who want the product that increases their status (Daradkeh, Gouveia and Sen 2018). iPhone has always been a brand of luxury and thus the company is focusing on innovating features that will make their products different from any other smartphone in the entire world.
The organization needs a simulation engineer to check the quality of the lithium battery for portable power consumer communication. The engineer will work with the diverse-team to develop electrochemical models for calibration and design assumptions. They will check the CPU performance of the iPhone. It could be clear that the product developed by the company is perfect and can be launched in the market (Morales-Contreras et al. 2020). The entire product development cycle of Apple Inc. is well established. The iPhone goes through different stages that include introduction, growth, maturity and decline. The product after going through these stages come at last become obsolete and the company then start working on providing something new to the customer.
The company is planning to develop an iPhone with 5G capabilities. The company is going to take the chip from intel as it is the only modem supplier. The company is also thinking to change its display with OLED. This feature is currently available in three mobile phones. The company is also thinking to reduce the size of the iPhone and build them to be 5.42, 6.06 inches and so on. The company is not known for its big merger and acquisition. The acquisition of Beat was a notable exception. The company was acquired by Apple Inc. for $3 billion. The company is known for acquiring a little known company for the sole purpose of adding talent and IP. But the company in the next five years is going to invest in merger and acquisition (Walker, Suckling and Wearing 2017). It is because the company has found a slip in its mobile phone. The information was disclosed when it was found that the vice president of corporate development has even started reporting to CEO Tim Cook. Perica has the responsibility of merger and acquisition and he was instrumental in the deal for Beats. It has found from the past that Apple Inc. has acquired 18 companies in 2018 but none of them was larger than $1 billion. Apple Inc. is said to have a five-point plan that is year-round deals to increase the revenue of the organization. It’s one of the year-round strategies is to reduce the price of the iPhones. It is also planning to cut all the suppliers and retailers that are unable to hit the target (Dave 2018). It is being done to encourage iPhone recommendations. The company is also thinking to retain its staff members so that they can help customers in operating the iPhone. It’s another strategy is to overhaul in-store display and branding. The company is also trying to overcome the problems experienced by people. It has been identified that many of the features in the iPhone like Siri and maps are not able to fulfil the needs of the customers. Siri is unable to work in the local language. It is also found that Apple Inc. maps are unable to give real-time direction. It is because of these features the company is losing its potential customers. The company has vast growth potential in the market. It is possible if the company changes its current strategies and start working on those which will help the company to grow in the international market they will be able to grow. The new gizmos improve each year and this is why it cannot be predicted which idea is going to take and which will fizzle. It is found that the company is trying to move in different areas instead of moving in one particular direction. The company has planned to make improvements so that the company’s revenue does not decrease due to competition in the market.
It can be concluded from the findings that Apple Inc. is that the company's performance in the market has increased in the past few years. The market shares reveals that the company's sale increased in the first quarter. Through the vision and mission statement of the company, it is clear that the company is trying to keep its position in the market. SWOT analysis and Porter five forces have been carried out to get detailed understanding. The company to grow further in the market and achieve its milestones are working on its strategic plan.
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