Porter’s 5 Forces
Poor bargaining power of suppliers
The Apple firm experiences a weak force due to several potential suppliers. Past studies have revealed that suppliers lack strong bargaining power. Owing to the relatively high number of viable supplying agents, suppliers have weak bargaining power when it comes to Apple’s products. Besides, the quantity of supply at the marketplace has been quite high over the years. The large base of possible suppliers makes it easy for Apple to make a choice about who to supply. Worse still, a highly competitive end is experienced by manufacturers of software and hardware products at the industry level. When Apple opts to switch from one supplying firm to another, the cost is very low and equally less hectic.
Weak bargaining power of buyers
Both collective and individual power to bargain when purchasing Apple’s products should be considered. At the industry level, a weak force in regards to individual bargaining power is evident. In other words, Apple does not lose any notable revenue when a single buyer opts out of the buying process. Nevertheless, mass customer defections to other competitive brands (collective bargaining power) may occasion a significant loss in revenue. Through substantial capital plow back in research and development, Apple is capable of countering the negative effects of collective bargaining power.
The threat of new entrants
There is a low likelihood of a new entrant into the marketplace who may economically jeopardize the profitability of Apple’s products. As it stands now, Apple enjoys a robust market share. The high capital expenditure of setting up a similar company may hinder serious competition. In addition, establishing brand name recognition is a costly and time-consuming venture that new market entrants cannot manage.
ÂThe threat of substitute products
In regards to Porter’s Five Forces Model, substitute products may not be necessary items that openly rival with an organization’s goods or services. When it comes to Apple, a landline telephone can be a typical substitute for possessing an iPhone. The latter is a weak market force for Apple since a number of viable substitute products have minimal capabilities when likened to products from Apple.
Competitive rivalry
Firms that produce similar products compete aggressively with Apple. Hence, competition between other firms and Apple is rather high in order to gain a wider market share. On the other hand, the switching cost especially when producing new brands is quite low since the company has been operational in the market sometimes. Similar technologies are replicated during brand management.
SWOT Analysis
Strengths
Apple enjoys a strong brand image owing to high-quality products. The company has also managed to effectively market its products across various market segments thereby gaining broader brand recognition.
The company also practices effective iteration in its production line and organizational culture. The production culture both in terms of quality and design are efficiently repeated. A large number of well managed retail stores have been instrumental in Apple’s distribution network.
Weaknesses
The high selling price for Apple’s products is a major weakness. The latter explains why the firm sales mainly in high-end market opportunities and therefore has a limited market share in the low-end market.
Opportunities
The firm has widespread and profitable marketing opportunities. In addition, the rising demand for some of its products and the potential of creating a new product line are some of the current and future opportunities.
Threats
While some of its products have been experiencing rising demand, it also faces the threat of creating a new product line. Moreover, aggressive competition and imitation are major present threats facing Apple Inc. Finally, macroeconomics factors such as the rising cost of overheads and change in government policies are likely to be future threats.