SWOT Analysis
New product development, is one of the most intricate organizational tasks that firms undertake in their quest to develop competitiveness (Graf & Saguy, 1999).
Apple’s managers are cognizant of the fact that the success of new products in the market is dependent on the effectiveness with which the firm understands and exploits its capabilities. Thus, it is essential for extensive internal business analysis to be conducted. By conducting internal analysis, managers gain sufficient understanding of their organization’s capabilities and competences.
On the other hand, external analysis gives insight on the prevailing market conditions. This increases the effectiveness with which the firm develops strategies to market its products.
Before launching its Mini Ipad product, Apple Incorporation conducted an internal analysis in order to understand its competences and capabilities. The SWOT analysis below illustrates the firm’s strengths, weaknesses, opportunities and threats.
Strengths
Positive brand perception
The success of firms in their respective industries is impacted by the brand perception developed by the target customers. Thus, it is critical for firms to take time in developing their brand identity (Klein, 2008). Over the years it has been in operation, Apple Incorporation has managed to develop a positive perception amongst its target customers (Apple Incorporation 2013).
The perception has emanated from the fact that the firm has positioned itself as a very successful and innovative company. This is well illustrated by the effectiveness with which it developed and sold its Macintosh computers and iPod products. Most consumers are increasingly considering Apple’s products as their favorable brand.
Additionally, most of Apple’s products are associated with quality, sophistication and fun (Tyrangiel, 2012). In the course of its operation, Apple Incorporation has been very successful in enriching its customers product needs. Consequently, a significant proportion of customers have developed positive perception towards the firm.
Development of high quality products
The firm has been very effective in developing products that are of high quality. This has arisen from the firm’s investment in research and development. Some of the high quality products that the firm has successfully developed include iPhones and Macintosh computers.
For example, its touch screen products have unique features that recognize multi-finger gestures. The quality of the firms’ touch screen products is also evidenced by their scratch resistant characteristic. As a result of its adherence to quality in its product development process, the firm has been very effective in satisfying customers’ product needs.
Investment in continuous product improvement
The global personal computer and mobile device industries have become very dynamic. This transformation has arisen from the high rate at which new personal computer and mobile device products are being developed. Therefore, it is essential for firms in this industry to determine whether they are capable of sustaining their competitiveness in order to survive.
Since its inception, Apple Incorporation is committed at delivering innovative and efficient products. Consequently, the firm continuously refines its products in order to ensure that they remain competitive. The firm has achieved this by incorporating a continuous improvement policy.
According to Burrows and Aley (2012), most competitors have been finding it hard to outdo Apple in the personal computer and mobile device industry. Continuous product improvement has significantly enhanced the firm’s market share for personal computer and mobile devices.
Weaknesses
High product prices
Consumers are very sensitive to price in their purchasing process. Therefore, it is important for a firm to incorporate an effective pricing strategy in order to enhance the rate at which its products penetrate the market. Apple prices its products at a relatively high price point. This limits the effectiveness with which its products penetrate the market (Chawla, 2012).
Faulty products
Despite its commitment in providing customers with high quality products, Apple Incorporation has on various occasions faced problems as a result of offering iPod Nano products that had faulty screens and batteries. Introducing new products in the market affects a firm’s reputation.
Opportunities
New market opportunities
Tablets are a new revolution within the mobile devices industry in the 21st century (Chawla 2012). There is likelihood of Apple succeeding by venturing into emerging markets.
Most firms in the personal computer industry are increasingly investing in developing tablets in order to satisfy the market demand. To satisfactorily exploit the market opportunity presented, Apple Incorporation will be required to adhere to quality in its product development process.
Product line extension
Apple Incorporation is continuously committed towards designing high quality products. The firm has a strong workforce that is experienced in designing and manufacturing new products compared to its competitors. Consequently, there is a high probability that Apple will successfully design, develop, differentiate and introduce new products.
Threats
Competition
The personal computer industry has become very competitive over the past few decades. Consequently, Apple will continue to face intense competition from other firms such as Nokia, Dell and Samsung.
Economic changes
Currently, the global economic environment is characterized by financial instability as evidenced by the 2007/2008 economic recession and the current Euro Zone crisis.
These economic phenomenons have adverse effects on the consumers’ spending power. Consequently, most consumers are shifting towards consumption of necessities compared to luxuries. If the situation does not change, Apple’s sales will be adversely affected.
External analysis and competitive analysis
In its quest to develop the country’s rate of economic growth, the US government s committed at promoting the rate of investment. Consequently, the government has instituted policies that promote investment in the industry. One of the policies relates to protection of intellectual property rights (Chawla, 2012).
Despite its innovativeness in developing high quality hardware and software products, the Apple will face intense competition from other firms in the personal computer and mobile devices industry.
This arises from the fact that firms in the personal computer industry are constantly improving their technology by investing in research and development in order to attract and retain a larger customer base.
The high rate at which consumers are incorporating technology in their consumption patterns has made the industry to be very profitable. Consequently, industry players are considering the most effective ways of improving their competitiveness.
According to Michael Porter, competitive forces differ across industries. There are five main forces that shape competition. They include the threat of rivalry, buyer and seller bargaining power, threat of substitute and new entrants (Porter, 2006).
Michael Porter further asserts that understanding the competitive forces prevailing in an industry enables a firm to determine its level of profitability. As a result, firms’ management teams are able to formulate effective competitive strategies (Porter, 2006).
In the course of its operation, Apple will experience high threat of rivalry from firms such as Samsung, Motorola, LG, Microsoft, Samsung, Amazon’s Kindle, Dell and Hewlett-Packard. These firms are increasingly investing in development of tablets (Chawla, 2012). Despite the threat of rivalry that the firm faces, Apple has managed to attain a substantial market share within the US Smartphone market.
Buyers bargaining power in the mobile devices sector is relatively low. The low buyer bargaining power has arisen from the fact that there are a large number of mobile product buyers. It is expected that mobile product buyers will continue to increase as firms venture into emerging markets.
On the other hand, the bargaining power of suppliers is relatively low. Apple procures the necessary raw materials in large quantities. Consequently the firm has been able to exercise significant leverage over its suppliers. This enhances the firm’s ability to bargain for favorable terms with regard to pricing.
The procurement policy adopted by the firm has considerably enabled Apple to lower its cost structure. Consequently, there is a high probability of Apple adjusting its high pricing strategy in order to attract a large number of customers.
Over the years, Apple has continued to experience relatively low threat of entry. One of the factors that have enabled this relates to the high brand loyalty that the firm has developed. Moreover, the huge startup cost involved in venturing the industry is a major factor that will act as a barrier for potential entrants thus safeguarding Apple’s investment (Whitney, 2013).
In the course of its operation, Apple faces significant threat arising from the high rate at which firms in the industry are investing in research and development. However, Apple has been able to counter the threat of substitute by incorporating the concept of product line diversification.
Additionally, the firm ensures that its products are well differentiated in order to develop customer loyalty. Considering the prevailing external environment, there is high probability of Apple succeeding within the personal computer and mobile device industry.
Reference List
Apple Incorporation: Apple and the environment. (2013). Web.
Burrows, P. & Aley, J. (2012). iPad: the PC killer. Web.
Chawla, S. (2012). Apple iPad mini: pricing, competition from Google Amazon and more. Web.
Graf, E. & Saguy, I. (1999). Food product development: from concept to the market place. Gaithersburg: Aspen Publishers.
Klein, K. (2008). A practical guide to branding. Web.
Porter, M. (2006). The five competitive forces that shape strategy. Web.
Tyrangiel, J. (2012). Tim Cook’s freshman year: the Apple CEO speaks. Web.
Whitney, L. (2013). iPad mini to drive lower cost tablets, says analyst. Web.