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Owing to its uniqueness and innovation in its wide range of products, Apple is regarded as the
world’s most notable and recognizable brand for electronic devices. This multinational corporation
has carved out a niche for itself ever since its co-founders —two college dropouts Steve Jobs and
Steve Wozniak — brought a revolution in personal computing. Now, Apple is the recognized as the
world’s largest information technology company in terms of revenue, the world’s largest technology
company in total assets, and the world’s second largest mobile phone manufacturer with 115,000
employees (last recorded on July, 2016).
Competitors Samsung Electronics Co. Ltd., Google Inc., Cisco Systems Inc., Hewlett-Packard
Company, Lenovo Group Limited, Sony Corporations
Products iPhone, iPod, iPad, Mac, Apple TV, software applications system iOS, OS X
operating system, portable digital music players, iCloud and its accessories,
applications like App Store, iTunes Store, iBook Store and Mac App Store and
many more
Website www.apple.com
SWOT Analysis
SWOT is one of the most common strategic management tools that help the managers to assess
and organize ideas during environmental scanning. SWOT is an acronym for,
Strengths
Weaknesses
Threats
Opportunities
The purpose of SWOT analysis is to enhance the organization’s strengths, excludes its weaknesses,
pursue opportunities and avoid potential threats.
Costs of Goods Sold (COGS) 64.08 87.92 B 107.24 112.55 142.26 131.51
incl. D&A B B B B B
Weaknesses
High price
Many criticize the brand for its high prices, but Apple fans justify the situation by tagging the brand
as a ‘premium’ gadget-maker. They also say it is for those people who can afford a pony. Apple, in
other words is like BMW, not Ford. But problem arises when consumers have access to cheaper
products with more or less same features. Samsung, Microsoft and many other companies provide
low-priced products compared to Apple. Here’s where apple loses its customer base. In 2013,
Strategy Analytics found that 88% of iPhone users would purchase another iPhone compared to
93% in 2012. So with each passing year, its customers are being lured by the competitors.
Unsuccessful anticipation
Apple founder Steve Jobs predicted that ‘No one’s going to buy big phones’. He got it wrong. Apple
failed to predict the future of few brand categories like Phablets. Apple did not launch any larger
screen phone despite having invested in tablets. But Samsung outperformed Apple when it came to
Phablets by launching Samsung Galaxy Note in 2011, and now has a commanding presence in the
Phablet market. The demand of large screen phone is only accelerating.
Incompatibility of different OS
Consumers whoever is accustomed with other OS systems do not get a handy experience when
they choose to use iOS or OS X. The reason is if you are switching from a PC to MAC, it can be
pretty intimidating using Apple’s operating system at first. When you are accustomed to using ‘Start’
menu, Apple will force you to use ‘Finder’ where you will find your apps, documents and other files.
US 38.8% 43.5
Opportunities
High demand of products
Studies show that there is a high demand for new Apple products, especially a flourishing demand
for recently introduced PowerBook and Power Mac products, as well as new upgrade to MAC OS X.
Apple CEO Tim Cook asserted that the demand for new Apple Watch was exceeding the available
supply. This is why so many pre-order deliveries were pushed back to May or later. Apple
consumers are also waiting for new iMac line and iDVD.
Growth in communication devices market
CEO Cook further said in one of his interviews that Apple did not intent to sell low-cost phones. The
aim was always to provide high-end products. Despite the huge price difference from its competitors,
Apple still enjoys increasing market demands in the smartphone industry.
Worldwide SmartPhone Market Share of Apple
Period Apple
2012 Q2 16.6%
2013 Q2 12.9%
2014 Q2 11.6%
2015 Q2 13.9%
2016 Q2 11.7%
Threats
The evolving environment of electronic communication
The complex structure of electronic environment communication devices is constantly innovating.
The company must keep up with the pace or it will lag behind with its competitors. It poses a serious
challenge to Apple company and the future market positions. Due to the fierce competition in
communication market, this company is forced to constantly design and modify its product to match
the needs of consumers.
Reputation damage due to tax scandal
Apple was involved in a tax scandal that went viral. Apple managed to keep $44 billion of its
revenues from going into the hands of the taxmen. The company has no tax perspectives and pays
minimal taxes. The tax professional did a bit of guesswork to analyze the source of revenues from its
foreign operations.
Infringement of intellectual property (IP) rights
The company has a fault in its IP rights policies. If any company breaches the Apple patent rights,
Apple takes time to acquire the information, and not as soon as the theft takes place. It takes some
time to discover it. As a result, the company faces severe damages to their brands and services.
Android OS growth
Worldwide Smartphone Sales to End Users by Operating System in 2015 (Thousands of Units)
Operating System 2015 Units 2015 Market Share (%) 2016 Units 2016 Market Share (%)
It poses a serious threat to the company that consumers can switch to Android operating system
over iOS system.
PESTLE Analysis
PESTLE refers to the analysis of external factors which play a vital role while conducting research
before beginning a new project. Managers assess the risks that the identified factors pose and use
their knowledge to take beneficial decisions for the company. PESTLE is mainly an acronym of six
factors which are,
Political
Economic
Social
Technological
Legal
Environmental
Unlike SWOT analysis, it concentrates on the external macro environmental factors that might affect
the position of the business in present or near future.
Economic factors
Recessions and economic crises can affect the company’s revenues negatively to a greater extent
compared to other businesses due to the choice of premium pricing policies.
US 50% 9%
Europe 31% 4%
Social factors
Globalization, the increased usage of the virtual world and the current lifestyle are few factors that
leave an enormous impact on Apple.
Technological factors
The stakes of information technology stays higher compared to other industries when it comes to
earning revenues. The companies who innovated with time, earned well and Apple is no doubt one
of them.
2015 5.0” to 5.5” Samsung Galaxy S6 and G4 got the preferences because of their
bigger sizes
Whereas, Apple’s last product iPhone 6 has only 4.7” display, and iPhone 6 Plus has 5.5” screen
size.
Legal factors
The company operates globally which makes it vulnerable to many legal factors and litigation.
Breach of IP laws:
Apple produces a variety of brands that are covered by intellectual property laws such as software
and music. Software produced by apple consumes a big part of its income that makes the company
vulnerable to both piracy and litigation.
Environmental factors
Various environmental factors like disposal can influence the company’s revenues and brands.
Global warming
Due to increasing rate of global warming, Apple could face the problem of transoceanic shipping that
is the core part of Apple chain supply.
Conclusion
After assessing all the factors in SWOT analysis, it is seen that Apple has more opportunities and
strengths compared to threats and weaknesses. Given the company’s current leadership in the
industry, Apple is in a position to enjoy these opportunities. But the company should devise few
strategies to address effectively the threats and weaknesses that it recently developed or has
chances of developing.
On the basis of PESTLE analysis, Apple should be able to thrive in electronic device industry in the
next five years in spite of the challenges because it demonstrates an impressive ability to adopt to a
challenging environment. The uniqueness in its design gives the company a competitive advantage
which reflects in their sales and revenues. So it can be said that Apple will continue to be the leader
in the electronic industry in years to come.
References
Apple Info.
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infographic_id71924