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Strategic Analysis of Apple Inc. Organisation

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Strategic Analysis of Apple Inc. Organisation

Businesses and organisations require strategic management techniques for their

success. Notably, strategic management entails formulating and implementing major

objectives and goals within a firm by the firm’s managers based on available resources,

consideration of the internal and external environment. Strategic management in business

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offers direction on how activities and roles should be executed, while aligning to the

company’s objectives, policies and needs, to ensure success, growth and development.

Concurrently, the Apple Inc. company is one of the global companies that has thrived for

many years due to strategic management techniques. Particularly, the company has stood out

to overcome the competition, environmental, political and technological threats. This paper

analyses the strategic framework of Apple Inc. company in various aspects. They include; the

company structure, external evaluation including PESTLE and five forces, internal analysis

such as VRIO and SWOT, and the competitive strategy. Additionally, the paper will highlight

applicable approaches that the company will utilise to improve its performance.

The Company Structure and Internal Analysis

Apple Inc. organisation is one of the global companies dealing with technology

products and services. The company offers a variety of products ranging from computer

software, electronics, and online services. According to the 2021 statistics, the company is

among the leading technology companies with its value at approximately $365 billion (Chen

et al., 2021, p. 73). In America, the company is highly utilised for information technology.

Apparently, the company competes favourably with Amazon, Microsoft Samsung among

others.

The company was founded by Steve Jobs as a family business in 1976, where it first

operated as a computer manufacturer. Since that year, the company has evolved to embrace

new technological trends within the market to come up with satisfying and efficient products

for use by customers. Through merging and acquisition, the company has successfully

expanded its market shares and operations not only in the United States but other countries

(Khan et al., 2015, p. 959). For instance, the company has broadened its technology portfolio

to the United Kingdom, Asia, Europe among other nations. Currently, its headquarters are
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based in Cupertino in California and owns approximately 520 shops across the world. The

current CEO of the company is Tim Cook who succeeded Jobs in 2011.

The company’s mission statement is “to bring the best personal computing products

and support to students, educators, designers, scientists, engineers, business persons and

consumers in over 140 nations globally” (Chen et al., 2021, p.72). The company considers

the current trends and changes in the technological world, and keeps up with the trends to

satisfy increasingly customer preferences and tastes. The company concentrates on

computing products ranging from phones, computers, and computing technology products. In

addition, the mission insists that there is no specific target audience for the company’s

products, so long as one is in a position to use technology.

Apple Inc Company’s vision states, “to make the best products on earth and leave the world

better than we found it” (Chen et al., 2021, p.72). Additionally, the company emphasizes on

the corporate social responsibility of environmental conservation and sustainability.

According to the company’s CEO, the company strives to the whole world a better place for

living and positively impact the ecological conditions in which it operates. This majorly relies

on the company’s strategic decisions and implementation.

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Annual revenue for the last 5 years (Source: Macrotrends.net stocks)

400

350

300

250

200

150

100

50

0
2021 2020 2019 2018 2017

SWOT Analysis

The company owes its success to its ability to seize some of its existing opportunities

and strengths in overcoming threats. A SWOT analysis of this company will help the CEO,

the management and policy makers in strategizing for maximum business growth and

performance.

Strengths

The strength aspect of analysis focuses on the possible strengths that the company

focusses on to overcome weaknesses and withstand threats existing within the technology

business. First, the company is one of the global strongest brands within the technology

sector, which helps it to utilise such opportunity in introducing new varied products, which

will definitely command a wider market demand due to its already known name (Khan et al.,

2015). also, the premium pricing strategy facilitates the acquisition of high profit margins

increasing the overall revenue of the company.

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Weaknesses

This evaluation emphasizes on the inadequacies that the company has which posses’

threat to its performance and limits it from maximising its operations. Accordingly, the

company has limited distribution network, which hinders it from supplying its products

globally. Similarly, comparing its products prices against those of existing rivals such as

Microsoft, the company’s products prices are slightly higher. For example, an iPod Touch

gadget with 32 GB storage costs $ 199 at Apple Inc while the same product retails 177.99 at

in Microsoft company (Chen et al., 2021).

Opportunities

Opportunities arise after critically evaluating the environment in which an

organisation operates. The opportunities available for the company will influence its strategic

positioning to enhance success. Relatedly, the company needs to expand its distribution

network to reach a wider consumer audience. Particularly, the changing technological trends

provides an avenue for innovating new products that go hand in hand with the existing

products such as designing lines for the iPod and phones to generate more revenue from sales

(Chen et al., 2021, p. 74). Although Covid-19 has posed a threat to a variety of business, it

has been an opportunity for the company since most people now perform meetings, attend

classes and do shopping virtually using technology products. Thus, the pandemic led to a

boom to the company’s business.

Threats

One of the most predominant threats across all business is competition threat. The

Apple. Company faces this threat from mighty technological companies such as Samsung and

Amazon (Khan et al., 2015). This calls for the company to strategise its competitive

advantage priorities to overcome aggressive competition. Similarly, some emerging firms

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have mastered the art of imitation, therefore offering almost similar products at lower prices.

In addition, the lockdown and other restriction measures has impacted the business negatively

by slowing down the distribution process of its products to international clients.

VRIO Analysis

The table in the appendix highlights five core resources that help the company to

compete favorably on the market. For example, the fact that the company has a strong brand

name known globally makes it valuable, rare and difficult to imitate making the company

organize this brand name as a competitive advantage (Porter, 1996). Additionally, the

aggressiveness in innovation and appreciation of environment sustainability programs

equates it to valuable, rare, non-imitable and organized brand. However, the employee

compensation package within the company turns out to be valuable and rare but can easily be

imitated by other companies (Whittington et al., 2019). Furthermore, the product diversity

strategy is both valuable, rare and not easily imitated but does not qualify the organized

aspect of VRIO.

PESTLE Analysis

Political Factors

Most of the political factors influencing the operation of Apple Inc Company offer

opportunities for the company to develop. Specifically, the governments in each of countries

in which the company operate and its competitors affect its overall performance (Whittington

et al., 2019). For instance, the company has faced improved free trade policies especially in

UK and USA, which has in turn offered an opportunity for the company to thrive. On the

contrary, the past decade has seen an endless trade disputes between China and USA which is

a significant threat to the company (Khan et al., 2015). This is because extensive trade
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disputes hinder the company’s growth and expansion, through imposing higher tariffs and

higher taxes on imported products. Therefore, the company needs to focus more on its

opportunities including political stability and friendly trade policies to maximise sales.

Economic Factors

The economic factors that influence the operations of Apple company majorly

provides opportunities for the company to operate. According to Whittington et al. (2019),

most developed countries in which the company has its ventures experience stable

economies, which are favourable for development. Similarly, the rapid growth that is

experienced in some developing country creates a vital opportunity for the company to

increase its market ventures and sales. For instance, the Asian population has provided

avenues for the company to increase its sales and revenue (Chen et al., 2021). Thus, the

present economic factors present in the macroenvironment of Apple Company offers

opportunities for the company to increase its revenue and expand its market.

Socio-cultural Factors

The company is prone to socio-cultural trends within its existing business

environment. Relatedly, the socio-cultural factors affect the way consumers behave and

expect from the technological products of Apple company. The rising utilisation of mobile

phones both at home and workplace provides a great avenue for the company to increase

sales and overall revenue. Matyushock et al (2021) hold that there has been an increasing

dependence on digital systems for the past two decades (p. 1492). However, some sentiments

from international companies which are rivals to the company are negative therefore

influencing the purchasing power of potential clients.

Technological Factors

The technological factors that affect Apple Inc. organisation ranges from changing

trends to changes in customer preferences and needs. Accordingly, the current technological
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trends within the company that is most common across its international branches. For

instance, the sudden increase in cloud computing technology implies that the company will

have increased demand hence increased sales of its products (Whinnongton et al., 2019).

Additionally, there has been increasing technological integration in businesses, which offers

the company an opportunity to provide its technological services that facilitate integration.

Also, Matyushok et al. (2021) note that most nations have embraced mobile market

technology. Conversely, the rapid technological growth from rivals especially Microsoft

company poses a threat to the company ventures since customers appreciate and prefer

keeping up with the latest technological innovation and trends (Mozur, 2013).

Environmental Factors

The environmental impacts that affect businesses range from climatic changes, waste

and pollution. For Apple Inc. company, most environmental factors provide an opportunity

for the company to expand and grow in its operations. For instance, most businesses

especially in the United States and UK have adopted business sustainability programs which

are vital for sustainability (Khan et al.,2015). This will ensure energy efficient trend and

conservation, which is friendly to the environment. The more efficient energy incorporation

will also enhance low production costs within the company hence more revenue.

Legal Factors

Generally, most law and regulation matters slow down business operations and limit its

operations within a given environment. The Apple Inc. Company experience two major legal

factors which include increasing privacy regulations, policies and legal matters. In fact, the

USA government has exerted more pressure on digital companies regarding digital law which

has a negative impact on Apple company (Chen et al., 2021). According to the company’s

CEO, the past three years has seen the company spend more on legal battles from European

Union and Australia, which in both cases concern policies of sales and repairs.
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The Five Forces Framework

Most of the company’s strategy aims at overcoming external forces in the marketing

environment. The existing forces can negatively affect the firm by reducing its market share,

the potential for growth, profits and revenue. The Five Forces evaluation based on Porter’s

theory, highlights the external factors existing within the Apple Inc. Corporation. They

include; competitive rivalry, bargaining power of clients, bargaining power of suppliers,

threat of substitution and threat of new entrants.

Competitive rivalry

Apple Inc. faces stiff competition from its rivals. This component of analysis

evaluates to what extent does the competition aspect affect the company’s operations.

Accordingly, rivalry in Apple corporation exists in terms of high aggressiveness especially

from Amazon and Samsung, low switching costs compared to Microsoft and existence of

similar products within the market (Khan et al., 2015). The aggressiveness portrayed by its

competitors leads innovative products on the market, forcing the company to come up with

innovative ideas to withstand competition. The company needs to collectively focus on three

items in the competition aspect of Porter’s five forces during its strategic management plans.

Bargaining power of Consumers

Buyers’ bargaining power in any business is a vital consideration during strategic

management. For Apple company, buyers portray a strong bargaining power, which has a

significant impact on the company’s decisions. For instance, the availability of extensive

information for the buyers strengthens the bargaining power (Collins, 2021). However, this is

a weak force for the company as its products are of higher quality compared to those of its

competitors. Similarly, the low switching costs existing on the market makes it easier for

customers to change brands according to their preferences and tastes, posing a threat to Apple

company. This force empowers power to customers to compel companies in the technology
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sector to strive to provide quality products and services and also offer them at reasonable

prices.

Bargaining Power of Suppliers

The bargaining power of suppliers weakly influences the Apple company. This Five

Forces component focuses on how suppliers’ demands affect the overall company activities.

In Apple Inc. organisation, the suppliers slightly influence the company since there exist a

higher number of suppliers therefore giving an opportunity to the company to choose the best

(Porter, 2008). Additionally, there is relatively higher supply of raw materials on the market,

rendering the bargaining power of suppliers weak. Therefore, when designing strategies for

the company, the bargaining power of suppliers is a minor issue that the company rarely

considers.

Threat of substitutes

The competitive threat of substitution is relatively weak in Apple company. The

component affects substitution criteria and power of products within the company. For Apple

Inc., substitutes rarely affects its performance since it has high quality products to substitute

according to the market demand (Dobbs, 2012). In addition, substitutes perform lowly

compared to the original products of the company rendering it a weak force in its strategic

management. Apparently, most customers especially in USA prefer using Apple products due

to its convenience.

Threat of New Entrants

According to the available data on new market entrants since its establishment, the

company faces a moderate threat of this component. The new competitors face various

external challenges that hinder them from overtaking the company including higher capital

requirements to meet Apple’s standards, high brand development costs (Grundy,2006). On the

contrary, the availability of opportunities and capacities for new markets to develop are high,
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posing a great risk to the company. For example, Google and Samsung are some of the new

market entrants that compete favorably with the company.

Recommendations

The company needs to carry out various activities in order to maximise performance and

position effectively. According to Yoffie and Rossano (2012), the company needs to study its

customers closely to understand the purchasing patterns and needs. Yuksel (2012) adds that

studying their competitors effectively such as Microsoft and Amazon, will help the company

keep up with the competitive spirit through innovation of competitive advantage ideas.

Notably, being consistent also helps in promoting business positioning hence making it

accessible and available to the customers. Therefore, the business needs to strategically

manage its operations using the results from SWOT, PESTLE, VRIO and the Five Forces

analysis.
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Reference List

Chen, B., Lu, W. and Wang, S., 2021. The Valuation and Analysis of Apple Inc. BCP

Business & Management, 13, pp.72-75.

Chen, X., Liu, Y. and Gong, H., 2021, December. Apple Inc. Strategic Marketing Analysis

and Evaluation. In 2021 3rd International Conference on Economic Management and

Cultural Industry (ICEMCI 2021) (pp. 3053-3061). Atlantis Press.

Collins, D.J. (2021). Why Do so Many Strategies Fail? Harvard Business Review, 99(4),

pp.1-18.

Dobbs, M.E., 2012. Porter's five forces in practice: Templates for firm and case analysis.

In Competition Forum (Vol. 10, No. 1, p. 22). American Society for Competitiveness.

Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic

Change, 15(5), 213-229.

Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external

environment of Apple Inc. International Journal of Economics, Commerce and

Management, 3(6), pp.955-961.

Macrotrends Data (2022). Link:

https://www.macrotrends.net/stocks/charts/AAPL/apple/revenue

Matyushok, V., Krasavina, V., Berezin, A. and García, J.S., 2021. The global economy in

technological transformation conditions: A review of modern trends. Economic

Research-Ekonomska Istraživanja, 34(1), pp.1471-1497.

Mozur, P. (2013, April 24). Apple Faces Dilemma Over Strategy in China. The Wall Street

Journal.

Porter, M.E. (1996). What is Strategy? Harvard Business Review, 74(6) pp.61-78
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Porter, M.E. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business

Review, pp.78

Van De Vliert, D., 2021. Apple iPhone: A Market Case Study. MacEwan University Student

eJournal, 5(1).

Whittington, R., Regnér, P., Angwin, D., Johnson, G. and Scholes, K., 2019. Exploring

Strategy Text and Cases. 12th edition.

Yüksel, I., 2012. Developing a multi-criteria decision-making model for PESTEL

analysis. International Journal of Business and Management, 7(24), p.52.

Yoffie, D.B. and Rossano, P., 2012. Apple Inc. in 2012. Harvard Business School.
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Appendix

Table 1: SWOT Analysis

Strengths Weaknesses

 High profit margins due to pricing  Limited distribution network

 Effective innovation strategies  Higher products and services prices

 Strong brand name  Overdependence on high end market

sales
Opportunities Threats

 Ability to expand the distribution  Competition from rivals such as

network Amazon and Samsung

 Aggressive marketing techniques  Imitation of company’s products

 Developing new products through  Rising labour costs

innovation

Table 2: Annual Revenue since 2017-2019

Apple Annual Revenue (billions of US $)

Year revenue (billions)

2021 $365.8
2020 $274.5
2019 $260.2
2018 $265.6
2017 $229.2

Table 3: Vrio Analysis

Apple’s Organisation resources and capabilities

CORE COMPETENCIES V R I O
Strong brand name Y Y Y Y
innovation trends Y Y Y Y
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access to user information Y Y Y Y

ecosystem sustainability Y Y Y Y
global distribution network and sales Y Y Y Y
NON-CORE COMPETENCIES
Employee compensation package Y Y
product diversity Y Y Y
human resource capabilities Y Y