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Table of Contents
References .................................................................................................................... 28
Table of Figures
The analysis begins with a situational analysis of the company, exploring its standing
within the industry using a PESTEL analysis, SWOT analysis, Porter’s five forces as well
as Bowman’s clock to understand Apple’s strategic positioning in the industry. Findings
showed that Apple integrated an umbrella strategy (Aroosh, 2018), that allowed for partial
control to be harnessed by the management of the company while giving enough room
for emergent strategies to be adapted and implemented. This approach can be seen in
the way Apple applies itself to constant innovation to ensure constant development of
user-friendly, high-end products at cost effective prices. The company also applies a
differentiated strategy that does not focus on a particular segment of the market but
explores ways to create and generate revenue across all market segments.
Apple also implemented emergent strategies as can be seen in their shift in focus first
from the production of personal computers to mobile devices and then a shift in revenue
concentration from its iPhones to other web-based service offerings to diversify income
streams (Broussard, 2019).
One company that has spearheaded the modern race for faster, more efficient, and user-
friendly communication devices is Apple Inc. Founded in 1976, Apple is currently one of
the world’s largest publicly traded companies and arguably the most well-known brand in
the technological industry. The first publicly traded company to ever hit the $3 trillion
market cap, a feat achieved on the third of January 2022, Apple has established itself as
a force to be reckoned with in the information technology industry. Apple is a technological
giant whose growth has not shown any signs of halting, as seen in the 11% increase in
its first-quarter revenue of 2022 compared to the first quarter of 2021, with a record-high
revenue value of $123.9 Billion (Csiszar, 2022).
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After the Coronavirus pandemic that shut down the world for over a year, many
companies’ revenue streams took a significant hit. However, Apple has stayed on a
consistent high, with the company’s stock splitting 4-1 in the summer of 2020. At the end
of the first quarter of 2022, the total shareholder equity of Apple stood at $63.09 billion,
with the revenue at the end of the 2021 fiscal year standing at $365.817 billion. In the
third Quarter of its fiscal 2022, which ended on the 25th of June, Apple posted a revenue
record of $83.0 billion, a 2% year-over-year increase with quarterly earnings of $1.20 per
diluted share.
8
The PESTEL analysis of Apple inc. explores the myriad external factors such as
technological, economic, social and political factors that influence its operations alongside
environmental and legal aspects. It analyses the extrinsic scenarios that have significant
impacts on the brand and its processes. This analysis is imperative for conglomerates,
the likes of Apple, as it helps to comprehend the shifting dynamics of its industry and
market as well as effectively drive innovative processes that optimise the efficiency of its
operations and ensure continual profitability (MBA Skool, 2021).
• Political
Apple being an American company that has most of its manufacturing operations
outsourced to China and Chinese companies, is significantly susceptible to the
increasing trade wars between America and China. This impacts Apple in the
sense that should America choose to increase the tariffs on importation from
China, then it is very likely that the Chinese government would also impose heavier
taxes on Apple. As one of the preeminent Tax Payers in the world, any major
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political issue would largely impact its overall performance commercially (MBA
Skool, 2021). Apple would also incur inordinate costs in a search for alternative
manufacturing options to China, which would cause an upward influence on the
prices of their product and consequently a loss of revenue. America’s stringent
labour laws, especially surrounding work visas, also significantly hamper Apple’s
competitive edge in the labour market (Khan et al., 2015).
• Economic
The global fluctuating and deteriorating economic conditions primarily driven by
the global recession and inflation that followed the Covid-19 pandemic have the
capacity to significantly affect Apple’s revenue generation as the upward
movement of the poverty quota curve can have a hazardous effect on the
purchasing power of Apple customers and cause a decline in the sales
experienced by Apple. There is precedence for this as Apple has experienced a
decrease in sales as a result of the global recession, as was evident in 2013, where
there was a 41% decrease in sales in the United States between 2012 and 2013
compared to 2011-2012 (Khan et al., 2015). The growth of developing countries
can also significantly impact the distribution line of Apple products and,
consequently, their international revenue (Chen et al., 2021).
• Social
The increasing socialising power that technology offers has significantly
contributed to changing perspectives on what it means to be a part of the Elite.
This shifting paradigm has tremendously and positively impacted Apple’s status in
the Information Technology industry. Apple has successfully cemented their
reputation as a high-end user-friendly product that bestows on its user an elite
status, effectively making Apple a premium brand globally and a status symbol
(Airan, 2015). Apple has also begun targeting young individuals and music
enthusiasts by venturing into the entertainment sector and providing exclusive
services to them, one of which is their flagship product, Apple Music. However, the
marketing strategy employed in deploying this product has attracted significant
backlash from many musicians, potentially damaging Apple’s overall image
(PESTLEAnalysis, 2015). Another socio-cultural factor influencing Apple’s growth
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is the fact that several international customers, particularly in Asia, are beginning
to switch to cheaper, locally sourced products to support innovation within
domestic brands (Chen et al., 2021).
• Technological
With technological advancements driving towards a necessity for cloud-based
computing, Apple has a tremendous advantage for growth as the company
currently offers its users the ability to access up to 2TB of cloud storage. Apple Inc.
has the opportunity to optimise its profitability by leveraging its cloud computing
technology to get ahead of the competition in the industry, with already growing
revenue generated from cloud computing services (Chen et al., 2021). However,
Apple is not the only brand taking advantage of this opportunity as competitors
such as Google provide users with variety by offering cloud computing services.
• Environmental
Climate change and corporate social responsibility towards its mitigation have
become a recurrent theme across all industries ((Airan, 2015). Every company, the
world all over and their production processes, including supply chains, is being
subjected to the scrutiny of environmental agencies as well as laws and
legislations to ensure that the damage done to the environment is kept at a
minimum. Apple has made significant efforts to comply with these stands, which
can be seen in the way all Apple offices, data centres and retail stores are run via
100% renewable energy, as well as pronounced efforts to recycle and reuse
material to mitigate wastage in the production process (Hasan, 2013).
• Legal
Over the years, Apple Inc. has been embroiled in a number of legal issues and
ethically questionable practices. For instance, in 2010, it was discovered that
Foxconn, one of Apple’s manufacturing partners, was employing child labour in its
factories (Etzioni, 2018). There have also been allegations of inhumane treatment
of workers at another manufacturing plant in the Apply supply chain (McLaughlin
and Bridgman, 2013). Apple was legally held accountable for these questionable
practices and has made significant efforts to increase compliance in all ethical
considerations (Myers and Fellow, 2013). Apple also recently entered a market
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with stringent regulations on financial services with their product Apple pay which
significantly increases the levels of governmental oversight and risks of litigation
(PESTLEAnalysis, 2015).
P E S T E L
•US-China •Recession •Status •Cloud • Climate •Financial
Trade wars and Conscious Computing change sector
inflation Society Technology and Legislation
•Tax Recycling
Regulations •Developing •Adoption of •Competent •Ethical
Countries domestic Competitio issues
•Labour products n
Laws
Bowman’s strategy clock is a strategy tool that expands on Porter’s five forces to provide
options for positioning within a market on the premise of perceived value and pricing.
Relatively easy to use, Bowman’s clock analyses and compares the competitive standing
of an organisation with rival businesses’ competitive abilities and advantages in relation
to differentiation advantage or cost advantage (Nilsson and Rapp, 2005). The marketing
concept adopted by Apple with respect to market segmentation, marketing concepts and
strategies, positioning strategies, and target marketing is a strict marketing paradigm that
combines the values and considerations created explicitly to address the needs of the
customer (Lamb et al., 2011).
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Apple’s differentiation strategy, as seen above, positions Apple to gain a much higher
competitive advantage by producing high-quality products at a standardised price. The
model adopts two theories; product valuation and expense, including eight intervals in
four quadrants without frills. The model also spots focused differentiation, low value, low
cost, hybrid and high price strategies. This strategy was deployed on the introduction of
the iPad in 2010, as it is one of the most efficient strategies for market development. This
is because the model combines high-quality features with reasonable prices, making the
product much more attractive to the target market (Thomas and Baden-Fuller, 2016).
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The SWOT analysis is another analytical framework that is used to evaluate and
understand the competitive standing of a company in its industry. The SWOT analysis
explores intrinsic and extrinsic factors that can substantially impact the company's
profitability and industrial standing, as well as its current and imminent potential (Kenton,
2022). The SWOT analysis is meticulously orchestrated to provide a realistic, data-driven
and fact-based overview of the strengths, weaknesses, imminent threats and
opportunities for innovation within its industry. This analysis, applied to Apple
Incorporated’s business model and structure, yielded the following findings;
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the integration of smartphone sensors that cost less to drive an overall improvement of
the company. This increased performance can be seen in the introduction of the virtual
mouse, GPS navigation, camera stabilisation, intelligent consumption of power and
fingerprint sensors that, in turn, caused an upward movement of the efficiency curve of
the Apple smartphone (Sivakumar, 2020). The broad differentiation strategy implemented
through elegant product design, high-end branding, user-friendly interface, cutting-edge
aesthetics and seamless connectivity across devices also works to help Apple stand out
in the technology market (Meyer, 2015). The implication of this strategic planning is that
Apple must constantly apply itself to developing innovative products via research and the
growth of its market reach. Apple’s strategic planning also does not focus on specific
market sectors or segments but rather, competes by offering a wide range of services
that serve the various market segments of both information technology services and
consumer electronics, consequently, penetrating the markets and providing the company
with a much wider reach.
Apple has been able to drive these levels of innovations by working around a strategy
that prioritises people and their needs. Apple looks into how to make life easier and more
convenient, a strategy that can be seen in the way Apple amalgamated the iPod and
Mobile phone into the iPhone (Nielson, 2014). It also incorporated its corporate culture
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with innovative strategy such that it is the driving force of all their corporate decisions.
Another way Apple was able to drive innovation as splendidly as it did was by balancing
structure and flexibility in a way that allows freedom for innovation within the rigid
deadline-driven corporate world. Apple also valued customer feedback immensely as this
is one way to understand the populations pain-points in real time and create innovative
ideas to alleviate these pains
Apple is currently looking into more innovations, particularly on the automobile frontiers
with talks of a self-driving car, “Project Titan”, under development. It is without any doubt
that should Apple stick to their innovative trends, the car would be a roaring success that
would greatly make life easier.
5.0 Conclusion
Apple has already made a name for themselves as gamechangers in the technological
world by driving innovation and creating high quality products that revolutionise what
technology has the capacity to be. It is able to do this by using an amalgamation of
strategic planning as well as efficient adaptation of emergent strategy to help the
company stay at the top of the food chain, a feat that in admirable and commendable.
Apple has learnt to understand the current realities of the world that we live in, find the
loopholes and pain areas and explore integrative ways for innovation to solve those
problems. This is one of the reasons that Apple has remained relevant and profitable over
the years. With its current strides in the world of technology, there is little doubt that its
momentum would continue on its upward trajectory through the years.
6.0 Recommendations
Strategic planning is vital to the success of any business, however, the technological
industry is highly unpredictable and stoic unchangeable and unadaptable strategies
would inadvertently lead to the failure of the company. Every organization should have
provisions to react and effectively adapt to changes within the ecosystem of their business
to survive, thrive and lead the pack. This is a lesson that Apple has internalised and made
a part of its core values and is currently reaping its benefits. However, the technonological
giant can make some changes to further increase its revenue streams. It would be greatly
beneficial to the company to look into relaxing its stringent restrictions concerning third-
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party apps and allow for greater customisation options as this would help to even out the
growing threat that Android devices currently pose to the company. Apple can also look
into adaptive marketing strategies that can help to increase sales in other countries as
well as consider a review of their pricing across board to make the device more affordable
and keep up with the global decline in purchasing ability.
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