Swot Analysis Business Analysis Part I

Muhammad Naseem Siddiqui

September 05, 2011

Apple is an American multinational corporation, established on April 1, 1976 in Cupertino, California that designs and markets consumer electronics, computer software, and personal computers. The company's best known hardware products include the Macintosh computers, the iPod, the iPhone, and the iPad. Apple software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software, among others. Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2008, 2009, and 2010. The company profit was around $8.24 billion closing the year of 2009 (Jose Antonio Hernandez & Dr. Yuan GuoHua, 2011)

SWOT Analysis

The following is a traditional SWOT analysis of Apple, Inc, an examination of significant internal strengths and weaknesses, and external opportunities and threats, currently facing the company today.

STRENGHTS | WEAKNESSES |

* Valuable global brand * Design and innovation * Better marketing strategies * Visionary and charismatic leadership * Retail as new revenue stream | * Significant delays in launching and shipping * Denial of product defects * Compatibility issues * Customer service * In-sourcing * Secretive nature of Steve Jobs |

OPPORTUNITIES | THREATS |

* Partnership with Telco carriers * Emerging products AppleTV, iPad, Ping * International expansion * New acquisitions | * High competition in the market * High pricing in recent economic crises * Technology advances * Changing buyer needs and tastes |

Strengths

1. Brand

Millward Brown rated Apple the 3rd most valuable global brand in their 2010 top 100 list of most valuable global brands and estimates their brand value to be worth $83.2 billion, (2010). Apples brand loyalty, often referred to as the Cult of Apple, is probably Apples greatest asset and because of their intense loyalty their customer base tends to be very forgiving of product problems, (Bulik).

2. Design and Innovation

One of the primary motivations for Apples design teams is to make intuitive products that allow users to be up and running without reading instruction books, due to this standard they set the benchmark for design led hardware and software products, (Harris, 2009).

3. Marketing Strategies

Advertising age recently awarded Apple the title of Marketer of the Decade. The first time it has ever awarded any firm this title, in deference to the way that they have influenced advertising, media, their influence on popular culture, and her marketing strategies and also in recognition of that they have been consistently a marketing powerhouse over the last decade, (Bulik).

4. Visionary and Charismatic Leadership

Steve Jobs a visionary and charismatic Leader. He widely has known for his mercurial, demanding management style. He drove his company relentlessly to make products that consumers lusted for.

5. Retail Market

Apple recently opened 200 retail locations throughout the United States and 50 retail stores in other countries, these locations currently account for 20% of their total sales, (Hoovers)..

Weaknesses

1. Delays

iPads featuring different connectivity were released at separate times, several months apart; consumers were wait-

listed to receive these, and there were significant delays in shipping the products. This weakness can only lead to consumer dissatisfaction and infringement issues.

2. State of Denials

Although the iPhone 4G was the highest scoring smart phone they ever tested. Consumer Reports does not recommend it due to its problems with its antenna and until Apple corrects it, and they advise their readers to stick with the 3G, (Smart phones, 2010). Apples reluctance to acknowledge or deal with this and other product defects are a big weakness as they appear to rely upon their customers to overlook these issues.

3. Compatibility Issues

As a reaction to a perceived threat from Google, Apple recently loosened overly stringent restrictions for developers that sought to develop applications for the iPhone and allows them to use a wider variety of computer languages with Apples operating system iOS, (Driver & Valdes, 2010)..

4. Customer Service

According to Forrester Research, of four PC manufacturers surveyed, Apple, Gateway, HP, and Dell, Apple rated the lowest, (-13) compared with Dells rating of (+38), in customer service, (Manning, H., 2007). Recent customer experiences with the iPhone 4G, including downloading and connection problems, indicate a weakness as Apple is still not reacting to customer complaints and delivering the superior service that should be expected.

5. In-sourcing

Apple recently purchased a processor company and a microchip company so that they can begin designing their own CPUs and microchips, as such fewer external sources will be involved in the development of their products, (Hoovers). The weakness in this approach lies that this behavior could lead to missed opportunities for improvements that their competitors will be sure to take advantage of.

6. Steve Jobs

The Brand image is tied to Apples founder and CEO Steve Jobs; so his secrets may very well be buried with him

when he dies. In most peoples minds, Steve Jobs is Apple, as Jobs micromanages Apple. The company, it is feared, will die along with Jobs (Apple, 2009).

Opportunities

1. Partnerships

Currently the only telecommunications carrier that Apple partners within the United States is AT&T, whereas many competitor phones can be used with multiple carriers. Customers unwilling to switch to AT&T from their current carrier are likely to forego owning an iPhone. Partnering with additional carriers could increase sales of the iPhones that would in turn encourage consumers to try additional Apple products.

2. Emerging Products

Apples iPad is driving demand for tablet computers; projections for tables for 2010 are 19.5 million units and by 2014 sales are expected to reach 208 million units (McGuire & Baker, 2010). Additionally, AppleTV as a fully streaming media box, and Ping as software for iTunes that enables social networking by allowing users to share their music with one another are the emerging products are seen as major opportunities.

3. International sales

Currently the United States accounts for more than half of Apples sales, (Hoover). Additional national and international locations could increase customer satisfaction with Apple products as generally customers who visit the Apple stores have a significantly better experience than those who deal with Apple online.

4. Acquisitions

Apple has acquired recently other companies, and as they are relatively new to the consumer electronics industry and media, to further her success she may consider acquiring a company that has long term success in this environment.

Threats

1. Competitors

Despite market share gains in recent years Apple sales are still far behind competitors in the PC market like Dell and HP, (Hoovers). Additionally, Google is moving into Apple's smartphone space by giving away the operating system, and it has announced that it will also be moving into the TV space that is a big threat to Apples market share (Jim Mueller, 2010).

2. Pricing

According to Forrester Research the percentage of customers who believe that better pricing outweighs brand loyalty has been steadily increasing, (Manning, H., 2007). The recent economic crisis has accelerated this phenomenon. This is a big threat that Apple will continue to lose market share in this industry because of high pricing.

3. Technology Advances

Apple becomes more cloistered it is likely to miss out on technological advances from which it might have otherwise benefitted. There will be another huge shift in technology coming out from Google Chrome OS and Samsung Smart phone and a real threat to Apple is that they are likely to lose out on it if they shelter themselves too much from other companies in the technology sector.

4. Buyers needs

Apples products are extremely stylish, but only available in white, black, or a stainless metallic finish, which to some extent prevents consumers from expressing their individuality even at this point. The threat to limiting consumer choices is that it could backfire if this strategy persists too long and Apple potentially box itself into a corner if she change strategy too late to suit consumers.

By looking at the strengths and opportunities that Apple has at the moment will allow an investor to exploits the potential of the company and invest in the opportunity areas. However, one can extract opportunities out of external threats that Apple has that might begin new product lines.

Stakeholders Analysis

A stakeholder theory asserts that a business must consider the interests of its stakeholders when making a decision (Gibson, 2000) defines stakeholders as groups or individuals who can affect or are affected by the decisions and actions of an organization (Wade M. Chumney, Tammy W. Cowart, 2009).

Shareholders

Apples shareholders are the primary stakeholders and most likely pleased with the companys latest financials. There interests lie in increasing profitability and share values that Apple is addressing well with innovative products and services.

Consumers

A second major stakeholder group to consider is consumers. Consumers need sophisticated, stylish, and unique electronic items and gadgets with good customer services in less price. Apple needs to work hard on customer services and price competitiveness to address consumers needs

Employees

Employees invest years of their labor in a corporation human capital giving them a similar stake in the corporation to shareholders (Etzioni, 1998). For Apple employees, their interests were certainly served by Apples tactics to secure the product line innovation and uniqueness. Apples foothold in the cell phone and tablet market is secured, thus increasing job security for Apple employees (Wade M. Chumney, Tammy W. Cowart, 2009).

Reference

Jose Antonio Hernandez & Dr. Yuan GuoHua, (2011) 2nd International Conference on Business And Economic Research Proceeding.

Bulik, B.S. (2010, October 18). Marketer of the year 2010, Marketer of the Decade: Apple. Advertising Age. Retrieved from http://adage.com/moy2010/article?article_id=146492

Driver, M. & Valdes, R. (2010, September 16). Apple loosens restrictions for iOS developers. Gartner Industry Research Group. Retrieved from http://my.gartner.com/portal/server.pt? open=512&objID=260&mode=2&PageID=3460702&resId=1436740&ref=QuickSearch&sthkw=apple

Harris, A. (2009, September 26). Design at the very core. Engineering & Technology, 4(16), 60-62. Retrieved from

EBSCOhost Business Source Complete.

Hoovers, (n.d.). Apple Inc. Hoovers Company Records. Retrieved from

http://premium.hoovers.com/subscribe/co/overview.xhtml?ID=ffffrtjccfjfkfckxf

Manning, H., Temkin, B., Bodine, K, Dorsey, M., & Geller, S. (2007, September 12). Topic overview: customer experience. Forrester Research. Retrieved from

http://www.forrester.com/rb/Research/topic_overview_customer_experience/q/id/43140/t/2

McGuire, M. & Baker, V. L. (2010, September 24). Apple's iPod and iTunes updates keep pressure on competitors. Gartner Industry Research Group. Retrieved from http://my.gartner.com/portal/server.pt? open=512&objID=260&mode=2&PageID=3460702&resId=1440061&ref=QuickSearch&sthkw=apple

Smart phones. (2010, September), Consumer Reports, 75(9), 24-27. Retrieved from EBSCOhost MasterFile Premier.

Jim Mueller (June 7, 2010), Apple: Strengths, Weaknesses, Opportunities, Threats. Retrieved from http://www.fool.com/investing/general/2010/06/07/apple-strengths-weaknesses-opportunities-threats.aspx

Wade M. Chumney, Tammy W. Cowart (2009), iEthics, Journal of Business Ethics 93:471482, DOI 10.1007/s10551-009-0234-6