Business Analysis of Apple

In this post, we are going to conduct an analysis of Apple Inc, the world’s largest technology
business with a strong global presence and offering a nice range of market leading
technological products and services.

Apple Inc is a leading US based technology firm dealing in a limited range of hardware and
technological services. The company is known worldwide as the maker of iPhone. Its range
of hardware also includes Mac, iPad and wearables. The company also offers a nice range of
services. Apple is the most valuable company in the world by market cap. Its market
capitalization in 2022 is around $2.5 Trillion.

The company was founded by Steve Jobs and Steve Wozniak on April 1, 1976.  Its
headquarters are located in Cupertino, California, United States. The company has achieved
strong financial growth in recent years driven by higher sales of iPhones and services
worldwide mainly.

Apple’s growth is also driven by other factors including a strong brand image, market leading
products, strong focus on marketing, technological innovation and strong customer loyalty.
The company has continued to improve its competitive advantage and market position over
the past several years. 2021 was the best financial year in its history when the company
generated record breaking revenue and income.

SWOT ANALYSIS OF APPLE:

STRENGTHS:

World’s largest technology business:

Apple is the world’s largest technology business. Its market capitalization is close to $2.5
trillion. The technology brand has experienced solid improvement in its market value over the
past few years. Led by Tim Cook, Apple has continued to release new models of iPhone and
other products over the recent years. Apple has rapidly released new models, which
demonstrates its dedication to innovation and customer experience. As the world’s largest
technology business, Apple holds very strong clout in the industry.

Nice range of technology products and services:

Apple offers a nice range of technology products and services. Its core product is iPhone,
which accounts for the largest part of its net sales each year. The company also offers other
hardware products including iPad, Mac, wearables and a nice range of services. Compared to
most of its rivals in the market including smartphone and laptop brands, the company offers a
limited range of services. However, its products are market leading products that enjoy solid
popularity across the globe.

Strong competitive advantage:

Apple’s competitive advantage is the strongest among all the technology brands. Even its
closes rivals are unable to match its market leading capabilities whether it is in terms of
marketing, customer experience, sales and distribution, or supply chain management. Apple’s
brand image and customer loyalty are also proofs of its competitive strength. The company
has established a culture focused on innovation and customer experience. Its culture and
sustained focus on innovation have also helped the company grow its competitiveness.

Focus on technological innovation:

In the technology sector, market leadership comes from technological innovation. Apple is
known as a fiercely competitive brand, behind which is rapid innovation. Customer
preferences have changed fast in recent years. However, the company has smartly responded
to the changing market dynamics and customer preferences to retain its sales and market
leadership position. It invests a large sum in research and development each year. While
compared to some rivals like Amazon or Alphabet, its R&D investment is smaller and yet the
company generates better results from its investment in research and development.

Strong financial position:

The company is also a market leading brand with very strong financial position. It achieved
record breaking financial performance in 2021. The company generated $365.8 billion in net
revenue or 33% higher compared to the prior year. For the first time, it has achieved more
than $350 billion in net sales. The company enjoys strong profit margins on its products. The
total net income of the company in 2021 reached around $95 billion, which was 64% higher
than the prior year.

Strong customer loyalty:

Apple is one of the very few brands that enjoy as strong customer loyalty across the globe.
According to 9to5Mac, customer loyalty for iPhone continues to run as high as 90%. The
company has several loyalty programs in place to drive customer loyalty higher.

Strong market share in the US:

Apple enjoys the largest market share in US smartphone sales. The company has close to half
of the market share in the US smartphone market. Samsung has close to 31%.

WEAKNESSES:

Limited range of products and services:

Compared to most rivals in the market including Samsung, Huawei and other smartphone
brands, the company offers a limited range of products. Apple is not as diversified as several
other technology brands including Microsoft, Amazon, Samsung, and others. Apple continues
to focus on its main products, while also enhancing its range of services.

Limited focus on cloud technology:

While other leading technology brands including Amazon, Google, and Microsoft have
invested aggressively in growing their market share in the cloud industry, Apple has focused
on retaining its position in hardware. While cloud technology offers excellent growth
opportunities, Apple is still unwilling to diversify from its core. Its sales of services have
increased in recent years, but Apple seems uninterested in being a cloud player.

Mainly limited to the higher end market:

Apple products are made mainly for the higher end market. Compare it to the closest rival in
the smartphone industry, Samsung, and its range of products is not just limited but also
costly. Apple targets the higher end market. While it has also released lower priced basic
versions of iPhones, they are still not as competitively priced as the various models released
by Samsung or other smartphone brands including LG. It can be understood as a weakness
but on the other hand, it also proves Apple’s dominance in the higher end market.

OPPORTUNITIES:

Cloud technology:

Cloud technology offers some excellent growth opportunities for Apple. However, it is not
among the core focus areas of the company. Apple could achieve faster growth by investing
in cloud technology and related services. AI & other related modern technologies are also
worth investing in.

Diversification:

Apple deals in a limited range of products and services. Its core product, iPhone accounts for
the largest part of the company’s net annual sales. The company could increase its sales and
revenue by diversifying its product range and entering new technological areas. There has
been talk about an Apple car in the media for quite some time. However, there are several
other sectors too where Apple’s resources and capabilities could help it find solid growth.
Apple has kept its focus limited to the areas where it has already proved its competitiveness.
Diversification also brings risks and Apple might not like to hurt its existing momentum in
any manner. So, it appears rather improbable that it would like to diversify from its core.
However, one cannot deny the fact that Apple might expand its range of services and add
new ones to improve its profitability.

Emerging markets:

Emerging markets offer excellent growth opportunities for market leading technology brands
like Apple. India, Brazil, Mexico, and other emerging markets have experienced growth in
middle-class consumers' disposable income. The company is focusing on improving its
digital presence and customer relationships in these markets to expand its customer base in
these regions. The importance of the emerging markets has also grown in the light of Apple
having stopped operations in Russia following the Ukraine war.

THREATS:

Competition from Chinese and South Korean brands of smartphones:

Apple is operating in a highly competitive industry environment.  Samsung is currently the

dominant player in the global market while Apple is the dominant player in the US market.
Apple’s market share in the global market according to counterpoint research in the first
quarter of 2022 was 18% compared to Samsung’s 23%. In the US market, its share in 2021
remained either close to or above 50%. In the first quarter of 2022, its market share was 50%.
While Apple is among the dominant smartphone brands in the global market, it is facing
strong competitive challenge from other players like Samsung, LG, Lenovo, Oppo, One Plus,
Xiaomi and others.

Competition from various laptop brands:

Lenovo and HP are the two market-leading and dominant players in the laptop and PC
industry. While Apple’s market share in the first quarter of 2022 improved in this sector
compared to the previous year, the company is on fourth position as a PC vendor. Lenovo is
the market leader in the PC industry with 23.6% and HP held 20.5% market share in the first
quarter of 2022. Dell’s market share in the same period stood at 17.7% while that of Apple
was at 9%. The PC industry is experiencing a fiercely competitive battle among the leading
four brands. Apple has released new Mac models which helped it grow its market share in the
PC industry.

Political and regulatory environment:

The complex political and regulatory environment in various regions of the world is also
making the task challenging for leading technology brands including Apple. The regulatory
environment of technology industry has continued to grow complex and Apple has also faced
additional complexity caused by the poor relationships between the US and China. The legal
environment has also grown more complex as Apple has faced several legal challenges
including those related to its payment processing system and the charges for using App store.

Changing market trends and customer preferences:

The market trends and consumer preferences have changed fast in recent years which have
forced companies to grow their focus and pace of innovation. Apple has rapidly released new
models of iPhone, mac, iPad and other products to maintain customer loyalty. Companies
now have to dedicate more resources to marketing and innovation to maintain their market
share in a highly volatile and fast changing industry environment.

PESTEL ANALYSIS OF APPLE:

POLITICAL:

Political factors have always played a central role in the context of international business.
Businesses around the world are affected by the political environment of the market that they
operate in and their government policies. Apple is a global business. While the US is its
leading market, the company operates globally and has acquired a solid position in several
leading markets including China, Canada, the UK, India and several more markets.

Government policies in these various markets including the United States have continued to
evolve over years. The changing regulatory environment affects business strategy and other
significant areas related to business operations.
Geopolitical changes also affect the business environment of various markets. For example,
the Russia-Ukraine war to the suspension of operations in Russia by several companies
including Apple.

Changing governments or political instability also affect business operations. Government

changes also affect government policies regarding technology businesses, which in turn
affects their sales and profitability in various markets.

ECONOMIC:

Economic factors affect business performance to a significant extent. The changes in the
global economic environment can have a significant impact on the sales and profitability of
large and global businesses like Apple.  From the GDP to exchange rates and interest rates,
level of employment and other important economic factors, there are several factors affecting
the conditions of businesses across the globe.

For example, during the pandemic, the level of employment in various regions around the
globe including the United States, China, the UK, and several other important markets
dropped. It led to a recession like situation causing sales of various nonessential products like
electronics and smartphones to fall.

Changing currency exchange rates also have a sharp effect on profitability of businesses.
Some brands are better able to manage the impact of economic factors on their business
compared to the others. Apple sells higher end products and its buyers are from affluent
families. Due to that, the effect of recession, higher unemployment and other similar factors
is low on its business. However, currency exchange rates still affect its profitability since it is
a global business and generates a large part of its income from outside the United States.

To some extent, the brand image, marketing strategy, customer experience, customer loyalty
and the brands competitiveness also affect its ability to manage the impact of economic
factors.

SOCIOCULTURAL:

Sociocultural factors also affect businesses to a significant extent in terms of marketing, sales
and other areas. Companies strive to be as diverse as possible and embrace the diversity of
their customer base. Businesses that operate globally across various regions and cover diverse
societies and cultures need to understand the impact of these factors on their brand image, HR
management, marketing, sales, distribution and overall business operations.

Companies should formulate strategies for various geographic regions based on their
understanding of the local cultures and society. Social factors like demographic changes also
have a clear impact on business growth and profitability. Apple mainly targets the millennial
customers, who are among the largest customer demographics in its customer base.

Suggested Reading: How Apple manages diversity?

TECHNOLOGICAL:
Technology and technological factors are also just as important in the context of international
business. Technology is a key driver of business growth across various industry sectors.
Apple is a technology brand that makes hardware products, operating systems and also offers
a nice rage of services to Apple customers.

Technological innovation and differentiation are the key drivers of its success in the global
market. It is the largest brand in the technology sector and also the largest in the entire
industry with a market cap of close to $2.5 Trillion.

It is known for offering a superior customer experience and innovative products that are
matchless in terms of performance. Its Mac OS and iOS are highly differentiated and superior
compared to the Android OS or Windows in terms of performance.

The company is also a leader in terms of digital marketing. Apart from its market leading
smartphone, the company is also a market leader in wearables and related technologies. It
offers an attractive range of technological services as well. Over the past few years, the
popularity and sales of Apple products has grown at a much faster range which is
demonstrated in its financial performance. The reason behind its faster growth in recent year
is its acute focus on technological innovation that differentiates it from other brands.

LEGAL:

Legal factors are also an important concern for international businesses. Compliance is a
critical concern for technology businesses since governments across the world have taken
stricter measures against tech businesses in various areas like consumer data, privacy and
others. Apart from these, labor related laws, and more laws which can differ from market to
market are also affecting the performance of international businesses.

Apple has dealt with several legal concerns in its history. Among the most important legal
concerns facing the tech giants like Apple are antitrust laws. Apple has been facing antitrust
cases in the US, Europe and even India. According to a 2021 news report by Reuters, Apple
is facing an antitrust challenge in the Indian market related to the fees charged on its App
store.

Apple is also facing more litigations in this area related to abusing its dominant market
position. However, the company also takes utmost care to operate its business in legal
compliance with all the relevant laws in all the regions where it operates.

PORTER’S FIVE FORCES ANALYSIS OF APPLE:

In this section, we will conduct a Porter’s five forces analysis of Apple Inc, highlighting the
effect of these five important forces on Apple’s business.

BARGAINING POWER OF SUPPLIERS: LOW

Suppliers are an important force in every industry. Their role is critical in conducting a
successful business. Companies rely on suppliers to maintain a regular supply of good quality
raw materials. The bargaining power of suppliers is higher in cases when the number of
suppliers is small and the size of the supplier firm is bigger than the buyer firm. In some
cases where the risk of forward integration by suppliers is higher, the bargaining power of
suppliers is also higher.

Apple sources raw materials form suppliers around the globe and a large part of its supply
chain is located in Asia. The company has maintained excellent relationships with its
suppliers worldwide.  However, Apple is the largest company in the industry and its suppliers
are smaller companies. Therefore, compared to Apple they do not hold strong bargaining
power.  Apple has also applied a code of conduct for its suppliers to follow. The bargaining
power of Apple suppliers is limited.

BARGAINING POWER OF BUYERS: MODERATE

Bargaining power of buyers/consumers has grown in the twenty first century. It is because of
several factors including a higher number of substitutes in the market, availability of
information, and more factors like a growing number of laws protecting consumers. Apple is
known worldwide for its consumer focus. The company is a customer-oriented brand that
maintains a strong focus on customer experience and customer service. It has also maintained
a strong brand image. Its focus on product quality, innovation and customer experience have
continued to strengthen its brand image and customer loyalty. These are some important
factors that have helped moderate the bargaining power of Apple customers.

THREAT OF SUBSTITUTES: MODERATELY HIGH

Apple operates in a highly competitive industry environment. The company has several rivals
in the international market, and operates in a fiercely competitive industry environment. The
focus of its rivals on research and development is very high. Its closest rival Samsung also
invest heavily in research and development and is among the top R&D spenders.

There are a large number of brands including Samsung, LG, OPPO, Xiaomi, Lenovo, Huawei
and others that produce, market and sell smartphones. However, iPhone is known for its
quality, performance and superior experience. Apple has differentiated its products from the
ones made by its rivals. Due to the superior quality and performance, threat from the
substitutes gets moderated and iPhone remains one of the most popular and best-selling
models around the world despite the large price tag.

THREAT OF NEW ENTRANTS: LOW

The threat of new entrants in the smartphone and PC industries is low. The market has grown
highly saturated. There are more barriers making entry into the highly lucrative smartphone
industry complex. Apart from the high financial costs of entry, there are legal barriers and
other barriers, some of which are technical. Apple and Samsung are the largest brands in the
smartphone industry and also the most aggressive when it comes to defending their territory
against new entrants.

Any company that tries to enter the smartphone, laptop or wearable industries, must have the
necessary technical knowhow and be able to make a large financial investment to grow its
market share. Apple targets the higher end market and there are not many models that can
compete against iPhone except Samsung Galaxy and a few other higher end models made by
LG, Xiaomi, and other brands. Apple has been able to establish its clout in the industry by
creating its own mobile operating system. All these factors mitigate the threat from the new
entrants.

LEVEL OF COMPETITIVE RIVALRY IN THE INDUSTRY: HIGH

The level of competitive rivalry in the industry is very high.  There are many strong players
in the smartphone industry with a strong global presence and critical technological
capabilities. Apple, Samsung, Huawei, LG and Xiaomi are all market leading brands of
smartphones. Apple holds around half of the US smartphone market.

Samsung also enjoys a strong competitive position in the global market and strong sales in its
domestic and overseas markets. These brands also focus aggressively on innovation and
customer experience. Other factors that are critical to maintain a brand’s competitive position
in the industry include brand image, customer experience, marketing, supply chain
management, and customer service. Apple enjoys a strong brand image globally and also has
other critical capabilities in various areas including marketing, supply chain and sales and
distribution. These factors have helped it mitigate the threat of competition. However,
analyzing the overall situation in the smartphone industry shows that the level of competition
in this sector is fierce.

BUSINESS STRATEGY OF APPLE:

Business strategy is a set of plans, actions, and goals that highlight how a company will
compete in a particular market with its product and services offerings.

Apple’s competitiveness in the global market depends on the success of its business strategy.
The company has been hailed worldwide for its excellent management of its business
operations in all areas from supply chain management, to HR, marketing, distribution and
store operations.

Apple’s excellent capabilities in most areas including technology, production and supply
chain are considered matchless. However, business strategy is a very critical thing and to
achieve the desired objectives using resources and capabilities, it is important to focus on
business strategy.

The core focus of Apple’s business strategy is fast paced innovation and superior customer
experience to achieve stronger growth momentum and higher profitability.  The company
invests heavily in research and innovation. However, at the same time, the company also
strives to generate the best results from every single R&D dollar it spends.

Another important area where Apple has focused to achieve solid growth and market position
is marketing and customer engagement. These are some critical areas where Apple is
considered second to none. When it comes to great marketing, Apple has always remained an
industry leader. Apple’s marketing strategy is clearly outside the box. Instead of investing
only in marketing and promotions, the company has focused on all the areas where it can
offer a superior customer experience and grow customer engagement.

Apple has also adopted a great distribution strategy. While at the surface, there is nothing so
extraordinary about it, everything in the case of Apple lies somewhere below the surface. In
the markets, where the company does not have a solid physical presence, it is using its digital
sales and distribution channels for sales, service and customer engagement. However, the
efficiency with which the company uses its digital resources and capabilities to maximize
customer satisfaction is amazing. The company has thus been able to maximize sales,
profitability,

Created:
December 26, 2022
Updated:
April 1, 2023
Author:
Abhijeet Pratap

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Extensive Research & Development. Apple started the building of Infinite Loop campus
and each activity on the campus was constrained to R&D. ...

Innovative Activities. ...

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Well Recognized and Cherished Brand Name. ...

Retail and Distribution Network. ...

Breadth of Product Line.

Customer Experience

Considering how competitive the tech space is these days, having a fancy smartphone or
computer isn’t enough. Other areas that Apple excels in are user experience and customer
service.

The company’s products have more capabilities than you can count on one hand. And yet,
despite this, they are easy to use. When you turn on an iPhone or Mac for the first time, one
of the first things you’ll notice is the user-friendly interface.

Beyond the product’s functionalities, Apple also releases regular updates. As such, even
products released years ago continue to work well. This longevity means that many people
see buying an iPhone, Mac, or another Apple product as a long-term investment.

Apple also gets people to buy into the company at a young age. One example is how it offers
students discounted deals, making Apple products more affordable.

Once those customers are ready to upgrade, they will often have higher purchasing power.
So, they can buy another Apple product at full price.
Apple also prides itself on customer service. When something goes wrong, you can expect
that you’ll get the necessary help at one of Apple's certified service providers. Staff in this
area receive comprehensive training and usually also use the products themselves. Having
this level of personal touch allows people who work for Apple to buy into the company’s
vision. And that has a significant impact on how they treat customers.

Unless you have been living under a rock for the past 4 decades then it’s highly likely that
you’ve seen the iconic Apple logo: an apple with a bite taken out on one side. After years of
dominating the technology market, Apple has become synonymous with the words ‘brilliant’,
‘creative’, and ‘fundamental’. But why is this?

Apple was founded on April 1, 1976 by Steve Wozniak, Ronald Wayne, and Steve Jobs. Jobs
being the face of the company and one of the core factors of why Apple would end up being
such a big deal in the technology market. Back then, Apple was known as ‘Apple Computer
Company’ and their first product was the Apple I, which was completely designed and built
by Steve Wozniak, and although the Apple I and some of the later products released by the
company did sufficiently well in the market at that time, it was the 1984 release of the
Macintosh that changed the whole trajectory of the company.

The commercial for the Mac was called a ‘Masterpiece’ by CNN and is considered one of the
greatest television commercials of all time. Now, this is where we see a sliver of the potency
of Apple’s marketing and one of the reasons why the company was so successful. In this
article we will explore 5 other reasons why Apple is as big a name as it is now.

5 Reasons Why Apple Is So Successful

 January 2, 2019

1. Ahead of the Curve

Apple is and always has been years ahead of its competitors. Quite literally. Apple has a
policy of being at least 2 years ahead of the market, which means that an Apple product, such
as the first iPhone, released in 2007 had completely dominated the market, before
competitors like Samsung & Motorola came out with their devices in 2009 and 2010. This
principle of always staying ahead of the competition by designing and producing products
that are to be released years into the future has set Apple apart from most companies.

As talked about in various documentaries and books, Apple has always valued creativity,
which is why the products, although conceptualized years in the past, still don’t go stale, so to
speak. To have a technological giant like Apple be so dedicated about their products and their
vision is one of the biggest reasons why their competition is always on its toes.

2. Improvements and Branding

 
Apple doesn’t release products just for the sake of releasing them. With every new Apple
product, there is some technological advancement that was not seen in the previous model of
that product. This is one of the reasons why people flock to Apple stores and stay in line for
hours just to buy the new iPhone when it releases. 

Every update to its operating systems, every new camera feature, every new color introduced
has incited excitement in its customers, in part thanks to the excellent presentations
conducted by Jobs and his successors that have branded Apple as a dynamic force you can’t
afford to miss. It is not unlikely that the minute a new product has been launched, their next
one is already in the stages of development.

3. Quality Products

Jobs’ and by extension, Apple’s, main objective for their products was beauty in simplicity.
Aside from their elegant, sleek trademark design, it was paramount for them that their
products should be easy to use for all age groups and audiences, which is plain to see in the
amount of toddlers you may see running around playing Subway Surfer on their parents’
iPad. Apple’s obsession with perfection makes it so that its issues are virtually non-existent.
Each product is tested by experts hundreds of times before it is finally approved for mass
production and launching.

Apple users will hardly ever complain of typical issues such as app crashing, malware
attacks, or frequent annoying pop-ups, because Apple’s design and programming is near
flawless. Each product is a take on current existing technology on the market that they
improve on ten times over, taking into account common issues customers experience in their
products and working to eliminate it altogether.

4. Customer Experience and Retail Experience

Seeing as Apple’s entire brand is based on fulfilling and catering to the needs of all
audiences, it comes as no surprise that their customer service is near unparalleled.The reason
for Apple’s huge success in sales over the years is in no small part to the loyalty they incite in
their customers, a fact they are well aware of. 

In order to keep their customers feeling happy, Apple has opened over 460 retail stores
worldwide by 2015 in order to have better, direct access to their audience. This has not only
opened up millions of jobs for people all around the world, but has also reached an inordinate
amount of people.

5. Range of Products

Apple has been consistently releasing a wide variety of products over the years ranging from
phones, laptops, watches, and more that are steadily expanding. Word on the street is
speaking of potential production of Apple Cameras and even an Apple car. Though Apple
holds no technology not already existing in the market, their customers still eagerly await the
launch of their newest products simply because Apple just does it better. 

Considering Apple’s objective is reinvention toward perfection, there is still an entire market
of products they can still aim to improve in their future products that keep their audience and
competition eagerly keeping tabs on what new experiment they may embark on.

Looking at all these reasons, it seems Apple’s role in the industry is undefeatable. Yet if
Apple has taught us anything since its inception, it is that perfection is never wholly reached,
and that there is always room for improvement. Keeping this in mind, it seems that Apple
won’t be going anywhere in the foreseeable future and neither will their loyal customers.

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