Apple
Industry Analysis
Apple competes in the consumer electronics industry, predominantly on the hardware side, but also on the software side. The most significant product that the company makes is the iPhone, which accounts for $155 billion in revenue out of a total revenue of $233 billion. The Mac computers generate $25 billion, the iPad $23 billion, services $19 billion and "other" $10 billion. Most of other consists of software and peripheral products, along with any residual iPod sales that might still exist (Apple Co. 2015 Form 10-K). This breakdown highlights that Apple is primarily a hardware company, though its hardware is embedded with the company's own software. Of these businesses the iPhone is a major growth business, having increased 52% over the previous year on the basis of the iPhone 5 release. The iPad is a declining business, having dropped 23%, while other businesses saw more modest increases. "Other products" increased 20% in FY 2015, but that merely restored revenues following a 17% decrease in 2014 (Apple Co. 2015 Form 10-K).
Apple's business is global in nature. The company operates many of its own retail channels, including its own stores and online retail site. In 2014, Apple was the second-biggest online retailer in the world, with online revenues of $20.6 billion. While this is nowhere near the level of market leader Amazon, it is higher than any other company, and most of those companies sell a very broad range of products, in multiple countries (Statista, 2014). The company earned $93 billion in revenue in the Americas, $58 billion in Greater China, $50 billion in Europe, $15 billion in Japan and $15 billion in the rest of Asia-Pacific (Apple 2015 Form 10-K). Sales growth in the Americas was strong at 17%, and solid in Europe at 14%. The largest growth region, however, was Greater China at 84%. Greater China consists of the PRC, Taiwan, Hong Kong and Macau. The rest of Asia Pacific is also a strong growth market at 34%. This market consists of South Korea, Australia, New Zealand and the Southeast Asian nations. Other markets such as the Middle East and Africa are structured under Europe.
Working with this industry definition, there are a few different tools to understand the profitability and desirability of this industry. As a general rule, this is a high growth industry with large profit margins, both characteristics that Apple has been able to leverage significantly. A Five Forces analysis highlights that this is generally a positive industry in which to operate, and that Apple has a powerful position that accentuates these benefits. The five forces that determine profitability in an industry are the bargaining power of buyers, the bargaining power of suppliers, the threat of new entrants, the threat of substitutes and the intensity of rivalry among existing competitors (QuickMBA, 2010).
The bargaining power of buyers is low. There are several factors that influence this. First, there are few players at the high end of the smartphone market, but most buyers in the industrialized nations prefer to buy at the high end. Essentially, the high end is a duopoly between Apple and Samsung. Consumers have relatively little knowledge about the costs of producing smartphones and other electronics, and they lack price sensitivity. They generally are willing to pay the going rate for these products, and this gives companies at the high end the advantage. Consumers are more sensitive to features, so feature-rich products reduce price sensitivity. This allows the high end products to carry high margins.
The bargaining power of suppliers is low. In general, suppliers in this industry offer commodity goods, so companies like Apple can shop around for the best deal. Furthermore, there are more suppliers in the industry than there are major vendors like Apple. This is important, because Apple's economies of scale are critical to the success of its suppliers. While Apple can readily change suppliers, the suppliers will never find another Apple. This gives Apple significant bargaining power over suppliers.
The threat of new entrants remains fairly high. The high availability of OEM parts allows many new companies to enter this business. These include established players that once had a bigger role in the industry such as Nokia or Motorola, operating system producers like Google or Microsoft, and it also includes low cost upstarts, mostly from China, who enter via the low end of the market and build share from there. An example of the latter would be Xiaomi, which specializes in lower-end phones for the Chinese market....
Apple Corporation SWOT analysis Apple Inc. is one of the well-known and recognized enterprises by not only the business community but populace from all over the world are cognizant about this corporation. It started off its business from the decade of 1970 that has been involved in the designing, manufacturing and offering its consumers with a wide range of innovative and technologically refined products like computers, software, music players and its
The decrease in 2006 is obvious to most all product categories and it can be explained through the economic crisis in the U.S. And the general reduction of industrial activities and corporate profits. The communications and telecommunications subsector has also been subjected to changes in 2006 as compared to 2005, registering both increases as well as decreases, as shown by the figures below (millions of dollars): Product Product Name 2006 Code 3342101 Telephone
The customers have often been left at dead-ends in the company's product strategy with only high-priced options left for moving into a next-generation product (Jonash, Koehler, Onassis, 2007). Suppliers have often been given inadequate information on new products, and if they are given new product designs, held to very stringent standards as to how they are used (Apple Investor Relations, 2011). Apple admits in its financial statements and filings
In addition, the traditional iPod platform is being scaled back as the benefits this platform provides consumers can be found in all other platforms, often accentuated with other forms of digital content as well, from e-books and published materials to movies, television shows and other forms of video content. Market Analysis The future of Apple's profitability is entirely based on the success of their iPhone and iPad investments and the transformation
Apple needs to increase its market share for iPad 4. Product outline Apple Inc. is a well known technology firm that specializes in designing, production and selling of computers, mobile phones and music related devices. The most outstanding feature of Apple Inc. is the brand-perception as well as identification. Apple has built itself to become a cult-brand over the last decade with the strategy to invest and market iTunes, QuickTime and iMaclines
Apple needs to increase its market share for iPad 4. Product outline Apple Inc. is a well known technology firm that specializes in designing, production and selling of computers, mobile phones and music related devices. The most outstanding feature of Apple Inc. is the brand-perception as well as identification. Apple has built itself to become a cult-brand over the last decade with the strategy to invest and market iTunes, QuickTime and iMaclines
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now