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SWOT Analysis of Apple

This is the Apple’s SWOT table which identifies his strengths, weaknesses, opportunities and threats. “Opportunities and threats emerge from an examination of customers, competition and the external market environment (Perreault, Cannon, & McCarthy, 2011).”

Strengths

Financial Strength
Brand awareness
Competitive Advantage

Weaknesses

Product line dependencies
Premium pricing

Opportunities

Expanding retail/online stores
Expanding third-party distribution
Ongoing Research and development (R&D)

Threats

Competition
Supplier dependency

Strengths

According to Apple’s Current Report to the United States Securities and Exchange Commission, “Fiscal 2015 was Apple’s most successful year ever, with revenue growing 28% to nearly $234 billion. The growth was fueled by record fourth quarter sales of iPhone, the expanded availability of Apple Watch, and all-time records for Mac sales and revenue from services.” Apple maintains its competitive advantage largely because of its design and development of its operating system, content (such as iTunes) and retail. An important factor in customer loyalty and brand recognition is Apple’s ability to integrate its technology across all of its products allowing them to connect to one another with each new release. Its competitors have been unable to duplicate their efforts. Apple’s rights to patents, copyrights, and trademarks of its hardware, accessories, software, and services contributes to its brand recognition.

Weaknesses

Apple’s iPhone and iPad have been the driver of its revenue and growth. Through advancement in technology and product innovation, Apple has seen a reduction of its tablet market share. Dependency on these products could negatively impact Apple. Competitors can reduce prices and lower product margins due to increased capabilities created by advancement in technology and product innovation.

Opportunities

Part of Apple’s success is their knowledgeable salespeople available to convey, demonstrate, and train customers on Apple’s hardware and software integration in their various products. Most the sales of Apple’s were made through different channels of distribution through their retail stores and online shops. Expanding their retail and online market as well as their third-party distribution channels would allow Apple to reach more of its target customers. Apple relies heavily on its research and development to remain competitive during rapid advancements in technology to deliver new products, services, and new technologies consumers demand.

Threats

Advancement in technology and product innovation has allowed competitors to threaten Apple’s market share. Competitors can reduce prices and lower product margins due to increased capabilities created by these. Apple’ dependency on industry-wide components used for mobile communications, media devices, and personal computers can be threatened by scarcity and price change which may affect their operational and financial functions. According to Apple’s Annual Report (2015), “many of the Company’s products are designed to include intellectual property obtained from third parties. While the Company has been able to get such licenses on commercially reasonable terms in the past, there is no guarantee that such licenses could be obtained in the future on reasonable terms or at all.”

Competitive Analysis

According to Michael Porter of Harvard Business School, five competitive forces can shape a business’ marketing strategy. These are a power of supplier, the customer, threat of new entrants, substitutes, and existing rivals. These power of the client reflects consumers’ primary need for products and services and their search to pay the lowest price. Mobile technology and communication have become a part of everyday life for most consumers, and Apple is identified as a provider of choice. The power of supplier represents the business’ goal to lower cost to make a profit while satisfying the consumer’s need. New entrants to the increase industry competition between suppliers, therefore, allows consumers to be more selective. Substitutes, even from a different industry, can replace consumers’ demand from one product to another. And finally, existing rivals are always looking to gain a competitive advantage to win new customers. Competitors such as Samsung, Sony, Google, and BlackBerry continuously look for opportunities to overtake Apple’s market share.