Running Head: APPLE INCORPORATED 1

Apple Incorporated
APPLE INCORPORATED 2

Abstract

The project entails the exploration in deep about the Apple Company which is one of the

largest and famous technology company known worldwide. We are going to look at the origin of

the company, the major founders and the reason as to why they came out with the idea of

creating the Apple Company. The project will also explore the company’s organizational

structure and how it has contributed to the success of the company. Moreover, the project will

explore the SWOT analysis structure where we are going to look at the various strengths that

support the success of the company, the opportunities that the company needs to explore, the

weakness and the threats that the company needs to work on. Furthermore, the project will look

at the various strategies that the company uses in ensuring that it is competitive advantaged,

these ranges from the functional level strategies, the business level strategies and the corporate

level strategies. The project also gives some recommendation s and conclusion on the various

areas that the company should work on so as to continue growing successfully.

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Table of Contents
Abstract ........................................................................................................................................... 2
History and Organization Structure of Apple ................................................................................. 4
The SWOT Analysis ....................................................................................................................... 6
Internal Analysis ......................................................................................................................... 6
Strengths .................................................................................................................................. 6
Weaknesses .............................................................................................................................. 7
External Analysis ........................................................................................................................ 8
Opportunities ........................................................................................................................... 8
Threats ..................................................................................................................................... 9
Application of Michael Porter’s Model to Apple ........................................................................... 9
Functional Level Strategies of Apple ........................................................................................... 11
Core competencies .................................................................................................................... 12
Financial strategy ...................................................................................................................... 12
Market strategy.......................................................................................................................... 13
Business level strategies of Apple ................................................................................................ 13
Product differentiation............................................................................................................... 13
Premium prices .......................................................................................................................... 14
Apple’s Corporate Level Strategies .............................................................................................. 14
Strategic alliances ...................................................................................................................... 14
Vertical Integration ................................................................................................................... 15
Horizontal Integration ............................................................................................................... 16
Recommendations ......................................................................................................................... 16
Conclusion .................................................................................................................................... 18
References ..................................................................................................................................... 19

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History and Organization Structure of Apple

Apple is one of the largest electronic and Technology Company knew in the world today;

it is one of the top ten tech company in the world today with seventeen representatives from

various countries. The company was found by two major college dropouts known as Steve

Wozniak and Steve Jobs in 1st April 1976 (O'Grady, 2009). The major aim of these two founders

was to change ways in which people viewed the world of computers. Specifically, the two

wanted to make the computers small enough that individual would be able to have them in their

homes and offices. This majorly involved making the computer user friendly and more portable.

Today Apple is a global company that that makes the consumers personal computers,

servers, and various electronic software and also offers the online services and network solutions

to its customers. in addition, the company has a huge portifolio of products and servers for its

customers ranging from the apple TVs, iPod, iPhone, the apple watch, iOS Apple store, and the

iTunes stores just to mention a few. Apple Company contributes a lot to the economy of

America, in the year 2016 the total revenue made by the company was 251.64 billion dollars and

it was ranked as one of the most valuable company in the world by the Forbes (Charles W. L.

Hill, 2016). The company has 486 retail stores that are open in the nineteen countries where it

operates its business.

The company’s organizational structure is one of the important factors that contribute to

the success of the company. Apple employs the traditional hierarchical organizational structure

with a combination of other important key elements from other organizational structures. With

this type of organizational structure, the company has been able to grow immensely due to the

successful innovations made and good leadership provided. The hierarchy structure has

supported strong control over the organization since the top leadership is given the opportunity to

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control every activity in the organization. However, the main demerit of this kind of

organizational structure is that there is low flexibility since hierarchy structure does not

effectively support the response of the business needs as well as the market demands from the

lower levels of the structure.

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The SWOT Analysis

The SWOT analysis is an important framework that any organization needs to use it in

doing the analysis inside and outside the organization so as to be able to uncover the available

opportunities that they need to exploit and also understand the various weaknesses and improve

on them. In addition to the analysis, the organization is able to eliminate the threats that may

catch them anytime. Moreover, comparing your organization with other competitors using the

SWOT analysis framework one is able to come up with better strategies that can differentiate

them from their competitors and thus have a competitive advantage over them by competing

successfully in the market.

The current in Apple Company is based on its ability to overcome the threats and

weaknesses that it experience and maki9ng use of their strengths and opportunities. The apple

SWOT analysis will give the company insights on the various actions that it should take so as to

be able to maximize its growth by the use of the opportunities and strengths that they have.

Moreover, the company should be able to also address the major issues that affect their success,

for example, the threat of competition which is the major threat that it experiences now.

Internal Analysis

The internal analysis under the SWOT analysis framework entails the discussion of

factors within Apple Company more specifically the strengths that the apple company has and

that play an important role in the success of the organization. The other factor considered is the

weaknesses that the company faces.

Strengths

There are several strengths that the Apple company has and have enabled the company to

be able to withstand the various threats it experiences in its business environment. The first
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strength that the company has is the strong brand image in the market. Apple Company has the

strongest and valuable brands all over the world, and with this, the company is always able to

introduce new and profitable products into the market by virtue of the strong brand image it has

(O'Grady, 2009). Moreover, the company is able to maintain its premium pricing strategy

without fear and thus always able to maintain its high profit margins in its operations. This

strength is the most important to the company since it has the ability to always adjust its product

prices as it makes significant profits. Secondly, Apple Company has an effective and rapid

innovation process due to the company’s effective growth strategies. The rapid innovations

always ensure that the company is always kept abreast with the changes in technology so as to

ensure competitive advantage.

The third important strength of the company is the loyal customers. The company is

always on toes to ensure that their customers are always satisfied with the products and services

are given to them so as to ensure that they do not divert to other companies. In addition, quality

leadership has played an important role in ensuring that the company runs smoothly and wise

decisions are always made. These strengths have kept the company going and being able to

compete effectively.

Weaknesses

Weaknesses can be a great obstacle to any organization. Despite the various strengths

that the Apple Company has there are few weaknesses that need to be worked upon. The first

weakness is that the company has a limited distribution network. The company makes the

selection of its product sellers carefully, and this is due to the policy of exclusivity. This policy

supports the control of the distribution of the products and limits the company’s market reach

(Tar, 2015). Secondly, the difficult of matching the client’s expectation, since apple is one of the

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largest companies worldwide with large market share, the customers’ expectations are also very

high. All customers expect great deals from the company each year and hence maintaining these

high expectations is not that easy. Thirdly, the dependency of few products, on the product

portfolio apple company has eight products. Comparing their close competitors like the Google

and Microsoft that have a wide range of products, this is a great challenge. Therefore, the

overdependence of apple on each of its product creates a big risk since if one of the product is

affected the company experiences a great loss. It is important for the company to work on these

weaknesses so as to sustain completive advantage.

External Analysis

The external analysis entails the factors outside the organization that has either positive

or negative effects on the company. These factors can be changes in technology, political issues,

and legislation

Opportunities

Opportunities are factors that have great influence on the strategic direction of the

company. One of the opportunities that Apple Company has is technology advancement;

technology is always an opportunity. With this we expect the company to come up with more

products in future like the Iwatches and the Mac books. Secondly, the company has the

opportunity of expanding its distribution networks. The company needs to change the

distribution strategies so as to expand the networks. Thirdly, the company has the opportunity of

creating new product lines since the creation of new products supports the growth of the

company. Opportunities will enable the apple company to grow further and meet the customer’s

needs to their satisfaction.

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Threats

Although the company has several opportunities, there are threats that it experiences in its

business environment. The first threat is that the aggressive competition, apple do get severe

competition from companies like the Samsung which also employs the rapid innovation

strategies in its growth. Due to this aggressive competition from other firms the apple company

should create strong fundamentals so as to be able to maintain a competitive advantage. The

other threat is the imitation where other firms try to imitate the apple products so as to attract

more customers. Rapid change on the taste and preference of the customers is another threat,

and hence the company should always work hard in ensuring that new and the quality products

are always produced to meet the needs of the customers. Based on this analysis the performance

of the company will be affected greatly is aggressive competition and imitation is not worked on.

Application of Michael Porter’s Model to Apple

Supplers
Threat of
bargaining
Buyers
power
Opting for
Substitute LOW
Products
Industry
Low competition
HIGH
Apple
company

Buyers Threaths of New

bargaining power Entrants
LOW LOW

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The strongest market place forces that have a great effect on the apple profitability are the

bargaining power of the buyers and competition from the rivalry. There is a very high

competition that Apple Company faces from its several rivalries (James McGuigan, 2008). The

company faces direct competition from companies like the Samsung, Google, and the Amazon

companies. Just like the apple company, these companies also do spend a lot of its revenue on

the research and development processes and marketing. This indicates that the level of

competition among these companies is very strong. The threat of market share completion is the

major issue that Apple Company has to deal with and consider by developing new and unique

products so as to be able to strengthen its market share.

Considering the buyers bargaining, the industry faces low cost switching and this is the

aspect that strengthens the bargaining powers of the buyers, in apple company the buyers

bargaining power is low this is because if the company loses one of its customers there is a

negligible lost of the company’s revenue (James McGuigan, 2008). However, if there is a

collective bargaining power of the buyers in the market the possibility of these mass buyers

defecting to other competitors is a very strong force . The apple company counters this by

continuously making substantial capital in the research and development so as to come up with

new and unique products.

Apple faces relatively low threats of new entrants into the market. This is majorly

because the processing of establishing a company in this industry requires a lot of capital and

also the process of establishing brand name recognition is also not that easy. New entrants

always need to have a huge amount of capital to spend more on research and development as

well as manufacturing so as to be able to come up with the product. In addition, the new entrant

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faces severe competition from the already established rivalries like the apple and Google.

However, there may be new strong entrants that may come into the market, and therefore it is

essential for apple company to always continue strengthening its market position by coming up

with new products and also building brand loyalty so as to place the new entrant in a

competitive disadvantage position.

In the market place of Apple Company, the bargaining power from the suppliers is

relatively low. This power is majorly weakened by the availability of potential suppliers that the

company has that provides ample supply of the required materials. With this in place, Apple

Company is always free to choose from this large potential suppliers. In addition, the cost

switching for apple to exchange one supplier for another is also low and thus not a big obstacle.

In addition, apple is the main customer for most of its suppliers. Therefore, these suppliers are

always keen to ensure that they do not lose this position. This situation strengthens the

company’s negotiation power with the suppliers and this weakening their bargaining power.

The threat of experiencing substitute products in the market in this industry is also low.

The landline telephone is one of the substitutes that compete with apple products in the market.

But such products have limited capabilities compared to the products from apple, and thus they

are not able to compete effectively.

Functional Level Strategies of Apple

The functional level strategy is an area of operational management that is based on

specific organizational departments such as the finance, marketing, and human resource. The

Apple Company uses various functional strategies in its effort to increase product quality,

efficiency, innovation and customer responsiveness. Some of these functional strategies

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employs are core competences, marketing strategy, financial strategy, purchasing and R&D

strategy.

Core competencies

The major competencies of the apple company are its technology based software and

innovative designs. With these innovative competencies, the company has been able to come up

with several new products to meet the needs of the customers. Some of the products that apple

has produced are the iPod, iPad, as well as the Iphones that have attractive and innovative

features. The interior competencies of the company are its robust nature (O'Grady, 2009). As

time goes by it has become hard for other firms to imitate the products of Apple Company and

this has given the edge to all its competitors. To achieve this company has a closed proprietary

system that ensures that company’s skills, secret recipes are not evaded by outsiders. Moreover,

the company is very consistent of developing its product portfolio, the dynamic capability ios

another important competency of the company since it’s is always ready to respond to any

changes that are brought by the competitors. For instance, when Dell first introduced its tablet

into the market Apple also introduced the iPad 2 to counter this change.

Financial strategy

The financial strategies employed in Apple Company are aimed at ensuring that the

company is always kept afloat while still ensuring that it remains top of its all competitors and

dominate most market positions. Apple's financial strategy is based on the concept of always

maximizing its margin. This concept can be clearly seen in each product model created by the

company. For instance, the company’s models and gadgets have unique features and thus the

customers always from the apple market and not any other. Any product that is launched by

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apple always ensures that the public cannot buy it from any other market except apple. This is

because any product that is produced by apple will make the customers have much passion and

always ready to buy it. The financial strategy in apple company is based on the unique features

of the products which are hard to emulate and thus always attracting and sustaining their

customers.

Market strategy

Having an efficient marketing strategy is an important aspect of any business

organization. The major marketing strategies employed by the apple company are the positioning

of the brand and the segmentation targeting. Apple uses the lifestyle of the individual in the

process of doing its segmentation. One of the segments is the urban population which has the

largest buying power of apple products; these are the individuals who are always the early

adopters of various changes in life more especially technology.

Business level strategies of Apple

Product differentiation

Business organizations employ marketing strategy of product differentiation, so ad to be

able to distinguish their products from their competitors. Since the apple company started, it has

steadily employed the product differentiation strategy to separate its service and products from

their other competitors in the same industry. From the first introduction of the Macintosh

computers, the iPod music players to the ipad and iPhone mobiles the company has used the

product differentiation strategy in targeting various customers and also sending a strong

message that their products stand out among others (Tetyana Demydas, 2008). Another Apple

business strategy entails, expanding and building on the online and retails stores as well as the
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third party distribution network so as to be able to effectively reach all of its customers and give

them the high quality sales. In addition, the company continues to expand its platform for the

delivery and discovery of various digital contents by the use of the iTunes stores.

Apple has always tried hard to increase its market demands by product differentiation

which majorly involves making the product attractive and unique. The apple products have

always been designed to be ahead of its all competitors despite the severe competition

experienced. Now the company has been able to create demand of its products and thus giving

the company the powers over the prices of the product through innovative advertisement,

differentiation, ensuring brand loyalty and also introducing new products.

Premium prices

Apple vision is always to create a premier product that will be charged a premium price.

The lowest priced products are always priced mid-range, but the company ensures that high

quality products are provided. The user interface and the hardware are designed to ensure that it

provides a lot of value for the product prices which ensures that the profits are highly sustained.

The strategy of marketing and pricing ensures that the company always makes products with

high quality that the competitors will find it difficult to imitate and sell them at lower prices. This

pricing ensures that the company is competitively advantaged.

Apple’s Corporate Level Strategies

Strategic alliances

Apple has been able to create several strategic alliances with many companies in its

history ranging from the Intel and the IBM. The company has been able to apply the non-equity

cooperative strategies in its alliances. In addition, the alliances were always made in accordance
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with the set strategic objectives which in some instances posed some risks apart from the

expected benefits. The major well known alliances that apple has made in its history are the

alliance with Motorola and IBM and the alliance with the Intel company.

The apple-IBM-Motorola alliance was formed in the year 1992 the main purpose of the

alliance was to counter the competition from Wintel. The alliance was to come up with an

operating system with an innovative design so as to challenge Wintel. This strategic alliance

resulted in the formation of the performance optimization with the enhanced RISC- performance

computing unit, and the same product was later used by the apple company in the creation of the

Macintosh system.

The alliance with Intel happens in 2006 which majorly entailed the creation of the

Macintosh computers that were equipped with the microprocessors from Intel. This alliance was

strategic since it benefited IBM by increasing the base of the customer and the same time it

enables apple company to compete effectively with its rivals like the Dell due to the use if the

high performing chip produced by the Intel company.

Vertical Integration

Apple company is vertically integrated since is able to carry many of its processing

operations without support from other companies. The apple company is a software company,

hardware, retail, and services company. Many companies in the same industry are not able to

manage all these disciplines, but for apple, it has the all four entities working together

harmoniously. The company now controls the essential parts of the chain used in the process of

making and selling products (Tetyana Demydas, 2008). Apple Company is able to create very

good software, owns core software and always optimizes the same software for the hardware and

also equips them with the web services. Competing with a company that is vertically integrated

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like the Apple, it becomes hard since they lack control of both the operating system and the web

services.

Horizontal Integration

Although the Apple Company has tried hard in its vertical integration, the company still

expands horizontally. For I instance although the company is big it does not have its own

manufacturing facilities because it produces the majority of its products in China due to the low

manufacturing cost provided there. This shows that this big company has not expanded

vertically that much in its production processes since they now outsource this tasks by giving

other companies the opportunities to produce various product components for them. It has

become easily for the company to grow horizontally than vertically since it has been able to

expand its market share globally by occupying the similar businesses worldwide.

Recommendations

Considering the SWOT analysis given above, it indicates that Apple Company has major

strengths that it can effectively use in addressing its weaknesses. Moreover, the company has the

ability to use the same strengthen in exploring its opportunities so as to be able to expand its

network distribution. For instance, the company has the rapid innovation processes as well as a

string brand image. Therefore the company should employ these positive forces in developing

new and unique products frequently so as to compete effectively in the market. However, the

company also faces major threats like the product imitation as well as aggressive competition

from the rivalries. The best action to take so as to address these threats are , creating a strong

patent portfolio and also sustain the innovation strategies so as to sustain competitive advantage

as the competitors try hard to catch up.

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Considering the business level strategy, Apple Company is more entrenched in the

manufacturing of the Pc software and hardware, and it seems that the company is relatively

reluctant to change its business practices. This can be a possible disadvantage for the company

because of technology changes due to advancement, new things are coming up, and the company

should work hard to ensure that it is not left behind. In addition, the company still repeats the

mistake of compatibility as it always tries to be one company that wants to do everything for

itself since they are not ready to relinquish control. It their competitors avoid this mistake and

become open to collaborations and partnership with the high companies, then apple will face a

great challenge.

In addition, the company should continue with its good product differentiation strategy,

the outsourcing strategy and also ensure that it promotes the economies of scale so as to decrease

on the cost of production and continue to grow further. Moreover, the company should also focus

more on the customer service strategy as well as aggressive marketing strategies to be able to

drive the users from their competitors like Microsoft to Apple and also get a large market share

then their competitors.

The company should not also just relies on its already existing competencies while

competing in the consumer electronic market; it is important for it to continue coming up with

other new competencies so as to get predominant and accelerate towards self enhancement.

Furthermore, Apple Company should have a close relationship with the education institution as

well as the gover4nment which are the major sources of the profit in the market as most of its

markets are also the schools.

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Conclusion

The apple company is one of the largest and valuable technology company i9n the world

today. That is mainly involved in manufacturing the electronics, offering online services

personal computers and the computer software. it contributes a large revenue to the American

economy due to the large sell it makes worldwide. Considering the company performance, it

indicates that it has a strong financial base. The company has used several strategies to ensure

that it always compete successfully with its computers. With the good leadership skills and the

organizational structure and culture employed in the company, it is our belief that apple is going

to expand more in future and come up with other new and unique products that meet the needs of

its all customers to their satisfaction.

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References

Charles W. L. Hill, M. A. (2016). Strategic Management: Theory & Cases: An Integrated

Approach. New York: Cengage Learning.

Chuck Williams, T. C. (2011). MGMT. New York: Cengage Learning.

James McGuigan, R. M. (2008). Managerial Economics: Applications, Strategies, and Tactics.

Mexico : Cengage Learning.

Leslie Hamilton, P. W. (2015). The International Business Environment. united Kingdom:

Oxford University Press.

O'Grady, J. D. (2009). Apple Inc. London: ABC-CLIO.

Porter, M. E. (2008). Competitive Advantage: Creating and Sustaining Superior Performance.

New York: Simon and Schuster.

Tar, A. (2015). Apple SWOT Analysis. Mexico: GRIN Verlag.

Tetyana Demydas, D. M. (2008). Innovation and Product Differentiation in the Apple Market: A

Study of Club Varieties. Maastricht: Shaker.

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