Internal and External Analysis of Apple Inc.





















Introduction
Apple Inc., is a multinational company that is known for its expertise in consumer electronics industry. Over the years, Apple has immensely grown to provide its customers with personal computers, cell phones, and computer software. Ever since Apple Inc., was established, it has operated in many different industries. From Personal Computing to Desktop publishing industry and to current consumer electronics industry, Apple has established itself has one of the most diversified companies. "Apple\'s 15 product lines were slashed to just four categories - desktop and portable Macintoshes, for consumers and professionals" (pg. 3). As a result, the attractiveness of the overall industry will be determined by industry analysis, generic strategy and internal analysis.
Industry Analysis
Threat of New Entrants
Although in the past, there were many competitors (such as IBM and Dell) in the industry, the threat of new entrant was possibly medium to low. This is because, in compa rison to other industries, the electronic indus try required extremely hig h capital investments mostly to support R&D and technological development . Over the years, companies like Apple has improved its supp ly chain, which has led to difficulty for new entrants to compete in the market .
Bargaining Power of Suppliers
According to the past market conditions of electronics industry, the bargai ning power of suppliers was low . Suppliers of electronic industry are once that supply components for phones, and Intel\'s chips for Apple laptops. As most of the electronics consist of similar hardware, this enables switching cost to be low; as a result bargaining power of suppliers is low as well. As the case specifies "Apple uses vertical integration where as other suppliers uses open system" (p. 2). This implies that in Apple could use its other long term contracts to produce needed components.
Bargaining Power of Buyers
Based on the electronics industry, it can be said that bargaining power of buyers is high. This is because, the price of the products had been extremely sensitive due to which buyers would switch to a different company with similar product. The buyers in this industries are retailers such as Wal-Mart, and Best Buy. For a company like Apple (who has maintained consistency in their pricing of each product), mid income consumers would not want to spend extra on something that is already being offered by another company with lower price.
Threat of Substitutes
Threat of substitutes in the e lectronic industry is medium to low. As technology started to advance, customers feel more attracted towards new inventions of technology. There are very few who woul d prefer books, and newspapers. In other words, people would rather prefer to use their phones to read a book rather than buying an actual book from the book store. When Apple was established there were certain items already available in the market (such as VCR\'s, DVD\'s, and regular telephones). As threat of substitutes starts to increase (which is the present situation), Apple\'s profit starts to decrease
Rivalry among Competitors
The intensity of rivalry among competitors is extremely high in the consumer electronics industry. Major competition comes from companies like Apple, IBM, Dell, HP and Samsung. Not only that "Online music stores such as Amazon.com, Napster, and Walmart.com offered individual song downloads at competitive or discounted prices to iTunes. Most competitors offered songs to play on various devices including iPod" (p.9). As competitors were coming up with identical products at lower cost, demands for iPods was decreasing. As a result, Apple did not have a competitive advantage anymore.
Generic Strategy
Over the past years, Apple Inc., has focused on many different generic strategies. These include: premium-price differentiation strategy by Gilbert Amelio, and low cost strategy of John Sculley. Overall, Apple Inc. followed a focused differentiation strategy. "Focused differentiation strategies are keyed to offering carefully designed products or services to appeal to the unique preferences and needs of a narrow well-defined group of buyers" ( Mortez, Ak bari, Hossein-Nejad, p. 108). Apple Inc., is a company that does not sell its products for lower price that its competitors. As a result, its innovative products have been targeted towards customers with high earnings. When Apple launched iPod, many people purchased it because it was easy to use and that iTunes