MGT510 Strategic Management

Introduction

Apple Inc. denotes an American tech firm established in 1976 by Ronald Wayne, Steve Jobs, and Steve Wozniak. Since then, development and expansion has made Apple one of the most prestigious multinational global conglomerates (Hacklin, Björkdahl, & Wallin, 2018). The firm offers a wide range of online services, computer software, as well as consumer electronics. The current paper uses Porter’s Five Forces Model to determine the competitiveness of Apple in Australia.

Porter’s Five Forces Model

Competitive Rivalry

The competitive rivalry component of the Porter’s Five Forces model explores the influence that rival brands exert on each other (Mathooko & Ogutu, 2015). Apple faces aggressiveness rivalry from other brands including LG Electronics, Samsung, Blackberry, and other rivals engaging in endless advertising campaigns, innovation drives, as well as imitation.

Buyers’ Bargaining Power

The bargaining power of the customers denotes a component that explores the impact of buyers’ decisions and actions on a business. Buyers in the tech industry enjoy low switching costs, particularly when pursuing customer satisfaction (Khan, Alam, & Alam, 2015). The purchase (in terms of volume) of individual buyers is negligible when compare to the total revenues generated by Apple’s business model. Individual customers command little bargaining power, but the ease of switching brands creates a strong collective bargaining power.

Suppliers’ Bargaining Power

The supplier component of Porter’s model highlights the influence exerted by the suppliers when imposing their demands on the business. The number of suppliers in the tech industry is very high (Khan, Alam, & Alam, 2015). The company can switch suppliers easily when in need of different inputs. There is no need for Apple to prioritize issues relating to suppliers because they are incapable of hurting business operations significantly at individual level.

Threat of substitutes

The current component deals with the ability of substitute products to attract buyers who would otherwise buy from Apple. Substitutes for Apple’s products have flooded the market, although they cannot hurt Apple’s business because they lack the necessary quality to compete with her products. According to Türkay, et al. (2016), Apple guarantees top quality performance of her products by focusing on handling R&D, design, development, pre-launch tests, and product launching effectively.

Threat of New Entrants

Entry and gaining footing in the tech industry is challenging because nurturing a new brand to compete with brands like Apple and Samsung requires huge financial resources. Multinational companies have already capitalized their brands through quality performance (Montgomerie & Roscoe, 2013). New entrants may take years before they can break even.

Inter-connectedness of Different Aspects of the Competitive Forces and their Overall Impact on Apple and the Industry

Apple’s strategies partly address the forces associated with the prevailing external business environment. According to Adeleke, et al. (2018), the external business factors can limit the efficiency, effectiveness, and productivity of an organization. Based on the findings from Porters’ Five Forces Model, Apple must raise her competitiveness and adapt her strategies to align with the ever-increasing bargaining power of the customers or buyers.

Apple is pursuing the objective above by embracing continuous innovation to gain a competitive advantage over her rivals (Montgomerie & Roscoe, 2013). The firm continues to attract buyers by offering quality market offerings. Apple should now emphasize quality supply of inputs to keep her products above the rating of the substitutes. The company should not worrying about new entrants.

References

Adeleke, A. Q., Bahaudin, A. Y., Kamaruddeen, A. M., Bamghabe, J. A., Salimon, M. G., Khan, M. W., & Sorooshian, S. (2018). The Influence of Organizational External Factors on Construction Risk Management among Nigerian Construction Companies. Safety and Health at Work, 9(1), 115-124. doi:10.1016/j.shaw.2017.05.004

Hacklin, F., Björkdahl, J., & Wallin, M. W. (2018). Strategies for business model innovation: How firms reel in migrating value. Long Range Planning, 51(1), 82-110. doi:10.1016/j.lrp.2017.06.009

Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management, III(6), 955-967.

Mathooko, F., & Ogutu, M. (2015). Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3).

Montgomerie, J., & Roscoe, S. (2013). Owning the consumer—Getting to the core of the Apple business model. Accounting Forum, 37(4), 290-299. doi:10.1016/j.accfor.2013.06.003

Türkay, M., Saraço?lu, Ö., & Arslan, M. (2016). Sustainability in supply chain management: Aggregate planning from sustainability perspective. PlosOne, 11(1). doi:10.1371/journal.pone.0147502