Apple Inc. - Overview, Vision, And External Threats

Vision of the Company

An American Multinational Company, Apple Inc. was establishes on 1st April, 1976 & incorporated on January 3^rd, 1977. The company has its headquarters in Cupertino, California. For the initial thirty years, the organization was named as Apple Computer, Inc., however on January 9^th, 2007, they detached the word “Computers”, so as to reflect the continuing expansion of the company into consumer electronics market in addition to its traditional focus on personal computers. Apple Inc. is a public limited company which designs & markets personal computers, computer software & consumer electronics. The organization has 496 retail outlets in 21 nations as of February 2016 & an online store where software & hardware products are sold. As of December 2016, Apple Inc. had 116000 employees worldwide & had annual revenue of US$215.639 billion in its financial year 2016 (Dedrick, Kraemer & Linden, 2010).

Vision of the Company

The 4 pillars of their vision set out the long term direction for the organization- where they want to reach & how they are going to reach there.

• Apple Inc. works to create a better future every day.
• Apple Inc. helps individuals look good, feel good & get more out of life with services & brands which are best for others & as well as for them.
• Apple Inc. encourages individuals to take every day small actions which might sum up to a big transformation for the world.
• Apple Inc. develops new means of performing business with the motive to double the size of their organization while decreasing the impact on environment (Apple - Supplier Responsibility, 2014).

Apple Inc. has continuously believed in power of their brand to enhance the quality of lives of individuals & in doing the correct things. As the business of Apple is growing, so are the responsibilities for them are growing. The organization recognizes that global challenges like climate change issues. Seeing the broader influence of its actions is entrenched in its values & is an important part of which they are (Nickels, Mchugh & Mchugh, 2009).

Apple Inc. operates in 2 primary industries:

• Delivery of Media & Entrainment
• Computing – Software & Hardware 

Apple has continuously remained under extreme rivalry within the entertainment, software & computer sector. “Observing back to 2004… Each time when Apple had tried jumping into the lead in their product category since last two decades, it faced difficulties in supporting its leadership position.” In order to understand the reason behind Apple industries being so competitive, we will be using Porter’s five forces model (Ries, Trout, 2011).

The total industry threat for the industry space which Apple inhabits (entertainment & compute equipment distribution) is a big threat sector. The company should endure pursing economies of scope (i.e. offering iTunes with ABC television shows) & product differentiation (i.e. ease-of-use & style of iPhone) to maintain their persistent competitive advantage in the sector (Holley, Pieracy & Nicouland, 2010).

• Computer Software & Hardware: Open Source software like the Open Office applications & Linux Operating System are threats for both Microsoft & Apple. The low (often, free) prices for the software might permit it to surpass Microsoft & Apple, particularly in emerging markets like China (Branstetter & Lardy, 2011).
• Music Products: Key online retail stores like Amazon are thinking of entering into the online music marker. Amazon might become a tough challenge for Apple because Amazon has a wide presence on internet & having a good name in the household field. If the key record labels (Warner, EMI, Sony & Universal) negotiate better terms with new competitors to iTunes, Apple might not be able to offer few of its music content which is being presently offered. The key music labels dislike dollar per song pricing of Apple. They will desire to gain greater revenues with “variable pricing”. With the pricing strategy being variable, the songs which are less popular would be less than $1 & the songs which are most popular will be higher than $1. Even though Apple has recently renewed their agreements with labels, there might be provisions which permit future changes in the model of pricing(Wangjing, 2011).
• Suppliers: The recent shift of consumers to the processors of Intel processors might create a substantial threat to Apple Inc. Intel-compatible processors are being produced only by two companies, i.e. AMD & Intel; there are strong potentials of having implicit oligopoly & collusion power amongst these providers. The purchasing of Apple should now directly strive with Dell, Lenovo & HP. If exclusive agreements or shortages materialize; Apple might face issues with procuring raw materials. Apple must ponder additional sources like AMD (Ferrell & Hartline, 2014).

Like other big software products, Apple software also has security vulnerabilities which hackers might exploit. A substantial exploitation in coming years might destruct many households & companies adopting Apple products. This could impact the future customer purchasing decisions. Apple is enjoying a competitive advantage, since their OS X is stable & mature because of its foundation on BSD Unix. In reality, “compute security people back at FBI HQ use Mac’s running operating system X.

Apple Inc.'s Primary Industries

But greater usage of Apple products is stimulating hackers to target this platform. In 2007, there are records of the first known Apple OS X worm. This was spreading to other users by using iChat instant messaging & was removing files from their Mac computers. If Mac OS X becomes widespread of a target like Windows, Apple’s professed differentiation as the most secure platform might vanish (Security Threat Report, 2014).

Sony is an instance of a competitor with a unique position against Apple. Numerous songs for Apple iTunes are supplied by Sony. Sony has also developed a Walkman portable music player version which competes directly with iPod. Sony is trying to vertically integrate forward directly to the music buyers. Sony incorporated their music system (Mora) into the Sony Walkman. Sony is dispensing certain songs exclusively on Mora. It is currently being targeted customers of Japan. If Sony is able to attain additional momentum (like collaborating with other record labels); the services offered by Sony might present tough challenge to iTunes in additional markets (Tokerud, Janet, 2013). PESTLE Analysis of Apple Inc.

The PESTLE analyses assists in determining the current situation of Apple Inc., identifying impacts of political, economic, social, technological, legal & environmental factors. (Rogers, Abby, 2014).

• Apple can become the target of developing anti-Americanism & nationalism in China that might diminish their market share.
• Apple is one amongst the number of American technology organizations which has accrued a huge amount of money. The company had $49 billion in their bank account on July 14, 2016. Such a big amount of money is causing calls for greater corporate tax in the US, where income the major political issue has become income inequality.
• Apple is profoundlydependent on low manufacturing cost in China. Social & Political unrest in China might interrupt manufacturing or raises the cost of manufacturing in that country. There have been also calls to confine the import from China in the US in an effort to boost the manufacturing in US.  
• The close association of Apple with China might develop to be a political concern in the nations like as Japan & US if China has to be professed as a threat.
• The cost of determining alternatives to Chinese manufacturing might be big for Apple. This might consequence in increasing the Apple products prices.
• The dependency of Apple on the Chinese markets & manufacturing makes it exposed to the political unrest in the country.
• The dominant position of Apple in the area such as music might result in antitrust distress & political pressure to restrict their market share or break the organization up (Kotler & Armstrong, 2009).

• A strong US dollar might surge the exchange rates, making the products for Apple more expensive, which will impact the significant markets like China & Europe.  
• Deteriorating the incomes of middle class in few of the developed countries, comprising US, might reduce the prospective market for high end consumer goods such as the products being marked by Apple  (Armstrong & Kotler 2015).
• Increased cost of labour in China might carry off the cost advantage of few of the products of Apple.

• Ethical concerns regarding the manufacturing of Apple in China might restrict the appeal of their products amongst the consumers which are socially conscious.
• Shoppers in markets such as Africa & younger individuals in established markets of Apple, like US, lacks the strong emotional attachment with the products of Apple which helps in driving the sales.
• The close association of Apple with China might offend some prospective consumers in other areas, like Europe & North America, predominantly if there is a rise in tension with China (Crum, Rex, 2014) .
• The largest development in the spending of consumers in coming years would be in the world’s countries like Africa where folks are unfamiliar with the merchandises of Apple.
• The music marketing strategy of Apple has developed bitterness & has resulted in public criticism from chief recording stars which could stain the image of their brand.
• There is a backlash against stylish & expensive products amongst few of the Europe & US customers (Pisano & Shih, 2009).

• Competitors like Samsung & Google have established a strong capability of duplicating the services & products of Apple. Google has taken less than one year to develop their payment app, Android Pay that has same competences as Apple Pay. That means the signature products & services of Apple are no more unique.
• Increasing use of tablets & smart phones will decrease the demand for the popular Apple personal computers.
• The no. of new merchandises that Apple can develop is restricted. Most of their new products like Apple TV would have a narrow market.
• The trademarked operating system of Apple can restrict the diversity of applications accessible to the users of smartphone. (Linzmayer, 2016).
• The rising competency of cybercrimes makes the systems of Apple less secure & carry off one of their strongest competitive advantage: their repute for greater level of safety & security.

• According to fresh reports, Apple is planning to enter another highly regulated sector, i.e.  Manufacturing of automobiles, entering into the automobile sector will increase the Apple’s litigation, insurance & regulatory costs. (Nicouland, 2013).
• By proposing financial services, Apple is capable of facing increase litigation levels.
• Recently Apple has entered the extensively regulated financial service sector via Apple Pay. That might result in increasing the regulation level & government oversight it faces.
• There is a dependency of Apple on diversity of products roofed by intellectual property laws like music & software, for most of its revenues. That leaves the organization extremely vulnerable to both litigation & piracy.  

• Pollution & other environmental harms from the facilities of manufacturing in China are raising issues. This might result in increasing the regulation & greater costs of manufacturing in neat future.
• The efforts being made by China to cut the greenhouse gasses & reducing the use of fossil fuel might upsurge the costs of electricity & cost of manufacturing the Apple products in the country.
• The key environmental issue that Apple is facing is the discarding of nonworking or used electric devices. The cost of device dumping, mainly those which comprises lithium batteries, might be more, Apple might be forced to accept that costs since the issues regarding such devices in landfills.

Apple must be capable of thriving despite of the above challenges, since it has showcased an impressive capability of adapting to a varying environment. Specifically, design & research ability provides Apple with an advantage which must push their growth of revenue for the coming decades  (Boone & Kurtz, 2012).  

• The company should lower the cost of their products & should maintain the similar standards of quality.
• The company could have a joint venture, i.e. they can amalgamate or merge with other companies and produce their products, and this might reduce the production costs as well as the additional costs of importing products from US.
• The company should work on its knowledge management, i.e. the company should work on the strategies to impart knowledge to the customers regarding their products.
• The company can think of opening more number of retail stores which will help in making the access easy for the products for the customers.
• The company should work on continuous innovations, i.e. they should try to bring more innovative products which will help them to expand more (Heyman, 2008).

For Others:

• In order to attract customers, the other companies including Apple should provide superior quality products at affordable prices. The companies should never compromise on the price for the quality, i.e. in order to reduce the prices of the products or making them affordable, the companies should not reduce the quality of the product nor should compromise with the services.
• Before manufacturing any product, the companies should always consider the customer preferences and should choose the products according to the needs of customers.
• In order to be competitive in today’s world and to maximize the profits or revenues, the companies should offer the customers with unique and different products, which none of their competitors are able to provide.

Conclusion

In order to succeed & grow, Apple should focus on few important facets. They should remain a steady commitment to licensing, push for economies of scope amongst computers & media, & transform a learning company.

Apple actually made a commitment to licensing. While it must endure, the company might desire to ponder additional forms of strategic associations. An equity strategic association might propose the organization with a chance to attain additional proficiencies. An efficient mode for an organization like Apple to achieve this will be in joint venture form (Yuan & Sharma, 2007).

The organization must endure pushing the new forms of media centric products. For the interim, the organization must not miss attention on its PCs. Macintosh computers were 42 per cent of sales of Apple in 2010. This very innovative organization exploits its 2^nd mover position. In coming near future, the company has to continue revolutionizing in order to expand the boundaries of both the computers & media.

As per the company’s action, I sense that the Apple’s mid-term performance would be strong. This period will give Apple sometime to overwhelm with the challenges if they move speedily. Because of this purpose, I sense that they might endure to succeed & might endure to outperform their peers.  

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