INTRODUCTION
Apple Inc. is the world’s largest technology company, which was founded in 1976 by Steve Jobs and Steve Wozniak, in Los Alto, California. Steve Jobs’ mission was to bring an easy-to-use computer to market to become the market leader in the technology industry. The main products of Apple Inc. include iPhone, iMac, iPod and latest advanced product IPad, which is on the verge of creating another revolution after Apple iPhone. The objective of Apple is to consistently improve its product line and deliver quality products with value-added services to its customers, in order to gain competitive and customers’advantage in the long run.
Corporate sustainability is in the heart of the Apple, which helps the company to grow and prosper. Moreover, the company gained a first-mover advantage in the technology industry for personal computing and electronics. Furthermore, Apple is the first organization that produces a modern day MP3 player and the first organization to combine this with internet connectivity and cellular devices, which has created a level of prestige for Apple Inc. Apart from that, the purpose of the company is to fulfill the changing customers’ needs and demands, in order to maintain a level of prestige.
However, due to the globalization of world economy, it is becoming critical for Apple to sustain their business. Nowadays, consumers are demanding more environmentally friendly and easy-to-use interface products, especially youngsters and business people, which are in high quality and competitive in prices. Therefore, it is highly important for Apple Inc. to create new opportunities for the company and consistently innovative its products, in order to maintain its competitive advantage and prosper the long-term growth of the company.
Q. Perform an industry analysis of the smartphone industry. Do you believe Apple was effective in neutralizing the threats and capitalizing on the opportunities posed by the forces in the smartphone industry? If yes, explain how. If not, explain why not
PORTER’S FIVE FORCES MODEL
The industry analysis of Apple Inc. is regarding current situation of the company and their competitive position in the Mobile phones and computer market. Moreover, by analyzing the high competition, bargaining power of buyers and suppliers, and threats faced by the company from new entrants and substitute. Therefore, it is important to analyze and evaluate the industry through Porter’s five forces model, which is one of the powerful tools to understand the core power of the business.
Rivalry Competition
Rivalry competition is moderately high for mobile phone industry, as the market is dominated by various and leading competitors such as Motorola, Samsung, Nokia, HTC, Sony, LG Electronics, and Research in Motion (RIM). Moreover, Apple produces a wide variety of products to penetrate various markets and to gain a competitive edge. However, the iPhone is still covering a majority of the market share, and has successfully built a maximum number of loyal customers.
By competing and gaining high economies of scale and market share in the mobile industry, it is highly difficult for the new entrants with little experience. Moreover, in distribution, leading cellular carriers such as AT&T, Verizon Wireless, and T-Mobile have control over the networks and the mobile phones used in those networks. The intensity of the low differentiation products is high because many competitors of Apple copy products and design to reduce the differentiation status. However, Apple holds high product differentiation in the industry as the technology enables their product to be available to the Apple’s competitors to copy. Lastly, Apple is most aggressive in pursuing legal compensation against Android Platform and Android devices.
Threats of the new entrants
The threats of new manufacturers or entrants in the mobile industry are relatively low, except the corporations that already operate in the electronics industry such as Samsung. Moreover, it would be challenging for the new entrants to gain economies of scale and market share against major competitors. Furthermore, the product differentiation, capital requirements, government policies and regulations, access to distribution channels and expected retaliation are the high entry barriers for the new entrants.
However, the switching cost is the low barrier for the new entrants because of high industry costs, lower regulations present in the technology industry, and benefit outweighs switching costs. When Google Play Store and Android made their first appearances, Apple faced fierce competition from Android devices and handset manufacturers. Moreover, lower prices, more variety and comparable set of applications empowered Android phones and devices to become the most popular smartphones in 2014.......................
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