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Business
Internal Analysis of Apple
Apple is a well-known firm, to assess their position and strategies an internal analysis looking at some of the main strengths and weaknesses can be conducted and consideration of the firms competitive advantage. It may be argued that the strengths are greater than the weaknesses, with the firms' ability to create and leverage strengths leading to the competitive advantage of differentiation.
One of the firms major strengths is the way that the products are designed; in terms of functionality and appearance. The firm sees its product range as more than simply high tech items, but as lifestyle goods that empower users and improve lifestyles (Apple, 2012). A key aspect of the products, including the MacBooks, iPods, iPhones and iPads is the high level of integration. All the goods use the same, intuitive,...
In addition apps which are bought for one product in the range, can be used on the same users other units. The functionality is supported by the appearance; the units are designed to be attractive, with a simplistic but clean design that appeals to the target market. The design of the products has seen the firm gain a very high level of customer loyalty, so much so, that many of the users do not even consider other brands in the purchase process, often buying multiple products from the firms range (Kotler and Keller, 2011).
The second strength of the firm is in the operations, with a high level of control over the supply chain, and a low level of capital tied up in stock. At any point in the firm has only five days worth of stock on hand and Gartner has rated Apple as…
The second strength of the firm is in the operations, with a high level of control over the supply chain, and a low level of capital tied up in stock. At any point in the firm has only five days worth of stock on hand and Gartner has rated Apple as having the worlds' best supply chain (Gartner, 2012). Part of the efficiency is with the use of outsourcing; the firm exercises a high level of control through long-term relationships and strict contracts with the suppliers, and many goods sent direct from the outsource supplier to the end consumer as they are ordered, and Apple stores hold only minimal stock (Nui, 2012).
The last strength of the firm may be seen with financial performance. The company is highly profitable, performing well above industry averages. The current net profit margin for Apple is 23.46% against the industry average of 13.28% and has low debt levels (MSN Money, 2013).
When examining the firm it is apparent that there is a strong level of customer loyalty, with the firm benefits from repeat purchases. The image of the products as empowering users has created an image different from any other (Kotler and Keller, 2011). Michael Porter has argued that there are two main sources of competitive advantage; cost advantage where a firm is able to gain superior profits, and differentiation, where the firm is able to add features that the purchasers will value, which are not provided by other suppliers (Mintzberg et al., 2008). Apple have several sources of differentiation, the design and features, often with the firm being seen as an innovator, as well as the intangible value that these create with the loyalty and association in terms of brand value and associations which these create. The brand is perceived as a premium brand which also appeals to the target market (Kotler and Keller, 2011). The firm clearly competes on differentiation. However, it is also clear that there is a good profit margin, which supports ongoing research and development to
The customers have often been left at dead-ends in the company's product strategy with only high-priced options left for moving into a next-generation product (Jonash, Koehler, Onassis, 2007). Suppliers have often been given inadequate information on new products, and if they are given new product designs, held to very stringent standards as to how they are used (Apple Investor Relations, 2011). Apple admits in its financial statements and filings
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