Apple's competitive strategy using Porter's five forces model

Current Event Analysis -- Apple's Product Innovation Leads to Profitability

Apple Inc. (AAPL) is one of the most financially successful high technology companies globally today due to their exceptional management of the five forces Dr. Porter describes (Porter, 81, 82) in his Five Forces Model, which is shown in Figure 1. This is the framework used for analyzing the two articles cited in this analysis. The first article is about the Apple iPad, and the second, about the best-selling smartphone the Apple iPhone 4. In each of these articles are ample proof as to how effectively Apple manages the five forces that shape competitive strategy (Porter, et.al.).

Analyzing the Market Acceptable of the Apple iPad -- A Runaway Success

Apple reported that in the first thirty days of the iPad being available, it sold 1 million units and within 80 days, 3 million were sold, equating to a 37,500 per day run rate. Apple relies in innovation as its primary source of differentiation, yet to support this strategy, the company had to ensure its suppliers were coordinated with production schedules, and that suppliers were able to meet the unique and demanding requirements the new product. This shows how exceptionally strong Apple is at supplier management. As Apple has a very strong and committed customer base, they have the advantage on Buyer Power as well. The strength of the Apple brand and the exceptional loyalty of its customer base contribute to the company's ability to negotiate for exactly the components and products they need from suppliers.

Second, Apple also has been able to achieve competitive rivalry by being able to attract, retain and grow the loyalty of customer's for its iTunes platform. The fact that iTunes is compatible across the entire spectrum of iPod/iTouch, and iPhone models has transformed Apple's business model by creating significant switching costs, further ensuring their market leadership. This has also created a defensible market position with suppliers and partners of all forms of digital content, from music and movies.