The market performance of Apple Inc. has been impressive and stable over the years. Since its inception, the company has braved the dynamics of the market to expand to capture the global market through its uniquely designed products. Rothaermel and King (2015) report that by February 2015, Apple Inc. was the first company to have a market valuation of greater than $700 billion. Achieving such a milestone denotes numerous hard work, commitment and innovation to keep the company registering progressive success. This essay examines the journey of Apple Company and unveils the secret to its success. Furthermore, the essay analyses the challenges, threats and opportunities lying ahead of the company.
The growth of Apple Inc.
The conception and birth of Apple Company can be attributed to Steve Jobs and Steve Wozniak who founded it as a personal computer company branded Apple Computer Inc. in 1976. To raise capital for the company, Jobs sold his Volkswagen and together with Wozniak and a few friends they begun to assemble personal computer in Jobs garage. In 1978, Apple II, the first personal computer was launched and sold at $666.66. The launch of an IPO (initial public offering) exposed the company to the growth truck and since then, the company has recorded a continued rising market value.
In 1980s, with the continued launch of personal computers products to the market, Apple Inc. had to face competition from other computer producers. For instance, IBM’s open architecture became easily imitable providing room for sprouting of other companies like Dell and Compaq. Other innovations by IBM, specifically development of Microsoft’s DOS operating system and Intel substantially increased IBM’s profitability and market coverage. Apple responded with introduction ofMacintosh with operated on a graphic utility interface (GUI). In 1985, another wave struck through Apple Company when Steve Jobs was forced out of Apple Company due to power struggle with CEO John Sculley (Rothaemel and King 2015).
Struggling to keep its position, maintain its dwindling market base in a highly competitive environment, Apple Inc. welcomed back Steve Jobs in 1997 and this opened a new door to extensive progressive and prosperous growth. Jobs return as CEO saw Apple Company taking a new turn towards prosperity. As the CEO, Steve Jobs embarked on a transformation mission of Apple through outsourcing manufacturing to Taiwan, scaling down distribution system by opening Apple retail stores to serve its customers. The launch of a revolutionary website to sell Apple products to customers provided Jobs with the much needed avenue to connect with customers on a global market.
The change of operating system to a more open and accessible UNIX based system, Mac OS X and Intel made Apple computers able to run on any operating system. The response from this switch was the growth of the company’s stock price from $6 in 2003 to $80 in 2006 surpassing its competitors. Jobs further appointed Jonathan Ive as head of in-house industrial design group. The result has been production of products with distinct themes that have been appealing to most of its customers. Below is a summary of Apple’s resources, capabilities and core competencies
Resources
Desktops
Portables
I pods
I pads
I phones
Capabilities
Venturing into automobile production
Exploring overseas markets
Building a global brand
Core competencies
Solid and transformative management
Innovative products
Articulate and appealing marketing strategy
Factors shaping growth of Apple Inc.
The growth of Apple Inc. and its cumulative profits is subject to various factors both favoring and hampering the business. The key factors shaping the growth of Apple can be classified under political, economic, social, technological, legal and environmental factors.
Political factors
The success of the business in a country largely depends on the political governance. For many years now, America has had political stability and smooth transitions of governments following election of new presidents in successive elections. Political stability provides peace and security of business and Apple has relied on that to invest and build their business. Steve Jobs, in an effort to revamp Apple Company, upon his return as the CEO outsourced manufacturing to China. This has made the company to be heavily dependent on lower cost manufacturing in China. In this case, political unrest in china could ruin the Company’s business.
China’s growing nationalism and anti-Americanism, the philosophies championed by China’s government seeks to encourage Chinese nationals to buy products from Chinese established firms and reduce products from American companies could disrupt Apple’s market in china thus affecting its sales and returns. Furthermore, Apple’s close association with China could lead to political issues especially from countries like America and Japan should they perceive China as a threat.
Economic factors
Production and business of Apple is highly engraved on the availability of market and customers who buy Apple products. Availability of market has been responsible for immense returns accumulated by apple. Going forward however, there are some potential economic factors based on the changing economic environment. Increased labor costs in china could disrupt the low manufacturing costs currently enjoyed by Apple since it could raise the cost of production of some products.
America is exhibiting a growing stagnation of the middle class income earnings among its population. This means that, the customers may not be able to purchase higher-end consumer electronic products produced by Apple. A stagnated market could signify stagnation in sales of the product thus affecting the revenue accumulated from the sale of Apple products. Furthermore, in as much as Apple Company seeks to tap into the global markets, a strong U.S dollar could increase exchange rates making Apple products more expensive in foreign markets like developing countries thus potential customers would opt for cheaper products from competing manufacturers.
Social factors
Africa is increasingly becoming the market for most of products from developed nations. Thus, Apple company would have to market if products and tap the market to enjoy the growing consumer spending in such markets. However, venturing into this market could be a hurdle since African people are unfamiliar with Apple products. In this case, consumers in overseas markets and the young people in Apple’s already established markets like United States lack strong emotional attachment to Apple products.
In a bid to survive the economic times, there is a growing backlash against expensive and stylish products among some consumers in America and Europe. This further reduces sales and revenue from Apple products. The venture of Apple in the music industry and specifically its music marketing strategy has raised public resentment and criticism championed by major recording stars in United States.
Technological factors
Technology is what Apple relies on in producing their unique, stylish products which they market to consumers. However, key competitors like Google and Samsung have demonstrated ability to produce products that match those of Apple. For instance, after Apple rolled outs its digital payment platform, Apple pay, it took Google less than a year to produce Android pay, a platform that matched the capabilities of Apple pay. The stiff competition from such company demeans the uniqueness of Apple signature products.
Apple is currently limited in terms of new consumer products it’s offering to the market. In this case, many of its new offerings will be experiencing limited market. The growing use of smartphones and tablets means that apple’s personal computers will decline in popularity. Additionally, unlike its competitors, Apple’s proprietary operating systems can limit the variety of applications available to smartphone users.
Legal factors
Apple’s entrance to the highly regulated financial services was ushered through the launch of Apple pay. This means that the company is subject to increased regulation and government oversight and potential increase in litigations arising from various financial transactions through its Apple pay. Additionally, with its planned venture into automobile manufacturing, Apple could be immersing itself further into increased business regulatory, insurance and litigation costs. The intellectual property laws that cover software and music are also binding on Apple Company and its operation.
Environmental factors
The biggest environmental issue facing apple is the disposal of E-waste. The disposal of nonworking electronic devices and other associated accessories is a major headache for the company. Increased global campaigns for restoration of environment through curbing of pollution and environmental degradation, especially those caused by electronic waste makes Apple at the center of attack from environmentalists. Climate change and global warming effect could disrupt trans-oceanic transportation cutting down Apple’s supply chain. Despite this macro-environment and its effect, Apple Inc. keeps forging ahead with business. Here is a
SWOT analysis of the company.
Strengths
The key strengths that have been behind the growth and prosperity ofApple lie in three key aspects. First, Apple has been innovative in all its products. Each production has come with improved graphic design making the products unique and quite stylish. The innovations have significantly boosted the appeal of the products in the market making the company rise above its competitors. Secondly, Apple Inc. has sought to diversify its products to meet the various needs of its customers. Key products of apple include personal computers, I pads, I pods, I phones, Apple pay and Apple TV. Third, the key driver to Apple’s growth has been its marketing strategy. Each of Apple’s production has been accompanied by well-crafted advertisement that not only seeks to market the product, but the image and brand of the company. This has created a network of customers emotionally attached to the company assuring Apple of a solid market.
Weaknesses
Apple’s products have largely been viewed as being of high class. This has been partly because of most of adverts featured prominent and wealthy leaders. This creates an impression that the products cannot be affordable to the low income earners, some who out rightly shy away from purchasing Apple products. Furthermore, Apple smartphones features some limitation in variety of applications available to users. This makes some customer opt to buy smartphones from competitors like Samsung who provides customers with unlimited experience of applications.
Opportunities
Africa and overseas market is the next big thing. Apple can easily tap into the global markets to boost its sales and revenue. The overseas marketing is increasingly growing and companies that are investing in such markets are slowly building their future. In addition with the availability of overseas market, Africa and other global markets provide Apple with an opportunity to cement its brand as a global leader in the electronic industry.
Threats
The PESTLE analysis above has highlighted numerous issues that could impact Apple Inc. and its operation especially on the macro-environment. However, there are two main immediate threats that can easily hamper the operations of Apple. First, there is increased competition. Electronic companies are designing products that eat into Apple market as most of these products exhibit potential to match those of Apple and are available at cheaper price. China based firms like Tecno, Infinix, Xiaomi and the dominant competitor Samsung are posing a serious threat to Apple. Secondly, Apple’s venture into financial services provider and its planned venture into automobile production presents the threat of litigations that could be so costly and even disrupt its performance.
Key findings
Analyzing Apple Inc. from its inception, through the various dynamics and its dominance in the market today, there are key findings that should be articulated. First, Apple’s success has been attributed to tireless efforts from its management. The contribution of Steve Jobs from 1997 to 2011, as the CEO, saw Apple progress from a struggling company to a dominant player in the market. Since 2011, Tim Cook has continued the works of Jobs by propelling Apple to the glory it currently enjoy. Secondly, Apple’s unique marketing strategy has immensely contributed to its glory. The creative marketing of Apple’s image as compared to single product created a solid customer base since some customers opted to choose Apple for all their electronic products.
Financially, Apple is a stable company reporting profitability. Having a market valuation of over $700 billion is a solid achievement. Finally, financial sustainability can be attributed to good accounting. Apple Company’s records present well balanced, clear and articulate accounting documenting revenue vs. expenditures and all the accounting jargon. A result of good accounting has been the recipe for the company’s investments and continued productions and growth.
References
Rothaermel, F and King, D (2015): Apple Inc. McGraw-Hill
