Apple Incorporated is a multinational corporation which based in the United States. The company is a long player in the computer and information technology industry. Since it was founded in 1977, Apple has made tremendous developments in its products making it one of the major firms in information and communication industry. In a general sense, Apple deals in designing and selling of computer software, consumer electronics and personal computers. The company has been known for producing various products that have revolutionized communication in the world (O’Grady, 2009b). This has made the organization gain strong grounds in the industry and to have a peculiar or unique identity as compared to other companies in that deals with technological products. The branded products of the company include the Macintosh computers, the iPod, iPhones and the iPads. These are hardware products. Also, there exists various branded software that the company has developed. These include Mac OS X computer operating system; iLife suite for multimedia and creativity; iTune media browser; and iWork suite productivity. In addition, other software include Final Cut Studio, which is a professional package for photographing; the logo studio, which has software tools for producing music; the iOS, which is a proficient operating system for mobile phones; and Safari web software. These and other products have turned Apple into an icon in the software and hardware technology industry (O’Grady, 2009a).
By the end of the year 2011, Apple had 357 stores that are located in ten different countries across the world. Apple has a big online store from where it conducts online sales. As we speak today, apple has been rated as the largest trading company by marketing capitalization. Apple is the biggest technology firm globally in terms of the revenue it generates and the profits made by companies in the technology industry (Wang, 2012).
Analysis of the Competitive Forces and Strategic Issues Shaping the Smartphone and Tablet Industry
Smartphones and Tablets have brought about two major changes in the information technology industry. These changes are technology consumption that comes with the touch screen technology and its application and usability. The second change is the smartness of devices which covers the location, content and context of devices. This is usually refereed to as the exo-brain which is the level of knowledge applied in device innovation and development. The market has increasingly become consumers of technology. Therefore, customers value devices that have improved technologies in terms of the speed and the expansiveness of applications that can be handled by the devices in the market. Each company in the smartphone and tablet industry is struggling to come up with products that would appease the customers. This means that the devices have to have new features from the features compared to those of the existing devices (Sorensen, Gillis, Gulli and Warnica, 2012). These companies include Apple, Microsoft, RIM, Nokia, Google, and Motorola, among many others. The use of smartphones and tablets is also changing. The use of these devices in making business transactions is becoming common. This shows the importance that is attached to these devices and the need for quality of the products. For example, in 2011, the Blackberry phone services went off for quite some time. The company was forced to make an apology to its customers. This is because many people use the phone to make business transactions that were affected when the services went off. This incidence had a negative impact on product marketing (Stackpole, 2011).
The smartphone and tablet industry is undergoing transformation at a very high speed. It has transformed and sophisticated communication worldwide. There have been tremendous developments in the industry which have resulted in innovations that are revolutionary in nature. There has been a lot of competition by the companies in the technology industry. These companies compete in developing products that impact communication in different ways. The volatile competition in the smartphone industry can be clearly traced from the year 2003 when Apple Incorporated invented smart communication gadgets such as the iPod, later the iPhone and the iPad. These products utilize smart technologies. One of the best smart technology is the there dimensional video technology which was developed by Apple. The completion picked a heightened pace in the year 2008 where each company strives to put a strong foot in the market by way of product invention and innovation (Stackpole, 2011).
The tablet craze that was sparked by the Apple Company has resulted in the 3C market – that is communication, computer and consumer electronics. In the year 2011, the shipment of the tablet was booming. 2011 was reported to have had more that 65 million shipments of tablets. This marked a percentage increase of approximately 200 from the shipments of the preceding year – 2010. While Apple Incorporated has remained to be a major player in the industry with the iPad, many players have come in and are influencing the direction and growth of the smart technology market. Other companies are making the best use of their strengths in the 3C market by upgrading their brands (Stackpole, 2011).
In the tablet sector, Google Company has been very competitive more so by developing the android software. Android has made rapid market access. It could be said that Android is competing the Apple company in ma big way. The major strength of the Apple Company is that it develops in both the smartphone sector and the tablet sector. Since the beginning of the year 2011, Android has made tremendous sales across the world. Perhaps it can be argued that Android has adopted aggressive marketing techniques. This has made Android earn the attention which it is getting in the tablet sector. If you visit the major internet marketing sites for instance Amazon. Com you will find widespread adverts of Android. Android attained a more than 30 percent market penetration rate in by the end of the year 2011 (Wang, 2012).
The Electrical industry in Taiwan has contributed to the stiff competition, especially in the tablet sector. One of the companies that have stood strong grounds in Taiwan is OEM device makers. The touch screen panel industry of Taiwan has added a big value to the brands in the tablet market. For firms that have aspired to gain quick entry into the tablet market, the Taiwan based companies have been the best partners. This is because the touch screen technology hastens communication efficiency and effectiveness and has thus been liked by many consumers of technological communication products. Therefore, for products in the smartphone and tablet industry, this technology is becoming almost unavoidable (Wang, 2012).
For any company to remain relevant and or compete successfully in the smartphone industry more so in this second decade of the 21st century, it has to poses a number of attributes. The first attribute is innovation. Innovation is a must because the products in this industry have trendy characteristics. Therefore, they must be developed according to the demand in the market. The second attribute of products is reliability. The quality of these products must meet its usage as these devices do have battery life. They also have reception thus technological support should be provided to customers. Usability is also an important attribute of competitiveness for smartphone companies. Smartphones have intuitive user interfaces thus they must be designed well. Expandability is a quality of the devices in the smartphone industry. Smartphones are used in offering third party applications and thus they should be accompanied with timely update of their software. Of course, all these attributes cannot be met without financial capability. Companies need financial resources to carry out various aspects such as shifts in products, promotions, and making acquisitions (InfoBarrel, 2012).
The smartphone and tablet industry is being increasingly affected by the explosion of data in the telecommunication industry. There is a big challenge of managing data in the telecommunication industry. This challenge is aggravated by the developments in consumer regulations. The United States, for instance, has neutralized the network thus limiting the companies in the industry on investing in the network infrastructure. When it comes to consumers in the industry, smartphone users; for example, iPhone, continue to have strong loyalty towards the device more than the network under which they communicate with the devices (Ernst and Young, 2011).
The issues of environmentalism and safety cannot be ignored in these industries. This is especially in the manufacture of products in the industry that makes use of chemicals which are lethal. Worker safety conditions become a problem in the handling of gadgets during the manufacturing process. This has ben a big problem in not only Apple, but also other companies such as Nokia, Sony, Motorola, Dell, Hewlett-Packard and many others (Duhigg and Barboza, 2012).
Assessment of Internal Issues Facing Apple
The most important resource for Apple Incorporated has been Steve Jobs, who has been the CEO of the company for quite a long time. The other important resource of the company is its integrated system of software and hardware. The software and hardware have been produced by the company and marketed worldwide hence making the company to derive value from them. Under the leadership of Jobs, the company was molded to achieve big success. The company attained billions of value under Jobs. We cannot rule out the role of the engineers, designers and programmers of the company. They give the firm a ground on which to innovate and make an impact on the industry. However, these just represent the competitive forces in the industry. Steve Jobs is echoed for managing to combine the resources of the company through a strategic vision and objectivity. He also made valuable outcomes manifested in the products and services of the firm. Therefore, he gave the company a sustainable foundation and a competitive advantage over other firms. Unfortunately, Jobs died last year and management of the company was taken aback by his death. Even the stakeholders were shocked because they had a high level of confidence in Jobs. Getting a perfect replacement for jobs has been hard and whether a perfect replacement will be gotten, time will tell as in the trend of performance of the company. However, as it is, this is a major issue in the company (Masi, 2009).
The Apple the Apple Company has been performing well in the smartphone industry. However, this does not mean that the operations of the company have been smooth although. Apple faces a number of issues which touches on organizational marketing. Most of the issues that Apple faces have arisen form the competition between the other companies that deals in technological products (Mendoza, Lu, Ariana, Cen and Bailey, 2011).
For quite some time, it was held that the relationship of Apple with its competitors and customers has been centered on Steve Jobs, its former Chief Executive Officer. Steve Jobs had a lot of identity in the company. He was the man behind the corporate image that the company has today. His demise in 2011 has left a big management gap which is yet to be fully filled up. As it is in management, the change in leadership brings problems especially so when the new leadership has not undergone full transition. The company has been characterized with isolation. In this respect, many industrial analysts argue that it is a means through which the company uses to prevent leakage of information on technology development in the company. However, other analysts argue that the isolation of the company is denying it a lot of opportunities which would have been more beneficial to the company if it interacted with other companies in the industry (Mendoza, Lu, Ariana, Cen and Bailey, 2011).
In the last two years, the Apple Company made a lot of profits. However, the company has had problems with its shareholders arising from the way the company is opting to use the profits. This problem has been going on since the Tim cook took over as the Chief Executive officer of the company. The shareholders of Apple have been demanding share buyback. With the recent rise in stock price of the company, investors are putting pressure on Cook to put the accumulated amount of money to investment because the money is not adding value to the company and its shareholders. The Wall Street has been urging the company to utilize the money on its shareholders in the form of buybacks and dividends. The company seems not to support the idea. Some stock analysts and economists have argued that the company seems to take a conservatism approach in that it ignores advice from the Wall Street. This argument has been sparked by the actions of other big companies for instance Microsoft Corporation and Cisco Systems Incorporated. Microsoft began giving dividends to its shareholders back in the year 2003 while Cisco began the exercise in 2011. However, Apple is claiming that it is using the money in property acquisition and the acquisition of plants and equipment. The rate at which the company is buying assets is being questioned. Its competitor Google Incorporated has spent 12.5 billion US dollars to acquire Motorola Mobility. Google was also able to make over 54 acquisitions in less than one year. This happens when the returns of Google are far much lower than the returns of Apple (Reuters, 2012).
This poses a business risk to the company. Tim Cook and the board of the company have to sit down and establish the best way of relating with shareholders and other stakeholders of the company. They should focus significantly on the management of the company’s finances. If not so, the problem may escalate causing the company to fall out with the stakeholders thus giving its competitors an advantage. The other issue that faces the company concerns technical problems and defaults in some of the company’s products. The performance of the company has been relatively well in handling the product technical problems. This explains why the company has been able to stay competitive in the market (Dempsey, 2011).
For the last ten years, the Apple Company has become one of the wealthiest companies not only in information technology industry, but across all industries in the world. The reason behind its success is that Apple has become a power house in the production of technology-related products. The company, together with other American firms have set a pace in which has surpassed the ability of other companies in the information technology industry to match it. Working conditions for workers in the industry have come under immense criticism. Workers who assemble the iPads, iPhones and other products are reported to work under harsh conditions. There are varied problems in the factory most of which are environmental and unhealthy to the lives of the employees. According to reports from the company, employees are reported to work for excessive hours and their accommodation place is not very conducive. They live in dormitories which are crowded. They are also forced to stand for a very long time which affects them physically. The discussion on the harsh work environment became increasingly turbulent from 2009. This was when it was reported that 137 employees of the Apple plant in China were injured by a chemical they were using to clean the screens of the iPhone. In 2001, there were two explosions within a span of seven months in iPad factories in China causing the death of four people and leaving 77 people injured. Concerns of ignorance of management are being raised because the company managers had been alerted about the hazardous conditions in the plant in which the explosion took place. However, most companies become more concerned with issues that directly affect products. When products are not being directly affected, it will be rare for the company to give attention to the issue. This is no different with Apple. The issue concerning employees is a developmental issue and could be ignored when it is at the initial stages. This is when the production has not been compromised. The company should address the concerns of its employees as when this escalates; the consequences are graver and may seriously taint the image of the company (Duhigg and Barboza, 2012).
The Apple Company has attained a favorable stand in the industry that has been characterized by stiff competition. There are few companies in the information technology industry. The products that are manufactured in the industry are quite expensive. So the question that is asked is how the company has attained the position it has in the industry. This question can be answered by looking at where the company has come from with its products. When we trace the history of products we come across the personal computer. The personal computer was the genesis of the explosion in the technology industry. In the development of personal computer, Apple was there. Apple produced an improved version of the personalized computer, the Macintosh. There were high volumes of sales of the Macintosh in the market. This was the first step and the right foot for the company. From then the company has been keeping pace with the technological development owing to the speed at which technology advances. The company imposes competition to other firms through this using its strong ground in technology that is their brand. Competition starts from within the organization and follows the organization in the larger industry and the international market. The major worry of the company is how to maintain the pace of innovation given the fact that other companies are working hard to challenge it (Masi, 2009).
When Apple is compared to other firms in the industry I different dimensions fro instance price as well as the design that goes into the products, a linear relationship is seen. Companies that command highest prices for their product opt for the Apple products. On the other hand, those firms that compete on low prices of products opt for other companies in the industry. This mostly applies to the prices of the personalized computers. The Apple Company offers high quality computers which utilizes the polycarbonate plastics and solid blocks made from aluminum. Most other firms utilize cheap materials such as plastic. When prices are compared to the design of products and quality in the industry, the same relationship is witnessed. Support is the common external tool that the firm bases on when it is competing with other firms. Most of the Apple products are costly. This is because Apple provides support services to its customers. Companies which give support services sets higher prices on their commodities. Apple gives detailed support packages and deals. These services are offered both in their stores as well as on a one-on-one basis to customers. Thus, this justifies the price of its products (Masi, 2009).
External Stakeholder Issues in Apple
It can be noted that Apple is doing well in terms of expanding its production facilities in other countries of the world. This is especially in the Asian region that is experiencing rapid industrialization. This is a good indicator of development for the company. However, this development must take place within an environment which will not bring friction to the company. There is the industrial disaster that happened within Apple firms in China during the year 2009. These disasters posed a public relations crisis for the company with reports claiming that these disasters were caused by laxity on the part of the management. The warning had even been published by the Chinese Group. The manner in which the company responds to a crisis matters a lot. Apple has been a slow responder to crises. The crisis in China has affected the spread of company activities in the country and the entire Asian region. Apple is used to taking an after-response even for issues that could be solved and thus prevented from degenerating into crises. A good example can be noted in the enhancement of the working conditions of employees. The management of Apple has come up to announce that the company is working towards improving the conditions in their factories. Apple has mounted auditing campaigns in its factories, and this helps in the detection of abuses and other flaws in the factories. Corrections are made once these flaws are identified. The system is yet to attain its intended purpose in the company. From the audits that have been made by the company since the beginning of 2007, it has been noted that most of the suppliers violates a number of the codes of conduct of the company. Nearly half of the company suppliers were audited. The suppliers violated the law though many of the violations involved working conditions and not the safety hazards in the factories (Duhigg and Barboza, 2012).
Being a big and innovative company, Apple has very many customers and stakeholders who have an interest in the affairs of the company. Therefore, the company activities are closely monitored by these stakeholders who will always want to ensure that the company operations are always on the right track. Also, the competition companies usually monitor the activities of the company but with different intensions. The competitors will always want to trace the loopholes in the company and use this as a way of having their products compete the products of the company in the market (Paul and Rose, 2011).
The invention of iPhone was an important benchmark for Apple. However, in the year 2010, the company faced big public relations resulting from iPhone 4. The device had technical problems. This was according to reports from users that gripping the iPhone in a natural way resulted in the drop of the strength of its signal. These complain increased over a short period. It was very easy to identify the problems as users simple held the device and observed the network bars. The device had defects of its antennae. Nonetheless, the company stressed that there was no technical problem; and the then CEO, Steve Jobs, simply advised the customers to hold the device differently. This problem persisted for quite some time but ended up fading (Theroux, 2011). Apple has to pay much attention to its customers as the con summers of their products. There was a drop in the share prices due to the crisis. Technical problems are prevalent with technological products. Therefore, the company must guard against the complaints and observations from its customers with a lot of value.
Customers and shareholders closely follow the financial performance of a company. While the company has had a good financial performance recently, it is not fully engaging its stakeholders more so the shareholders its investment plans. This is likely to taint the corporate image and performance of the company as the customers may lose confidence in the company and opt out. For a company to maintain good a good corporate image, it must ensure that its stakeholders are given priority and give them a change to voice out their suggestions especially so suggestions concerning investments. This has not been the case. The company seems reluctant to buy into the idea of giving dividends to shareholders. This issue is building up and could become a crisis if the company will not find a right foot of handling the issue. The best way as suggested by market experts will be to consider shareholders first and motivate them through issuing out dividends (Dempsey, 2011).
The customers have very high expectations of the company. This could be both advantageous and disadvantageous to Apple. The disadvantage comes in the sense that a lot of pressure is mounted on the company when it thinks of new products because if the new products fall short of customer expectations, a public relations disaster will be imminent in the company. These expectations can only be met when the company invests significantly in innovative research. Unfortunately, the person behind solid innovations is no more and the company is still struggling with filling the gap (Dempsey, 2011). From the annual report of 2009, the company faces many other risks or challenges. This include increased competitions and poor relations with competitors; need for increased innovation that characterize the industry; dangers of relying on third party agents for supply; problems with software applications and developers; and personnel problems among many other challenges (Dempsey, 2011).
While Apple has managed to develop and implement an effective marketing strategy, it still faces challenges in the market. This is posed by the practices of other companies, which put the company at risk. Therefore, this threatens the company’s existence in the future. Most of the risks of Apple revolve around its dependence on the foreign factories and OEM for manufacturing of the products of the companies and even the assemblage of these products. Although the company provides its OEM with guidelines to be used in the sourcing of materials that are utilized in production, the OEMs are not given direct control of procurement of materials. Therefore, OEMs, which derive more profits from the higher volume with lower margins, continues to seek for a reduction in the input cost. This is meant to curtail the pressure on margins. The gradual slips in the quality of material are the likely resultant outcome. The slip in quality will affect the company when the low quality of materials will begin to show up in the finished products. Customers will notice this and thus reject the premium prices at which the products of Apple are offered. The general outcome of this will be that customers will start disapproving the products of Apple. Therefore, this would cause a taint in the image of the company. This can be looked at as a smoldering crisis for the company provided that the issue is not dealt with in time (Paul and Rose, 2011).
Apple has not been very active on issues of environmental conservation and the corporate social responsibility. Issues related to the environment are very important more so to companies that have a large clientele of customers. Part of the huge profits that are made by Apple have to go to charitable and conservation activities. This could perhaps be more visible in the future as the company stratifies the use of its finances. Nonetheless, as it still remains, the company still closes itself more so on the use of finances (Masi, 2009).
Discussion and Recommendations
As noted earlier, the Apple Company is still one of the dominating firms in the tablet and smartphone industry. Nonetheless, the smartphone and tablet industry is one of the most dynamic industries. This is because technology keeps changing and growing every day. Therefore, for any company to remain dominant in the industry, it has to be able to keep pace with technological changes and developments. The company should also minimize the challenges and flaws that are imminent in technological products. Such a company has to be ready to face stiff competition as it interacts with its competitors both in the industry and at the market. In keeping pace in the industry, Apple has encountered different problems: technical problems of its products, marketing problems, financial challenges, problems from competitors over copyrights and other product issues and management problems (Dempsey, 2011).
First of all, the company should assure their customers of the competitiveness of the leaders of the company. This could be achieved by way of rebranding. The customers had built a lot of trust in the former leader of the company – Steve Jobs. In deed, he was the brand of the company. This was because of innovation which put the company where it is today. The competitiveness of leadership is gauged through the input in the products of the company. Therefore, the company should work hard under its new leader – Tim Cooks. Encouraging collaboration and partnership with other companies in product development within the industry could lead to solid innovations. These innovations have the potential of adding to the achievements already made by Apple. Partnership will help the company to iron out the copyright problems with other technology firms (Dempsey, 2011).
It is good that Apple still has a significant presence in the smartphone and tablet market. All this can be attributed to the customer perceptions over the products of Apple – that is the products of Apple are simple, user friendly and sleek. The company has been enjoying free advertisement as a result of customer perception from the media and loyalists. Adding to this was its former leader – Steve Jobs. However, this trend is changing. The company has to embark on aggressive marketing techniques. One of the best means of advertising itself is through the value for quality in its products as well as making inventions. Also, stakeholder communication and management is very important as these stakeholders are assets in marketing. When the shareholders are confident and approves of what the company is doing, they will advocate for the company in the market (Dempsey, 2011).
The best way the company can deal with the issues of procurement as it relates to the foreign non-subsidiary companies, the company should improve the lean manufacturing structure that it uses. Apple should fade from reliance on the external subsidiary firms. If it would be costly to move away from using the subsidiary firms, then the company must commit itself to monitoring the operations of the foreign firms. The company must commit itself to the treating the workers in these firms as it does for its workers in the local firms. The company should also develop mutual and beneficial ways of relating with the suppliers. The relationship will address and moderate pricing and sourcing. When there are mutual benefits, compromise on the quality of materials will not be witnessed thus leading to high quality. Issues that touch on the quality of products are always very sensitive and should be minimized at all costs. Apple has a wide variety of padded products that can allow for replacement of devices that are defective. This does not mean that the quality issues have to be overlooked. Quality issues should be totally eliminated if possible. When these issues are very minimal, it would be easier to sort out emerging issues in that line. The company reputation arising from good customer service and flexibility in solving issues need not be affected. This is because it leaves the company with a high regard by the customers even when it has other issues. The highest thing that is valued by customers is the quality of products. The expansion of the Apple stores is also a positive move. These stores have two significances to the company. The first one is that the stores do act as a ground of advertising the products of the company. The second, and perhaps the most important significance, is that the stores act as a source of income for Apple. Also, as the company continues partnering with OEM, especially in the Asian region, it is locking out other competitors from gaining access into the region. The firm will get a chance to expand its business in the region by locking out the competitors. Asia is one of the regions of the world that is developing very fast and an attraction to many investors. Apple has to continue strengthening its relationship with the OEM in Asia. This is beneficial to the company (Masi, 2009).
Concerning the means of advertising their products, Apple has to adopt a better way of advertising its products. Apple should improve on its integrated system in advertising its products. The company does not rely on Microsoft windows in advertising like many other companies do. This is a positive move for the company; however, adopting Microsoft windows could help the company to reach more customers.
The investment of the company in research has been increasing from the year 2007. This is a positive move from the company and helps to improve on the quality of products thus cutting down competition from the industry. More investment in research is vital especially because competition is stiffening, and any new developments of products jerk the company in the industry. The problems concerning customer service can be expanded. The company developed a service known as the “Apple Genius Bar”. In this respect, customers get a chance to interact directly with specialists from the Company concerning the problems that they encounter when using the products. This service has improved the rapport of the company with the customers. The customers get the right information, and thus they seize to go as per speculations. Speculation leaves a big vacuum between the company and its customers and can result to poor relations and a public relations crisis. The company should better and expand the Apple Genius Bar service as this service will help to cultivate good relations between the company and the customers. When customers are enjoying relations with the company due to better service, the company will enjoy from the increased gains that will be made from the increased sales. This service is coupled with the free consultation services. This is where the customers are allowed to bring back their devices for consultation even when the warranty duration has expired. Customers get the opportunity of pursuing different options of solving the problem without spending a lot of money. This is what is called strategic customer relations and management. It is very hard to lose such a customer. Therefore, the expansion of customer services will be part of advertising the company and thus will add more value to Apple operations (Masi, 2009).
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