Table of Contents

Executive Summary......................................................................................... 1
2.0 SWOT Analysis........................................................................................... 3
2.1 Internal Strategic Factors (Strength & Weakness)......................................4
2.2 Strengths.................................................................................................... 5
2.3 Weaknesses............................................................................................... 5
4.4 PEST (Political, Economic, Social and Technological) & (Opportunities &
Threads)........................................................................................................... 7
4.5 Opportunities............................................................................................. 7
4.6 Threats....................................................................................................... 8
PEST Analysis (Opportunities & Threads).........................................................9
4.6.1. Political Factors................................................................................... 9
4.6.2. Economic Factors................................................................................ 9
4.6.3. Social Factors.................................................................................... 10
4.6.4. Technological Factors........................................................................10
4.6 Suggestions & Recommendations Based on Apples SWOT Analysis to
overcome Apple Weakness............................................................................ 11
6.0 Conclusion................................................................................................ 12
References..................................................................................................... 13

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Executive Summary
Apple Computer Inc. was founded by Steve Jobs and Steve Wozniak in
April

1976.

It

began

as

computer

software

and

hardware

manufacturers. Apple Computer Inc. has one of the biggest and most
loyal customer bases, who supported the continued growth of the
company. In 2007 Apple Computer Inc. Changed the company name
to Apple Inc, which reflects the expansion in the market for consumer
electronics while maintaining its traditional focus on the personal
computer. Apple Inc. has evolved from strictly a computer company
to a diversified technology company, renowned for its art, software and
design. CEO Steve Jobs is not only the company leader he is one of its
principal visionaries. Jobs latest creations are the iPhone and the IPad
He refers to it as a "magical device that will change the world.

The main Purpose of this assignment is to critically analyze and identify the company
strength, weakness, exploit its opportunities and prevent threads for the company. These
types of analysis such as SWOT & PEST will provide a company a clear platform to
achieve its completive advantage.

1.0 Introduction & Background of the company

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Apple Inc. is an international American company that produces computer software, cell
phones, personal computers and consumer electronic products. The notable results of

Figure 1: Apple Company Background

Apple include: the iPod, the iPhone, the Macintosh line of PCs and the iPad. 301 retail
locations in 10 nations are worked by Apple in August 2010. The product of Apple
comprises on the Mac OS X working framework, iWork suite of profitability
3 | Page

programming, Final Cut Studio, Logic Studio a music generation device's suite, iOS; a
versatile working framework, the iTunes media program, the iLife suite of sight and
sound and imagination s programming, Aperture; an expert photography bundle, Airplay,
Airprint, (Business Insider, 2016).
Macintosh Company was produced on first April, 1976 by the prime supporters named
Steve Jobs and Steve Wozniak in Cupertino, California. The initial 30 years of the
organization was named Apple Computer Inc. however, later on January 9, 2007, "PC"
has evacuated (Business Insider, 2013). They presented Apple I PC in 1976 which was a
disappointment however in 1980, they propelled Apple II which was fruitful. The IPO
offered by the organization in 1980 (Datamonitor, 2006).

2.0 SWOT Analysis

Apple Company intends, produces cell phones, personal computers,
music players and related services, networking solutions, peripherals
and software. The companys market position can be measured by
its strong operating performance, which has also increased the
confidence of investors. On the other hand, companys margins can
be affected by extreme competition (Data monitor, 2006).

Table 1: SWOT Analysis of Apple

4 | Page

Source: Strategic Management Insight

2.1 Internal Strategic Factors (Strength & Weakness)

1. Strong brand image
2. High profit margins
3. Effective innovation process
Apple is one of the most valuable and strongest brands in the world.
This part of the SWOT analysis shows that the company is capable of
introducing profitable new products by virtue of its strong brand image.
In addition, Apple maintains its premium pricing strategy, which comes
with high profit margins. This is a major strength because it creates
5 | Page

flexibility for the firm to adjust prices while ensuring significant profits.
Also, Apple is known for rapid innovation based on the companys
intensive growth strategies. Rapid innovation enables the firm to keep
abreast with the latest technologies to ensure competitive advantage.
Based on this dimension of Apples SWOT analysis, the companys
strengths are difficult to compete with, thereby supporting the firms
continued leadership in the industry.

2.2 Strengths
1. The major strength of Apple has its strong market position and consumer
trustworthiness which raises due to Apples ecosystem, which in turn to
increases Companys competitive advantage. Second, Apple has a full variety of
software, products and apps which are interlinked and maintain each other. Third,
iTV and other new products will be released soon.
2. In 2012, 3rd time Apple chosen as the most innovative company in the world.
3. At the end of 2012, Apple holds approximately $10,000,000,000 in cash.
Company has no debts and the gross profit margin is also higher than its
competitors.
4. Apple was the second valuable brand in 2012 and its brand value was at $76.5
billion.
5. High quality customer experience is a key of Apples retail store by providing a
direct speak to well-informed staff which increases brand awareness.

2.3 Weaknesses
1.

Limited distribution network

2.

High selling prices

3.

Sales limited mainly to high-end market

4. Low expenditure on research and development compared to other

companies leads to fewer innovations and products introduced to the
market.
5. Dependency on few products: Apple has only 7-8 products in its
portfolio in comparison to the various products that its closest
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competitors Microsoft and Google have. Hence the dependency of

Apple on each of its products is very high. If one product fails, then
that is a 10% loss to Apple. Hence, there is a common demand from
Apple to increase its product portfolio.
Apple has a limited distribution network because of the companys
policy of exclusivity. For instance, the company carefully selects
authorized sellers of its products. This part of Apples SWOT analysis
shows that such an exclusive strategy supports control over the
distribution of products, but limits the companys market reach. In
addition, because of the premium pricing strategy, Apple has the
weakness of having most of its sales revenues from the high-end
market. This market is composed of customers from the middle and
upper classes. Customers from the lower class, which represents the
majority of buyers in the global market, are unable to purchase Apple
products because of the relatively high prices. Thus, based on this
dimension of Apples SWOT analysis, the companys pricing and
distribution strategies impose limitations or weaknesses in the
business.

High price is the major weakness of Apple because there is a

strong completion in market now, and the consumer of Apple
products can easily obtain the similar function products by its

competitors in a lower price.

Decreasing market share can be caused to less influence its

customers to using closed ecosystem of Apple.

Apple Company is often blamed by other companies to
disobeying their patents and also it has lost some trials as well.

Such type of things can damage Apples reputation in market.

In 2012, Tim Cook became a new CEO because of the death of
Steve Jobs, which was the biggest loss for Apple Company. After

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some time, John Browett and Scott Forstall left the firm, this will

have a negative impact on management.

In tech industry, Apples gross profit margin is highest but
according to fear of forecasters that Apples current margin will
not be continued due to increasing in prices and tough
competition.

4.4 PEST (Political, Economic, Social and Technological) &

(Opportunities & Threads)
1.

Distribution network expansion

2.

Rising demand for tablets and smartphones

3.

Creation of new product lines

Apple has the opportunity to expand its distribution network. Such

opportunity directly relates to the weakness of the limited distribution
network of the company.

This part of Apples SWOT analysis

emphasizes the need for the company to change its distribution

strategy. An expanded distribution network can help the firm reach
more customers in the global market. Also, Apple has the opportunity
to explore new product lines. Its current product lines are highly
successful. Through further innovation, Apple can introduce new
product lines, like what the firm has already done with the Apple
Watch. Developing new product lines can support the companys
growth. Thus, this dimension of Apples SWOT analysis indicates that
the company has major opportunities for further growth despite
aggressive competition.

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4.5 Opportunities
1. Apples market share will be increase due to high demand of iPad
and iPad mini in tablet market and this will help company to use
as competitive advantage.
2. Apple TV sales will be increased by the launch of iTV which will
release soon.
3. Smartphone and tablet markets are growing which is a good
opportunity for Apple to expand their market share in these
markets.
4. Collecting

damages

from

competitors

because

companies

sometimes violated Apples patent. So, such types of factors can

be used by Apple as to damage the competitors image on
market and collecting damages from them will led to increase
cash reserves as well.
5. The growth of mobile advertising is an opportunity and Apple
allows advertising on iPod touch, iPhone and iPad by developing
the platform named iAd advertising.
6. The requirement of cloud based services is increasing, so Apple
can enlarge its services relate to iCloud and software as well
(Strategic Management Insight, 2016).

4.6 Threats
1.

Aggressive competition

2.

Imitation

3.

Rising labor cost in countries where Apple plants are located

Tough

competition

in

the

industry

is

partly

because

of

the

aggressiveness of firms. Apple competes with firms like Samsung,

which also uses rapid innovation. This part of Apples SWOT analysis
highlights the limiting effect of aggressive competition. Because of the
aggressive behaviors of competing firms, it is necessary to have strong
fundamentals for maintaining competitive advantage. In addition,
9 | Page

Apple faces the threat of imitation. This threat is significant because of

the large number of firms that can easily imitate Apples products.
Some local and regional firms could partially imitate Apples product
design. Moreover, rising labor costs in Apple plants, such as in China,
can reduce profit margins or push selling prices even higher. Based on
this dimension of Apples SWOT analysis, the companys performance
could suffer because of aggressive competition and imitation of
product design. Thus, Apple must take appropriate action to prevent or
overcome these threats.

Rapid technological change is the biggest threat which Apple and

its competitors are experiencing now days. As customers are
become more technology lover and they want more and more
new products in very short time due to this, companies are
facing pressure. So competition is very high and the one who

cannot remain themselves with rivalry shortly be unsuccessful.

Increment in Tax in USA will affect the Apples growth.

Samsung is the only one who provides application processors to

Apple and it has asked to pay higher price for it. It should be
asked Apple to pay more because there are no feasible
substitutes who could provide Apple to application processors

(jung, 2012).
The main competitor of iOS is Android OS in mobile market. The

power of Apple iOS can be dominated by Android OS.

Availability of wide range of music stores like Wal-Mart, Amazon
and online music companies like sound cloud and Spotify will
threat for Apple music store.

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PEST Analysis (Opportunities & Threads)

To gain an understanding of Apples business potential, direction of
operation and to know situation of future market, we will use PEST
analysis.
4.6.1. Political Factors
There are many problems which cannot be controllable by the
company such as; geopolitical uncertainties, war against terrorism,
authority to work and health issues which can affect the sale of
Apples product worldwide. As to reduce operating cost Apple has
outsourced in different countries like Ireland, China, Korea, Czech
Republic and Cork. If these countries face any political instability or
any problem which causes to delay in manufacturing operations, will
led to spoil the Apple likeness in the eye of consumers and its dealers
(CNetnews 2012).
4.6.2. Economic Factors
Purchasing power depends on the Worlds economic conditions.
According to past few years, unemployment rate is very high in many
countries which cause to decrease the sale of Apple products. Another
reason was increase in oil prices which causes inflation in worlds
economy. As a result of these economic factors, purchasing power of
people reduced which negatively affected the sale of Apple products
due to its higher price. But now worlds economic conditions are
getting better and company has purchased itself foreign currencies, so
Apple revenue has increased in the global market (Apple Inc 2012).
4.6.3. Social Factors
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Two factors always have been on forefront of Apple product

throughout the history, the design and the quality. The purchasing of
luxury products has gone up because the purchasing power of
consumers has risen in different market across the world and people
prefer to buy iPod, iPhones and latest technology iPad. As music
industry growth, has increased which is the biggest social influence on
Apple because the main essential music store is iTunes. Therefore,
Apple has gained so much from social factors because its defining an
individuals modern lifestyle.
4.6.4. Technological Factors
Apple always takes advantage because of its innovative and high
technologies products. The large amount has invested in research and
development field by Apple, thats the reason Apple comes in top of
the new innovative products.

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4.6

Suggestions

&

Recommendations

Based

on

Apples SWOT Analysis to overcome Apple Weakness

Apples SWOT analysis indicates that the company possesses major
strengths that can be used to effectively address organizational
weaknesses.
1. The company can also use these strengths to exploit the
opportunity to expand its distribution network.
2. In addition, Apple can use its strong brand image and rapid
innovation processes to successfully develop and launch new
product lines. However, the firm faces the significant threats of
aggressive competition and imitation, which are major
challenges affecting players in the industry. A suitable course of
action is to address these threats through a stronger patent
portfolio, along with continuous innovation to ensure the
competitive advantage of Apple products even when competitors
try to catch up.
3. should reach out to countries where its share of market is
minimal to leverage on International PLCs and reduce the threat
it is facing for all its product lines.
Apple should start acquiring small innovative companies to bring in
more talented people and expertise. This will also help to reach out to
untapped local markets.
Apple should relaunch Apple TV integrated with other prominent
features of Apple like iTunes, iCloud with innovative ad campaign with
affordable pricing strategy.
Apple should consider diversifying into Hollywood and providing
customized digital solutions to the clients and also to the current

13 | P a g e

existing products which can be made easy to use with superior design
like projector.
Superior software and Apps are what Apple need to look in near
future. Developing software and applications we never imagined will
give Apple an added advantage in the market. Apple should cut
number of junk services it is providing currently and create space for
value added services at its App Store.

6.0 Conclusion
In short, Apple Company is very innovative and early adapters and it is typically the
foremost company who takes new innovative products as compared to other companies.
These types of things usually considered as riskier but it appears to be functioning as
Apples advantage. Strong market position and consumer loyalty which increases due
to closed ecosystem and user friendly products makes different to Apple Company from
its competitors.
Another most important factor is that the Apple Company is the First most admired
company in the world. Whereas, it is also credited to first sustainable music
downloading business model in history by its iPod and iTunes online media store.
Apple is a profitable company and its future is bright. But Apple should be careful in
legal and political areas because as to reduce operating cost it has outsourced in different
countries and it has to find different alternate to reduce the risk as Apple buys application
processor from Samsung which can create a problem for it.
With the development of Apple in the previous decade comes another
period of mechanical goliaths. The fight amongst Microsoft and Apple
has been a long and difficult rollercoaster, and it appears to be
presently Apple has the high ground. With the iPad 2 taking off store
racks (around 600,000 sold on the main day) and bits of gossip about
the following iPhone turning out this late spring, they have indicated
how working through difficult times and investigating hazardous
14 | P a g e

endeavors have paid off. Be that as it may, where does Apple and the
driving force Steve Jobs have its hands plunged in now. Apple has been
serving its new purchasers a current fan base well by turning out with
above normal quality items that approach the most in vogue and
specific purchasers.

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