SWOT Analysis of Apple Inc

The SWOT Analysis of Apple Inc will analyze the strength & weakness of, opportunities & threats for Apple. It provides a broad understanding to the company’s strategic situation. The analysis can be used to evaluate the current business position of Apple. This can be used to instruct the overall business strategy session; it can also be used to go deep into a specific segment like marketing, production, and sales.

Company Background : The US-based company, Apple is one of the most popular and reputed technological companies in the world. It was founded in 1976. Apple is a multinational technological company. The headquarter of Apple is in California, United States.  It has many world recognized products including the iPad, tablet computer, iPhones, portable media player, Mac personal computer, and the Apple Smartwatch. Apple Inc.’s consumer software are the Safari web browser,  iTunes media player, iOS operating systems, and the iLife and iWork creativity and productivity suites.

The key founders of Apple are Steve Jobs, Ronald Wayne, and Steve Wozniak. Currently, it is being traded under NASDAQ.

 

Strengths

  1. Varieties Ranges of Products – Apple has product variety which gives it a way to earn profit. The product lines include Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, Software, Electric vehicles, and Apple Energy. By this diversified portfolio, Apple ensures that they can offer modern technologies to their customers. Among these products, some are cash cows. This means, these products are the most popular product and collect most of the revenues. The diversified portfolio also ensures the stabilization in revenue earning. One product may fail for a specific period of time, but at the same time other one may experience a high sale. So, by offering varieties of products, Apple manages the product failure risks as well.
  2. Careful Selection of Employees – when it is about the recruitment, Apple is very much aware of selecting sincere and confident employees who work hard to ensure quality. Apple tries to find those employees who strongly follow their passion and have idealism. According to Forbes, “Apple look for positive thinking people who don’t say “no”, people who can think out of box, and people who can make impossible to possible.”[10] This ensures that Apple will always be able to keep the quality high and offer classy and innovative products to its customers. This also helps Apple to reserve a strong brand image.
  3. Development of New Products – Apple does not stop at the time they launch a finished product. They start working on developing a new product soon after finishing and launching one. They do not waste time by watching their product’s sales. “When we launch a product, we’re already working on the next one. And possibly even the next, next one.” – Said Tim Cook, the CEO of Apple. [5]
  4. Strong Brand Image – Since the beginning, Apple has been providing quality products to its customers and clients. A person bought an iPhone used it for long period of time without any internal problems. Through this strong quality offering, it has developed strong brand recognition. According to Forbes Magazine, “Apple has as twice value as Microsoft.” [8] They put Apple on the first position in their list of the most valuable brands. [8]
  5. Most Successful Company in the History – According to the Computer World, “Apple is the most successful company in history.” They have listed some facts. Apple is the most valuable company in the history, made record earning among all others, solved phone theft problems, and has huge collection of apps available in the market. [7]
  6. Financing Strength – It is very strong financial, as a result it can finance all of its investment and research to develop its product and services. In February 2015, Apple reported the revenue of $74.6 billion and an amount of $18 billion in profits for a single quarter. It is said to be the highest income in the history. It has big amount money as its retained earnings. It is as large as USD96.36 Billion, as of September, 2016.[9] This retained earning account will help them to recover from any financial downtime in future. Also, this can be used as a backup of better research and development department.
  7. Excellent Hardware Performance – the performance of the internal hardware of its products is excellent. Customers were highly satisfied on the longevity of Apple hardware performance.
  8. Amazing Design – The designing of the products of Apple is unique. The look of the iPhone is very much unique and stunning.
  9. Innovation – Apple maintains a portfolio of innovative products. From the initiation of the company, it has been offering innovative products. It has been very famous in the history of modern technology. In the year 1984, it launched the Macintosh for the first time. It was the first computer with graphical interface, a huge shift in the history of technology. [16] Apple iPod what the first portable music player in the history of modern technology. It was launched in the year 2001. [17] There are other innovative products such as Apple iPhone, MacAir, & iPad.

In the Strengths of Apple section, we have found 16 strengths of Apple. In this part, we can say that as the most valuable company Apple has every criterion to be the best one. Among all the strengths, the financial strengths, the brand value, the innovative characteristics, the experience, training the employees to make them efficient, and diversified portfolio of products we found most significant.  

Weaknesses

  1. Higher Price than Other Smart-Phones – As Apple uses premium pricing strategy, the prices of the Apple products always remains beyond the general people’s reach, especially for iPhones. The price of the products was always higher than other recognized brand in the market such as Samsung, HTC etc. There is a huge market of middle class people. Apple totally ignores this segment to preserve its brand image.
  2. Limitations – It is not flexible while you want to connect it with devices that are from other brands. Apple iPhone does not allow you to get software installed from other sources other than its own providers.
  3. Less Variety in the Phone Design – iPhone 1 and iPhone 7 do not have much difference while it is about their look. It did not deviate from its first look much. This creates a feeling of using same products years after years. Oppositely, other manufacturers such as HTC, ASUS, and Samsung are offering products with unique and attractive looks when it is about smartphones.
  4. Narrow Product Line – The product line is very narrow. For last decade, it has been developing same looking iPhones with updated features.
  5. Niche Customer target – When a company target the niche markets, their market becomes small. In this case, Apple’s market is not big like other smartphone or computer brands. They only target high class customers that let them avoid the middle class customers which is really a big market.
  6. Limited Distribution Network – Apple distribute its product by itself. And it kept its distribution channel narrow. For most of the time they do not use any third parties to sell their products. Apple uses own website and Apple Stores to sell their products.

Opportunities

  1. Demand of Computers and Laptops – For the first time in the history, the sales growth of smartphones fell. According to Telegraph Magazine, “The sales fell by 3 per cent year-on-year from 345 million units in the first three months of 2015 to 334.6 million handsets.” [18] A shift to computers and laptops sales may take place.
  1. Increasing Technological Dependency – People are becoming more dependent on technology and they have been dependent on smartphones as well. They became more interested on portable devices. As a result, the demand of smartphone may increase more at an increasing rate.
  2. Globalization – Globalization of market is giving the people the opportunities of having tech products very easily. As a result, people can buy and get those products within a short period of time directly from the respected companies. It increases the sales as well which results in more profit margin.
  3. Accessories and Gadgets – Apple can offer technological accessories and gadgets to increase its products. With a strong innovative historical background, it has created a strong familiarity of introducing new products. If it keeps this trend, it will go further toward greater profits.
  4. Investment in R&D – Apple holds a huge amount of retained earnings in its account. They can switch fund to R&D; investment in research and development department will make the department stronger that may become stronger.
  5. Product Diversification Strategy – If it makes its product lines broader, it will be able to offer more products to its customers. Also, they should develop new products or cheaper products for the middle class people to grab the markets in the developing countries.
  6. Expansion of Distribution Network – for most of the time, Apple distribute its products by itself. It should create more third party distribution channels to make more sales in the overseas countries. Increasing distribution network will allow them to create more profit.

Threats

  1. Potential Market of Tablet and Smartphones –As I mentioned above, the smartphone demand fell by 3% in the history of smartphone sales. There are few reasons among which one seemed most important. That is, when a person buys a smartphone, s/he uses it for a 2.5 to 3 years’ time period. People do not see new reasons to spend large amount of money for a new mobile phone while the existing one is functioning very well. That slows down the sales of smartphone.
  2. New competitors – Emerging strong competitors who are offering same type of products at lower rate is the biggest threat. There are alternatives. Samsung is offering premium products as well as cheap products. Other competitors such as Sony, Asus, and Nokia are growing larger as well.
  3. Aggressive Competition within Blue-Chip Companies – the increasing number of Blue-Chip companies making the industry more competitive. China is offering high quality products at a very lower price than Apple products.
  4. Imitation – It was always been a strong threat for recognized brands in the history. When Apple introduces a new product, a replica or a substitute product is introduced by other companies. Sometimes, technology is stolen. There are also many counterfeit products in the market. Recently, 6 6 counterfeit iPhones were found in the Chinese market which were made by Chinese manufacturers. [19]

In Conclusion:

The SWOT Analysis of Apple Inc showed that the major key strengths of Apple Inc. that comes from the quality and uniqueness of the Apple iPhone. The major key weaknesses include lack of distribution channels in the countries and high price which can be overcome. There are huge opportunities for this company, and there are major threats from the competitors as well.

You may want to study the Marketing Mix of Apple Inc.


Competitors’ SWOT


Sources Used to Develop the Apple Inc SWOT Analysis:

  1. Wikipedia (Apple)
  2. Apple Official website
  3. APPLE INC., US SEC
  4. App Store At 6: How Steve Jobs’ Biggest Blunder Became One Of Apple’s Greatest Strengths
  5. http://www.theregister.co.uk/2015/12/21/apple_60_minutes_interview/
  6. http://www.apple.com/supplier-responsibility/empowering-workers/
  7. http://www.computerworld.com/article/2883747/why-apple-is-the-most-successful-company-in-history.html
  8. http://www.forbes.com/powerful-brands/list/
  9. https://ycharts.com/companies/AAPL/retained_earnings
  10. http://www.forbes.com/sites/carminegallo/2015/12/21/5-personality-traits-apple-looks-for-in-job-candidates/#3d8580b03ec0
  11. http://www.al.com/news/index.ssf/2015/12/tim_cook_chinese_workers_more.html
  12. http://www.apple.com/diversity/
  13. https://9to5mac.com/guides/apple-customer-satisfaction/
  14. http://techland.time.com/2012/05/07/six-reasons-why-apple-is-successful/
  15. http://www.apple.com/au/shop/help/returns_refund
  16. http://www.campaignlive.co.uk/article/1356079/apples-history-nine-innovations
  17. http://www.cheatsheet.com/stocks/apples-product-timeline-the-best-of-the-best.html/?a=viewall
  18. http://www.telegraph.co.uk/technology/2016/04/28/smartphone-demand-falls-for-first-time-in-history/
  19. http://mashable.com/2016/06/17/apple-china-knockoffs/#w.BZ_etHdPqx

 

faizul

Sheikh Faizul Haque, the founder of GotAbout, graduated from North South University, Bangladesh. His major was Finance and Accounting. Faizul has been writing in business blogs since 2013, also has a strong interest in Behavioral Finance, Risk Management, and Portfolio Management.