Apple Inc.

Operations Management: 10
Decisions, Productivity
UPDATED ONUPDATED ON FEBRUARY 19, 2019 BY CHRISTINE ROWLAND

A close-up of an Apple keyboard. Apple Inc.

addresses the 10 decision areas of operations management through different
managerial channels. The company also satisfies necessary OM decisions to optimize
its productivity. (Photo: Public Domain)
Apple Inc.’s operations management (OM) involves the application of the 10 decisions
of OM to ensure that all aspects of the business are running smoothly. In operations
management, the 10 decisions relate to such aspects as product design, quality
management, process and capacity design, and location strategy, as well as inventory
management, among other operational areas. In Apple’s case, the 10 decisions of
operations management are carefully implemented through coordinated efforts in
product design and development, sales and marketing, and the firm’s supply chain,
along with the company’s other business areas. With considerable leadership in the
computer technology and digital content distribution industries, Apple Inc. is an example
of success in addressing the 10 decision areas of operations management. Operational
effectiveness and strategies involving technological innovation help the business thrive,
in spite of competition involving Dell, Lenovo, Microsoft, Sony, Google, Amazon,
Samsung, Walmart, and other companies. This success highlights the importance of
Apple’s strategic approaches to achieve high productivity goals and objectives in
operations management areas.

Apple Inc. has a dedicated team of senior managers, each of which handles the
implementation of measures to address the 10 decisions of operations management.
The company has excellent performance in maximizing efficiency in operations
management. This operational efficiency translates to competitive advantages and
capabilities that fulfill strategic objectives, ultimately leading to the achievement
of Apple’s corporate mission and vision statements.

Apple Inc.: 10 Decision Areas of Operations

Management
1. Design of Goods and Services. Apple’s processes in the design of its products are
handled through a number of organizational components and officials. For example, the
development and production of Macs involve a Senior VP for Mac Hardware
Engineering and a VP for Mac Software Engineering. This coordination reflects the
nature and characteristics of the corporate structure of Apple Inc. In this decision area
of operations management, these VPs coordinate with the company’s Senior VP for
Operations. The system of interactions ensures that the outputs in this operational area
are successful in making Apple excel in the design of its technological products.

2. Quality Management. This decision area of operations management emphasizes

quality standards and controls. Apple Inc.’s Senior VP for Operations coordinates with
eight other Senior VPs to ensure compliance with the company’s quality standards. The
company is known for high quality standards that permeate different areas of the
business, including product design and development, retail, marketing, online sales,
industrial design, and human resource management. Thus, Apple has a holistic
approach in ensuring quality to address this decision area of operations management.

3. Process and Capacity Design. Apple’s human resource management strategies

include support to maximize workforce capacity for product development and design. In
addition, the company works with suppliers to ensure efficient processes and adequate
capacity in this decision area of operations management. For instance, suppliers are
given directives for process design, as well as the Apple Supplier Code of Conduct to
optimize their human resource management. Moreover, Apple Inc. strives for innovation
in its facilities to optimize capacity and process efficiency. Thus, the company has a
comprehensive approach for this decision area of operations management.

4. Location Strategy. Apple Inc.’s location strategy is selective, involving limited

authorization of sellers. However, most authorized sellers are located in urban centers
to maximize foot traffic and brand exposure. At present, the company has hundreds of
stores in more than 20 countries around the world. Despite this limited approach to
seller authorization, the company is now among the most profitable in the world, and
Apple Stores have the highest revenue per square foot of retail space in the United
States. Thus, Apple’s selective location strategy successfully satisfies this decision area
of operations management.

5. Layout Design and Strategy. Apple’s layout design and strategy emphasize
customer expectations. For example, company-owned and authorized-seller stores are
spacious with minimal décor to ensure focus on Apple products. In the company’s other
facilities, this decision area of operations management is addressed through innovative
office layouts that encourage creativity and efficiency of workflows. Creativity is a critical
factor among employees involved in product design and development processes at
Apple Inc.

6. Job Design and Human Resources. This decision area of operations management
requires job design and human resource strategies specific to the trends in relevant HR
 management needs. In Apple’s case, job design and HR strategies are based on Steve
Jobs’ original emphasis on excellence. However, the company has been gradually
changing its HR strategies under Tim Cook to reflect a more sociable workplace for
optimum employee morale. Apple Inc. has mastered job design and human resource
strategies to ensure continued support for its industry leadership.

7. Supply Chain Management. Apple’s supply chain is among the most efficient and
streamlined in the world. To address this decision area of operations management, the
company uses automation of processes and regular monitoring of suppliers. This
monitoring evaluates supplier capacity and productivity, as well as compliance with the
Apple Supplier Code of Conduct. The automation aspect serves as the main strength of
the corporation’s approach to supply chain management.

8. Inventory Management. In this decision area of operations management, Apple Inc.

uses different methods of inventory management, such as the serialized method for
effective tracking and control of products. The company also uses the first in, first
out (FIFO) method, which ensures that most old-model units are sold before new Apple
product models are released to the market. Apple Store managers also handle the
inventory management of their respective stores.

9. Scheduling. Apple Inc. applies this decision area of operations management through
a combination of automation and manual processes. Automation is used for scheduling
activities in the supply chain and production processes. On the other hand, manual
scheduling is used for individual Apple Stores and in some aspects of the company’s
offices. The main aim of the firm in this decision area of operations management is to
maximize the capacity utilization of facilities, equipment and human resources.

10. Maintenance. Apple Inc. addresses maintenance needs through dedicated

maintenance teams. For example, the company has different maintenance teams for its
various facilities. Apple’s IT teams also function as maintenance teams for the firm’s
servers and other IT assets. The VP for Human Resources ensures that the company’s
personnel are always at adequate capacity to maintain high performance at the
company’s facilities. Thus, Apple effectively addresses this decision area of operations
management.

Productivity at Apple Inc.

Apple Inc.’s operations management monitors and evaluates productivity through
various criteria. The company’s global size and diverse activities translate to different
standards, benchmarks and criteria for productivity in different business areas. The
following are some of the productivity criteria in Apple’s operations management:

1. Revenue per Square Foot (productivity of Apple Stores)

2. Product Units per Time (productivity of suppliers and the supply chain)
3. Milestone per Time (productivity of employees in product development)

Apple Inc.’s Marketing Mix or 4Ps (An

Analysis)
UPDATED ONUPDATED ON FEBRUARY 25, 2019 BY ROBERTA GREENSPAN

The entrance to the Apple Store on Fifth

Avenue, New York City. Apple Inc.’s marketing mix (4Ps) takes advantage of different
product lines, distribution channels, and promotion, while keeping high-end price points
for information technology, Internet services, and consumer electronics products.
(Photo: Public Domain)
Apple Inc.’s marketing mix (4P) indicates how the company matches its business
activities to the conditions of the global market for information technology, consumer
electronics, and online services. A company’s marketing mix involves the strategies and
tactics pertaining to the implementation of a marketing plan. The focus of the marketing
mix is on the 4P variables, namely, Product, Place, Promotion, and Price. In this
business case, the marketing mix is specific to the technological nature of Apple’s
business. For example, the company’s 4Ps encompass multinational operations in the
consumer electronics market, the information technology market, the Internet services
market, and the digital content distribution market. Such diversity in operations brings
Apple Inc. in competition with a variety of firms, such as Google, Amazon.com,
Samsung, Dell, Lenovo, Sony, and PayPal, as well as Microsoft, IBM and Intel. These
competitors are known for their aggressiveness in innovation and marketing. As a
result, Apple has a marketing mix that involves various strategies and tactics that
correspond to the approaches of these other firms.

In developing its marketing mix, Apple Inc. uses an approach that focuses on premium
branding. This approach involves capitalizing on the premium brand, and ensuring that
all of the 4P elements support the maintenance of a strong brand image. For example,
Apple’s prices match its premium brand, as well as the corresponding consumer
perception that equates the company’s products with high value and high quality.
Reinforced with appropriate 4Ps, such response to the market enables the corporation
to keep its wide profit margins. These conditions help fulfill Apple Inc.’s corporate vision
and mission statements.
 Apple’s Products (Product Mix)
This marketing mix element determines the outputs of the business organization. In this
case, Apple’s product mix includes goods and services that are classified as, or involves
information technology. However, the company continues to expand its product mix,
creating the possibility of adding non-IT-related products in this 4P element. Apple Inc.’s
main product lines are as follows:

1. Mac
2. iPhone
3. iPad
4. iPod
5. Apple Watch
6. Apple TV
7. Digital content
8. Software
9. Accessories
10. Cloud services

These product lines are associated with human resource utilization and business
processes based on product-based divisions, which are a characteristic of Apple Inc.’s
corporate structure. The Mac product line includes desktop and laptop computers of
various sizes for different market segments. On the other hand, the iPad, iPhone, iPod,
and Apple Watch are mobile devices with some functions similar to those of Mac
products. This element of the marketing mix shows that the company operates in the
consumer electronics products. In the company’s current strategic management
approaches, the Digital Content product line includes digital music, videos, e-books, and
games. Through digital content, Apple TV, and Software like mobile apps, among other
products, Apple Inc. operates in the digital content distribution industry. Moreover, the
company’s 4Ps include products based on cloud technology, which allows customers to
store and access their data, and use software as a service (SaaS), such as iWork for
iCloud. The product lines in this 4P element are based on the outputs of the product
development growth strategy (see Apple’s Generic Competitive Strategy & Intensive
Growth Strategies). This element of the marketing mix reflects Apple Inc.’s evolution
from a computer technology business into an increasingly diversified business with
focus on information technology.

Place or Distribution in Apple Inc.’s Marketing Mix

This element of the marketing mix involves the selection of appropriate places or
venues through which the company distributes its products. Apple Inc.’s business case
involves company-owned locations, as well as other parties that the company
authorizes to distribute its products. The following places are included in Apple’s
distribution strategy:
1. Apple Store locations
2. Company-owned website and online stores for desktop and mobile
3. Authorized sellers
4. Telecommunications companies

Apple Store is a subsidiary of Apple Inc. that operates physical or brick-and-mortar

stores that sell the company’s products, along with related products from other
manufacturers. For example, these stores sell MacBook units, as well as peripheral
devices from other companies. In addition, customers can buy products through Apple’s
website and online stores for desktop and mobile. Customers can buy consumer
electronics through the company’s website. Apps, music, movies, and other digital
content are available through online stores for desktop and mobile, such as the App
Store and the iTunes Store. In this element of the marketing mix, the inclusion of these
online distribution channels helps optimize international market reach. Also, Apple Inc.
includes authorized sellers in its distribution strategy. These sellers operate stores in
various strategic locations, such as in shopping malls in different markets around the
world. The sellers include large retail firms like Walmart and Best Buy. Some authorized
resellers sell through their own stores as well as their seller accounts on Amazon.com.
Moreover, the company has agreements with various telecommunications companies,
such as Verizon, AT&T, and Sprint, which offer iPhone units integrated into some of
their telecommunications service packages available to subscribers in local or regional
target markets. Thus, Apple’s marketing mix is comprehensive in taking advantage of
online and non-online distribution channels.

Apple’s Promotions (Promotional Mix)

Also called the marketing communications mix, this element of the marketing mix
determines the communications tactics that the company uses to reach its target
customers. Apple Inc. promotes its products in various ways, involving different
communications channels and parties. In addressing this 4P element, the company
emphasizes the premium brand image and premium quality of its products. The
following communications tactics are in Apple’s promotional mix:

1. Advertising
2. Personal Selling
3. Sales Promotion
4. Public Relations

Apple Inc.’s marketing mix includes advertising, such as on Google’s digital advertising
network and on technology news websites. The company has agreements with various
prominent websites to advertise and promote Apple products. In addition, the company
uses personal selling in the form of Apple Store employees who provide product-
specific information in the aim of convincing store visitors to make a purchase. Also,
among the 4Ps, this element involves sales promotion, which usually happens at the
Apple Store locations and authorized reseller locations. For example, some locations
 offer old models at discounted prices when bundled with larger or more expensive
products. Moreover, the company uses public relations to optimize its corporate image.
For instance, Apple Events, leaks of new product features, press releases, and
exclusive interviews are carefully executed to maximize positive publicity. The company
is also involved in various initiatives, such as ConnectED, which aims to improve formal
education outcomes, while promoting the business and its products. These efforts are
linked to Apple’s corporate social responsibility strategy and stakeholder management
efforts. The company uses such communications tactics to satisfy this element of the
marketing mix, pertaining to business needs in reaching more customers worldwide.

Apple’s Prices and Pricing Strategies

This element of the marketing mix sets prices, price points, and price ranges for the
company’s products. Apple Inc. uses the following pricing strategies:

1. Premium pricing strategy

2. Freemium pricing strategy

The premium pricing strategy involves offering products at a premium. In theory, a

premium is an amount that is applied in addition to the typical or common price. In this
regard, Apple’s use of the premium pricing strategy sets high prices for its products. For
example, in general, iPhones are more expensive than Samsung smartphones.
Premium pricing maximizes profit margins. Even though the SWOT analysis of Apple
Inc. shows that such high prices are a weakness, the company utilizes premium pricing
in combination with premium branding and creative innovation. Such combination
ensures competitiveness. Creative innovation is supported through Apple’s
organizational culture. Aside from premium pricing, the company also uses
the freemium pricing strategy. This strategy involves “free” and “premium” pricing
combined into a single strategy. In this freemium pricing case, some of Apple Inc.’s
products are free, but customers pay to access more, advanced, or better features. For
example, the company offers free 5-gigabyte iCloud storage. However, to add more
storage capacity, customers must pay a recurring fee. In this regard, Apple’s marketing
mix is aligned with premium branding and associated product design and development
efforts.

Apple Inc. Stakeholders: A CSR Analysis

UPDATED ONUPDATED ON JANUARY 29, 2017 BY ANDREW THOMPSON
 Apple products for
home and office use. Apple Inc satisfies most of its stakeholders’ interests through suitable
corporate social responsibility efforts. (Photo: Public Domain)

Apple’s success is partly due to its ability to satisfy stakeholders and corporate social
responsibilities (CSR). Stakeholder groups impose demands that translate to corporate
social responsibilities, which influence firm performance. In Apple’s case, stakeholders
significantly affect the business in terms of customer perception and sales revenues.
Considering the continued high value of its brand, Apple effectively accounts for
stakeholders in its strategies and policies. For instance, the company addresses
stakeholders’ environmental concerns through a policy on sustainable material
sourcing. Apple has a firm and holistic approach in addressing the interests of
stakeholder groups significant to the business. These stakeholder groups compel Apple
to improve, and Apple affects them by satisfying their interests.

Apple’s stakeholders have varied concerns encompassing product quality and function,
business sustainability, employment practices, and financial performance. These
interests highlight the need for a holistic approach in corporate social responsibility
efforts, which Apple already uses in its aims to satisfy major stakeholder groups.

Apple’s Stakeholder Groups

Apple considers the interests and concerns of a number of key stakeholders in its
policies and programs for corporate social responsibility. Stakeholder groups impose
varying demands in different aspects of business. In Apple’s case, the following
stakeholders are the most significant:

1. Customers/Consumers
2. Apple’s Employees
3. Investors
4. Employees of Suppliers and Distributors

Customers/Consumers. Apple prioritizes customers as its top stakeholders in devising

corporate social responsibility strategies. This stakeholder group is composed of
individual and organizational buyers of Apple products. The main interest of customers
is to have effective and efficient products that are reasonably priced. Apple products
have higher price points. However, Apple’s premium pricing strategy is acceptable
because it matches the high quality and aesthetics of these products. The company
also has environmental programs for recycling and responsible sourcing to address
customers’ demands for business sustainability. Thus, Apple’s corporate social
responsibility efforts satisfy the interests of customers as the top stakeholders of the
business.

Apple’s Employees. Employees are the second-priority stakeholders in Apple’s

approach to corporate social responsibility. This stakeholder group is composed of
employees at Apple’s facilities. The main interests of these stakeholders are proper
compensation and career development. Employees as a stakeholder group are
important because they directly determine Apple’s human resource capabilities to
innovate and develop profitable products. The firm addresses the interests of its
employees through compensation packages competitive in Silicon Valley. Thus, Apple’s
corporate social responsibility efforts satisfy the concerns and interests of employees as
a major stakeholder group.

Investors. Investors are typically major stakeholders and determinants of corporate

social responsibility programs in businesses. In Apple’s case, investors are interested in
maximizing the returns on their investments. The company effectively addresses this
stakeholder group through excellent financial performance. For example, Apple is now
one of the most profitable companies in the world. The firm maintains high profit
margins. Apple also has a strong financial position, which involves high liquidity through
large amounts of cash. The company has also managed to avoid debt. Based on these
corporate social responsibility conditions, Apple effectively satisfies the interests of
investors as stakeholders.

Employees of Suppliers and Distributors. Workers in Apple’s supply chain are also
significant considerations in the company’s corporate social responsibility efforts. These
workers are indirect stakeholders in Apple’s business, but determine the firm’s
corporate social responsibilities. The main interest of this stakeholder group is similar to
the interests of Apple’s own employees, such as proper compensation and job security.
Also, this stakeholder group is interested in ethical employment practices. To address
these interests, Apple has a Supplier Code of Conduct. The company monitors and
imposes requirements on the employment practices of firms in its supply chain. Part of
Apple’s policy is to terminate business relations with suppliers that continue to fail or
refuse to satisfy this Code of Conduct. Apple’s 2014 assessment of suppliers shows
that 92% of suppliers now comply with the 60-hour workweek rule. Thus, to a certain
high degree, Apple’s corporate social responsibility efforts satisfy the interests of the
stakeholder group of suppliers’ workers.
Apple’s CSR Performance in Addressing Stakeholders’ Interests

Apple has a considerably high performance in addressing its corporate social

responsibilities by satisfying the interests of stakeholders. The company satisfies the
interests of customers, Apple employees, and investors. However, Apple has the
opportunity to improve its corporate social responsibility performance in addressing the
interests of the workers of firms in its supply chain. Imposing rules on suppliers is
difficult, considering differences in organizational contexts. However, Apple has the
power to compel suppliers to comply with its Supplier Code of Conduct. Thus, the
company’s main corporate social responsibility effort should be to improve overall
compliance in its supply chain.

Apple Inc.’s Organizational Culture & Its Characteristics (An

Analysis)
UPDATED ONUPDATED ON FEBRUARY 15, 2019 BY PAULINE MEYER

Apple products commonly used in offices and

homes. Apple Inc.’s organizational culture empowers the business to continue succeeding in the
computer software and hardware, cloud services, consumer electronics, and digital content
distribution services industries. (Photo: Public Domain)

Apple Inc.’s organizational culture is a key factor in the continuing success of the
business. A company’s organizational or corporate culture establishes and maintains
the business philosophy, values, beliefs, and related behaviors among employees. This
business analysis case shows that Apple has a corporate culture that enables human
resources to support various strategic objectives. For example, the company’s cultural
traits are aligned with the drive for innovation, which is a major factor that determines
business competitiveness in the information technology, online services, and consumer
electronics industries. Based on the organizational culture, this business condition
facilitates the fulfillment of Apple Inc.’s corporate mission and vision statements.
Through the leadership of Steve Jobs and, now, through the leadership of Tim Cook,
the company continues to enhance its cultural characteristics to maximize human
resource support for business relevance in various markets around the world. Apple
shapes its corporate culture and uses it as a tool for strategic management and
success.
 Through its corporate culture, Apple Inc. strengthens its competitive advantages against
other firms in various industries. The company competes against information technology
firms like Samsung, Google, Amazon.com, Dell, Lenovo, Sony, and PayPal, as well
as IBM and Intel. These competitors impose a strong external force that influences
strategic management among firms in the industry, as illustrated in the Porter’s Five
Forces analysis of Apple Inc. As a result, cultural traits must reinforce necessary
competitive advantages through the workforce. The company partially achieves this
strategic objective through its organizational culture.

Apple’s Organizational Culture Type and Characteristics

Apple Inc. has an organizational culture for creative innovation. The company’s
cultural features focus on maintaining a high level of innovation that involves creativity
and a mindset that challenges conventions and standards. The business depends on
cultural support and coherence, which are determinants of competitiveness and industry
leadership, especially in addressing aggressive and rapid technological innovation and
product development. The following are the main characteristics of Apple’s corporate
culture:

1. Top-notch excellence
2. Creativity
3. Innovation
4. Secrecy
5. Moderate combativeness

Top-notch Excellence. Apple’s organizational culture comes with a policy of hiring only
the best of the best in the labor market. Steve Jobs was known to fire employees who
did not meet his expectations. This tradition continues under Tim Cook. Such a tradition
maintains and reinforces a corporate culture that promotes, appreciates, and expects
top-notch excellence among employees. This cultural trait is institutionalized in Apple’s
organization. For example, the company has programs that recognize and reward
excellence among workers. Excellence is emphasized as a critical success factor in the
business, especially in product design and development, which is a major growth
strategy (see Apple Inc.’s Generic Strategy and Intensive Growth Strategies).

Creativity. This cultural characteristic pertains to new ideas that help improve the
business and its products. Apple’s management favors creativity among employees’
knowledge, skills, and abilities. This characteristic of the corporate culture enables the
company to ensure sufficient creativity, especially among employees involved in product
design and development processes. Such creativity is observable in the design and
features of iPhones, Macs, and iPads, among other products included in Apple’s
marketing mix or 4Ps. In this regard, the organizational culture helps maintain the
company’s capacity to satisfy customers’ expectations and preferences.
Innovation. Apple’s organizational culture supports rapid innovation. The company is
frequently appraised as one of the most innovative companies in the world. Based on
this cultural trait, the firm trains and motivates it employees to innovate in terms of
individual work performance and contributions to product development processes. The
corporate culture facilitates rapid innovation, which is at the heart of Apple Inc.’s
business. Rapid innovation ensures that the company continues to introduce new
products that are profitable and attractive to target customers.

Secrecy. Steve Jobs developed Apple to have an organizational culture of secrecy.

This cultural characteristic continues to define the company’s human resource
development. Secrecy is part of the company’s strategy to minimize theft of proprietary
information or intellectual property. It is also a strategic management approach that
enables Apple Inc. to maximize its leading edge against competitors. Through the
corporate culture, employees are encouraged and expected to keep business
information within the company. This cultural trait is reinforced through the company’s
policies, rules, and employment contracts. In this context, Apple’s organizational culture
helps protect the business from corporate espionage and the negative effects of
employee poaching.

Moderate Combativeness. Apple’s organizational culture has moderate

combativeness. This feature is linked to Steve Jobs and his combative approach to
leadership. He was known to randomly challenge employees to ensure that they have
what it takes to work at Apple. However, under Tim Cook’s leadership, the company has
been changing its corporate culture to a more sociable and a less combative one.
Nonetheless, combativeness remains a major influence in the business. Apple’s
corporate culture exhibits a moderate degree of combativeness that presents
challenges that aim to enhance employees’ output.

Apple’s Corporate Culture – Advantages, Disadvantages,

Recommendations

Advantages and Benefits. The combination of top-notch excellence, creativity and

innovation in Apple’s organizational culture supports the company’s industry leadership.
The business is widely regarded as a leader in terms of innovation and product design.
These cultural characteristics empower Apple and its human resources to stand out and
stay ahead of competitors. This corporate culture enables success and competitive
advantages, as well as the further strengthening of the company’s brand, which is one
of the key business strengths shown in the SWOT analysis of Apple Inc. Creativity and
excellence are especially important in the company’s rapid innovation processes for
continuous competitiveness and business development.

Drawbacks and Weaknesses. Apple’s corporate culture brings challenges because of

the emphasis on secrecy and the moderate degree of combativeness. An atmosphere
of secrecy limits rapport among workers. Also, moderate combativeness has the
potential to limit or reduce employees’ morale. These cultural issues can reduce
business effectiveness and increase employee turnover. Apple Inc. can address this
situation by modifying its organizational culture to reduce but not necessarily remove
combativeness. This recommendation focuses on reducing the disadvantages of
combativeness, without eliminating the benefits of combative approaches in the
company. Also, Apple can integrate new cultural traits to keep the business relevant,
given trends and changes in the information technology, cloud services, digital content
distribution, and consumer electronics industry environment.

Apple Inc.’s Organizational Structure & Its Characteristics (An

Analysis)
UPDATED ONUPDATED ON FEBRUARY 14, 2019 BY PAULINE MEYER

A close-up of two Apple iPhones. Apple Inc.’s

organizational structure supports extensive managerial control but has limited flexibility in
facilitating responsiveness to changes in the global information technology and consumer
electronics industries. (Photo: Public Domain)

Apple Inc.’s organizational structure contributes to effective and rapid innovation, which
is a critical success factor of the business in the information technology, online services,
and consumer electronics industries. A company’s organizational or corporate structure
is the combination of workforce groups, resources, and interconnections among these
groups and resources in the business. The organizational design determines how the
organizational structure is developed and managed. In this business analysis case of
Apple Inc., the corporate structure supports strategies that push for further technological
innovation. The company’s structural characteristics maintain a traditional hierarchy,
with some key elements from other types of organizational structure. Apple Inc.’s
success is linked to innovation and the leadership of Steve Jobs, and its corporate
structure is partly responsible for ensuring support for such leadership. Now, under Tim
Cook’s leadership, Apple has made some small changes in its organizational structure
to suit current global market and industry demands.

Apple’s organizational structure is effective in supporting business performance to

ensure leadership in the industry, especially with regard to competing
against Google, Microsoft, IBM, Intel, Amazon.com, Sony, PayPal, and many other
firms. The Porter’s Five Forces analysis of Apple Inc. determines that these competitors
impose the strong force of competitive rivalry in the company’s external environment.
Still, through the effective use and evolution of its corporate structure, Apple continues
to improve its capabilities and competitive advantages, especially in the area of rapid
 and creative innovation and product design for competitive products in the international
market.

Apple’s Organizational Structure Type and Characteristics

Apple Inc. has a hierarchical organizational structure, with notable divisional

characteristics and a weak functional matrix. The hierarchy is a traditional structural
feature in business organizations. The divisional characteristics refer to the product-
based grouping within Apple, such as for iOS and macOS. The weak functional matrix
involves inter-divisional collaboration, while the hierarchy is preserved. The following
are the main characteristics of Apple’s corporate structure:

1. Spoke-and-wheel hierarchy
2. Product-based divisions
3. Weak functional matrix

Spoke-and-Wheel Hierarchy. A bird’s-eye view of Apple’s organizational structure

shows considerable hierarchy. In the past, everything went through Steve Jobs. Jobs
made all the major strategic management decisions. However, under Tim Cook’s
leadership, this hierarchy in Apple’s corporate structure has slightly changed. The
company now has more collaboration among different parts of the organization, such as
software teams and hardware teams. Apple’s vice presidents have more autonomy,
which was limited and minimal under Jobs. Thus, the company’s organizational
structure is now less rigid, but still has a spoke-and-wheel hierarchy where Tim Cook is
at the center. The upper tier (innermost tier in the spoke-and-wheel circle) of the
corporate structure has function-based grouping, which is an element derived from
the functional type of organizational structure. Senior vice presidents who report to Tim
Cook handle business functions. For example, Apple has a senior vice president for
retail, and a senior vice president for worldwide marketing. In this structural feature, the
company’s top leaders address business needs in terms of business function areas.

Product-based Divisions. The upper and lower tiers of Apple’s corporate structure has
product-based divisions, which is an element derived from the divisional type of
organizational structure. There are senior vice presidents and vice presidents for
different outputs or products. For example, Apple has a Senior Vice President for
Software Engineering (iOS and macOS), a Senior Vice President for Hardware
Engineering (Mac, iPhone, iPad and iPod), and a Senior Vice President for Hardware
Technologies (hardware components). Apple Inc.’s marketing mix or 4P is linked to this
structural characteristic. This aspect of the corporate structure is used to manage
specific products or product components that the company delivers to its target
customers.

Weak Functional Matrix. Apple Inc.’s weak functional matrix refers to the collaborative
interactions among various components of the business. In a weak functional matrix,
top management determines project direction, while project heads have limited authority
and control. For example, the corporate structure allows hardware teams to collaborate
with software teams. In this way, the company facilitates information dissemination that
is necessary for innovation processes. This structural feature contributes to effective
and rapid innovation processes, which are a major business strength shown in
the SWOT analysis of Apple Inc. Through this characteristic of the organizational
structure, the company maintains strong innovation processes that support brand
development and the use of premium-pricing strategies.

Apple Inc.’s Corporate Structure – Advantages, Disadvantages,

Recommendations

Strong Corporate Control. The hierarchy in Apple’s organizational structure supports

strong management control in the organization. Theoretically, hierarchy empowers top
leaders like Tim Cook to control everything in the organization. Through the hierarchy,
business functions and product-based groups are effectively controlled through the
decisions of the CEO and other top executives. This advantage of Apple Inc.’s
corporate structure facilitates rapid and effective strategic management implementation,
and helps in establishing coherence throughout the entire organization.

Limited Organizational Flexibility. Apple’s corporate structure has the downside of

low flexibility. Hierarchy typically prevents lower levels of the structure to flexibly
respond to current business needs and market demands. For example, the company’s
product-based divisions must wait for directives from the CEO or other top executives to
proceed in implementing changes that address trends in the market for consumer
electronics. However, Tim Cook has already made slight improvements by increasing
collaboration among different parts of the firm. Such collaboration improves
organizational flexibility. Still, Apple’s organizational structure does not support rapid
changes because everything must go through Tim Cook and the top management.

Apple Inc. SWOT Analysis & Recommendations

UPDATED ONUPDATED ON FEBRUARY 14, 2019 BY NATHANIEL SMITHSON

An Apple Wireless Keyboard (German language)

and Magic Mouse. A SWOT analysis of Apple Inc. shows that the business is strong but must
address the threats of competition and imitation in the computer technology, cloud services,
digital content distribution, and consumer electronics industries. (Photo: Public Domain)
 Apple Inc.’s success is linked to the ability to use business strengths to overcome
weaknesses and threats, and to exploit opportunities in the industry environment. A
SWOT analysis of the company gives insights on the strategic actions of the business,
especially in maximizing its growth based on its strengths and opportunities. The SWOT
analysis framework is a strategic management decision-making tool that determines the
most pressing issues facing the company, based on the internal business conditions
and the external environment. In this case, the SWOT analysis of Apple Inc. scans the
business for relevant strengths, weaknesses, opportunities, and threats (SWOT
variables), with reference to various industries and markets. The company is involved in
the computing technology (hardware and software), consumer electronics, cloud
computing services, and online digital content distribution services industries. This
condition necessitates that Apple develop a diverse set of strategies to ensure its
competitiveness and business growth.

This SWOT analysis of Apple Inc. presents the strategic factors that influence the
decisions of CEO Tim Cook and managers in developing the business. With its
operations in various markets around the world, the company deals with different sets of
SWOT factors based on regional situations. Also, the Porter’s Five Forces analysis of
Apple Inc. establishes that the company faces the strong force of competition linked to
the aggressiveness of other technology firms, such as Google, IBM, Amazon.com,
Samsung, Sony, Lenovo, Dell, and PayPal. This competitive landscape requires
innovative strategies and tactics to achieve continuous business growth and
development, and to fulfill Apple’s corporate mission statement and corporate vision
statement.

Apple’s Strengths (Internal Strategic Factors)

This aspect of the SWOT analysis framework identifies the strengths that enable the
company to overcome weaknesses, take advantage of opportunities, and withstand
threats in its business environment. These strengths are internal factors specific to the
conditions within the business organization. In this case, the following are the most
notable strengths of Apple Inc.:

1. Strong brand image

2. High profit margins
3. Effective rapid innovation processes

Apple is one of the most valuable and strongest brands in the world. In the context of
this SWOT analysis, the company is capable of introducing profitable new products by
virtue of its strong brand image. In addition, Apple’s marketing mix or 4P involves the
premium pricing strategy, which comes with high profit margins. This internal strategic
factor is a major strength because it maximizes profits, even when sales volumes are
limited. Moreover, the generic competitive strategy and intensive growth strategies of
Apple Inc. involve effective rapid innovation, which enables the business to keep
abreast with the latest technologies to ensure competitive advantages. Based on this
aspect of the SWOT analysis of Apple Inc., the company’s strengths are difficult to
 compete with, thereby supporting continued leadership in the global industry
environment.

Apple Inc.’s Weaknesses (Internal Strategic Factors)

In this aspect of the SWOT analysis, the emphasis is on the weaknesses or

inadequacies of the company. Weaknesses are internal factors that are obstacles to
business growth. The following business weaknesses are the most notable in the case
of Apple:

1. Limited distribution network

2. High selling prices
3. Dependence of sales on high-end market segments

Apple Inc. has a limited distribution network because of the company’s policy of
exclusivity. For example, the company carefully selects the authorized sellers of its
products. The SWOT analysis framework considers this exclusivity strategy as a factor
that limits market reach. This weakness exists despite exclusivity’s advantages, such as
Apple’s strong control on the distribution of products. In addition, because of its
premium pricing strategy, the company has the weakness of the dependence of sales
on high-end market segments. High prices attract customers from the middle- and high-
income brackets, while preventing customers from low-income brackets to easily
purchase the company’s products. This internal strategic factor is a considerable
weakness because high-end market segments represent only a minority of the global
market. Based on the internal factors in this aspect of the SWOT analysis, Apple Inc.’s
pricing and distribution strategies impose limitations or weaknesses in the business.

Opportunities for Apple Inc. (External Strategic Factors)

This aspect of the SWOT analysis of Apple Inc. pinpoints the most significant
opportunities that are available to the business. Opportunities are external factors based
on the industry environment. These factors influence the strategic direction of business
organizations. In Apple’s case, the following are the most significant opportunities:

1. Expansion of the distribution network

2. Higher sales volumes based on rising demand
3. Development of new product lines

Apple Inc. has the opportunity to expand its distribution network. Such opportunity
directly relates to the weakness of the company’s limited distribution network. This
SWOT analysis emphasizes the need for the company to change its distribution
strategy. An expanded distribution network can help Apple reach more customers in the
global market. In relation, the company has the opportunity to increase its sales
volumes through aggressive marketing, especially for mobile products. This opportunity
is linked to the rising demand for mobile access, as illustrated in the PESTEL/PESTLE
 analysis of Apple Inc. Furthermore, the company has the opportunity to explore new
product lines. Its current product lines are highly successful. However, with further
innovation, the company can develop and introduce new products, like what it has
already achieved with the Apple Watch. Developing new product lines can support
business growth in the international market. Thus, this aspect of the SWOT analysis of
Apple indicates that the business has major opportunities for further growth despite
aggressive competition.

Threats Facing Apple Inc. (External Strategic Factors)

In this aspect of the SWOT analysis, the focus is on the threats that the company
experiences from various sources, such as competitors. Threats are external factors
that limit or reduce the financial performance of businesses. In Apple’s case, the
following threats are the most significant:

1. Aggressive competition
2. Imitation
3. Rising labor cost in various countries

Tough competition in the industry is partly because of the aggressiveness of firms.

Apple competes with firms like Samsung, which also uses rapid innovation. In the
context of this SWOT analysis, aggressive competition has a limiting effect on Apple
Inc. Because of the aggressive behaviors of competing firms, it is necessary to have
strong fundamentals for maintaining competitive advantages. In addition, the company
faces the threat of imitation. This threat is significant because of the large number of
local and multinational firms that imitate the design and features of Apple’s products.
Moreover, rising labor costs involving contract manufacturers, such as those in China,
reduce profit margins or push selling prices even higher. Based on the external strategic
factors in this SWOT analysis, Apple Inc.’s performance could suffer because of
aggressive competition and imitation of product design.

SWOT Analysis of Apple Inc. – Recommendations

The internal and external factors discussed in this SWOT analysis indicate that Apple
Inc. possesses major strengths to effectively address organizational weaknesses. The
company can also use these strengths to exploit opportunities, such as the expansion of
its distribution network. Moreover, the company can use its strong brand image and
rapid innovation processes to successfully develop and launch new product lines.
However, Apple faces the significant threats of aggressive competition and imitation,
which are major challenges affecting players in the global market for consumer
electronics, computer hardware and software, and online digital content distribution
services.

Based on the strategic issues highlighted in this SWOT analysis of Apple Inc., a
recommendation is to continue the aggressive and rapid innovation involved in
developing the company’s products. Such innovation reduces the adverse effects of
imitation on revenues. Also, it is recommended that the company further enhance the
automation of its production processes, and support the automation of its contract
manufacturers, as a way of addressing the rising labor costs involving Apple product
manufacturers. Another recommendation is to establish partnerships with more
distributors to improve the overall market reach of the company’s distribution network.

Apple Inc. PESTEL/PESTLE Analysis & Recommendations

UPDATED ONUPDATED ON JUNE 9, 2019 BY JESSICA LOMBARDO

An iPhone, one of Apple’s bestselling products. A

PESTEL/PESTLE analysis of Apple Inc. indicates that most of the external factors in the
company’s remote or macro-environment present opportunities for the consumer electronics
and information technology services business. (Photo: Public Domain)

Apple Inc.’s high performance is linked to effectiveness in addressing external factors in

the company’s remote or macro-environment. The corporation’s success is a result of
strategic management that exploits opportunities and protects the business from threats
in the consumer electronics and information technology services industries. This
PESTEL/PESTLE analysis of Apple Inc. identifies the most significant external factors
that the company must strategically address in its industry environment. The
PESTEL/PESTLE analysis framework evaluates the political, economic, sociocultural,
technological, ecological, and legal factors relevant to the business. These strategic
factors are opportunities or threats that impact business performance relative to
competitors, such as Google, Microsoft, Amazon, Samsung, IBM, Dell, HP, Sony,
Lenovo, Huawei, and LG. While Apple has a leading position, especially in the premium
consumer electronics market, this PESTEL/PESTLE analysis shows that the company
must continue evolving its strategies to keep its leadership. Effectiveness in addressing
these external strategic factors ensures that Apple remains strong despite tough
competition in the global market.

The external factors in Apple’s remote or macro-environment indicate the value of

strategic management and flexible long-term strategic planning in managing external
factors. This PESTEL/PESTLE analysis serves as a guide for strategic formulation
processes to address external pressures the technology corporation is
experiencing. Apple Inc.’s generic strategy for competitive advantage and intensive
 strategies for growth are examples of strategic congruence for countering such
pressures.

Political Factors Affecting Apple’s Business

The political external factors in Apple’s remote or macro-environment mainly present

opportunities. This aspect of the PESTEL/PESTLE analysis model indicates the
influence of governments and related organizations on businesses. In Apple’s case, the
following are some of the major political external factors:

1. Improving free trade policies (opportunity)

2. Stable politics in developed countries (opportunity)
3. Trade disputes, especially between the U.S. and China (threat)

Better overall free trade policies are created over time. This external strategic factor
increases the opportunities for Apple Inc. to distribute more of its products around the
world. This PESTEL/PESTLE analysis also identifies the stability of the political
landscape of developed countries as an opportunity for Apple to grow, considering the
reduced political problems affecting business operations in these countries. In spite of
these trends that present opportunities, the political external factor of trade disputes,
especially between the United States and China, creates a threat against the company’s
potential growth and the global sales revenues of its products, such as consumer
electronics. For example, growing China-U.S. tensions could lead China to impose
higher tariffs on imported electronic components used in Apple’s product assembly.
Based on this part of the PESTEL/PESTLE analysis, Apple can improve its performance
by taking advantage of political opportunities in its remote or macro-environment,
although caution is needed to ensure stability despite trade disputes.

Economic Factors Important to Apple Inc.

Most of the economic external factors in Apple’s remote or macro-environment create

opportunities. This aspect of the PESTEL/PESTLE analysis model indicates market and
industry conditions that impact firms. In this external analysis case of Apple Inc., the
following economic external factors are the most significant:

1. Stable economies of developed countries (opportunity)

2. Rapid growth of developing countries (opportunity)
3. Increasing disposable incomes among target customers (opportunity)

The economic stability of developed countries creates opportunities for Apple’s

expansion. However, the rapid growth of developing countries is a more significant
economic external factor in this PESTEL/PESTLE analysis case, in terms of support for
growing the technology business. For example, the high economic growth rates of Asian
countries are opportunities for Apple to increase its revenues through sales in these
foreign markets. In relation, higher disposable incomes create more opportunities to sell
 the company’s relatively high-priced technology products. In exploiting these economic
opportunities, it is essential to consider competitive forces in the international market, as
described in the Porter’s Five Forces analysis of Apple Inc. These external strategic
factors indicate growth potential for the corporation and its competitors, especially large
multinational firms like Samsung. Based on this part of the PESTEL/PESTLE analysis
framework, speed and effectiveness are critical in Apple Inc.’s growth and expansion
efforts because competitors also target these same economic opportunities.

Social/Sociocultural Factors in Apple’s Industry Environment

Apple’s business is subject to the effects of social or sociocultural trends. This aspect of
the PESTEL/PESTLE analysis model points to the social external factors that influence
consumer behaviors and expectations. In Apple’s case, the following sociocultural
trends are significant in the remote or macro-environment:

1. Rising use of mobile access (opportunity)

2. Increasing dependence on digital systems (opportunity)
3. International anti-Apple sentiments (threat)

The rising use of mobile access is an opportunity to grow Apple Inc.’s revenues. This
social external factor relates to the increasing demand for devices like smartphones and
tablets. This PESTEL/PESTLE analysis also points to the increasing dependence on
digital systems, which is another sociocultural trend that creates opportunities for Apple
to sell more of its products based on higher demand. Despite these opportunities, the
company faces the social threat of opposition against its business operations. Anti-
Apple sentiments are mounting, questioning business practices, such as the company’s
lawsuits against third-party repair service providers that repair products like the iPhone
and MacBook. In the PESTEL/PESTLE analysis context, these sentiments have the
potential to reduce brand image and consumer confidence in the corporation’s
technological products. These sociocultural factors emphasize the importance of Apple
Inc.’s corporate social responsibility strategy. Such strategy helps satisfy stakeholders,
including customers and governments. In addition, Apple Inc.’s corporate culture is a
relevant factor because it influences the quality of service provided to customers. The
company’s internal cultural approach must align with the sociocultural trends influencing
the global market. In this part of the PESTEL/PESTLE analysis of Apple Inc.,
opportunities for growth, as well as threats against the business, are identified. These
strategic concerns require that the company continue improving its policies and
practices, as well as its approaches to technological innovation. Also, Apple Inc.’s
marketing mix or 4Ps must include strategies that match such social external factors.

Technological Factors in Apple’s Business Environment

The technological external factors in Apple’s remote or macro-environment generally

provide opportunities for the enterprise. In this aspect of the PESTEL/PESTLE analysis
framework, current technologies and technological trends are evaluated based on their
 effect on business conditions. In Apple’s external analysis case, the following
technological external factors are the most significant:

1. Growing cloud computing demand (opportunity)

2. Increasing technological integration in businesses (opportunity)
3. Growing mobile market (opportunity)
4. Growing technological capabilities of other firms (threat)

This PESTEL/PESTLE analysis of Apple Inc. identifies the growing demand for cloud
computing as an opportunity to grow the business. The company now offers cloud
services, although to a limited extent. In exploiting this opportunity, together with
support from Apple Inc.’s corporate structure, developing an expanded cloud
infrastructure could maximize the profitability of the business in offering cloud-
computing services. In relation, the external strategic factor of increasing technological
integration presents the opportunity to enhance the company’s services and grow the
business by offering its technological goods and services to more customers, including
organizations. Furthermore, this PESTEL/PESTLE analysis includes the growth of the
mobile market as an opportunity for Apple Inc. to gain higher revenues, including
revenues through the App Store and related digital content distribution platforms.
However, the technological advancement of other firms threatens the company, as
more new players could enter the market. Thus, to ensure the achievement of Apple
Inc.’s corporate vision and mission statements, it is beneficial to reinforce business
capabilities to exploit the opportunities and protect the business against the competitive
threats shown in this part of the PESTEL/PESTLE analysis.

Ecological/Environmental Factors

The ecological factors in Apple Inc.’s remote or macro-environment provide

opportunities for business improvement. This aspect of the PESTEL/PESTLE analysis
model highlights ecological trends and their impacts on business. In Apple’s case, the
following ecological external factors are the most important:

1. Business sustainability trend (opportunity)

2. Energy efficiency trend (opportunity)

The business sustainability trend is an ecological factor linked to increasing favor

among businesses to adopt sustainable practices, based on concerns about the
adverse environmental impact of business operations. In this PESTEL/PESTLE analysis
of Apple Inc., such an ecological trend offers the opportunity to strengthen the
company’s corporate image. In addition, the energy efficiency trend is an ecological
external factor that promotes the adoption of newer and more efficient technologies
among businesses and customers. Apple has the opportunity to improve its operational
cost efficiencies in this regard, while offering more attractive products to an increasingly
environmentally aware customer population. Based on this part of the PESTEL/PESTLE
analysis model, Apple addresses these ecological/environmental factors in its remote or
macro-environment. The company has strategic measures to adjust its operations and
 technological products to respond to these ecological trends. Apple Inc.’s operations
management also supports business efforts to exploit opportunities on these trends.

Legal Factors that Limit Apple

The legal external factors in Apple’s remote or macro-environment create threats to the
business. This aspect of the PESTEL/PESTLE analysis framework indicates the impact
of laws or regulations on businesses. In Apple’s case, the following are the most
significant legal external factors:

1. Increasing privacy regulations (opportunity & threat)

2. Legal challenges against Apple’s policies and practices (threat)

Governments’ pressure on privacy in the digital age has resulted in increasing privacy
regulations on businesses like Apple Inc. This legal external factor is a threat that could
impose costly regulatory compliance requirements and more limits on the technology
company. However, this PESTEL/PESTLE analysis identifies the same external factor
as a trend that presents the opportunity for Apple to boost its business through
enhanced privacy measures. In addition, the company faces legal challenges related to
its practices and policies on after-sales service and other areas of the business. For
example, in Australia, the European Union, and the United States, among other
countries, the company has faced strong criticism and legal battles regarding its policies
on third-party repair services. Based on this part of the PESTEL/PESTLE analysis
model, Apple must emphasize privacy protection and regulatory compliance in all of its
products, and consider adjusting its policies and practices to address current legal
pressures on the business.

Apple Inc. PESTEL/PESTLE Analysis – Recommendations

This PESTEL/PESTLE analysis shows that the majority of external factors in Apple’s
remote or macro-environment provide opportunities. Given its current industry position,
the company can exploit these opportunities to expand its reach in the global
information technology goods and services market. However, Apple must develop
suitable strategies to effectively address the threats identified, especially those in the
legal dimension of its remote or macro-environment. Based on this PESTEL/PESTLE
analysis, it is expected that Apple will remain in its strong industry position.
Nonetheless, the dynamics of the market and the presence of aggressive competitors
could drastically change the company’s strategic position. In this context, it is of critical
importance to further improve the strengths identified in the SWOT analysis of Apple
Inc.

Apple Inc. Five Forces Analysis (Porter’s Model)

UPDATED ONUPDATED ON FEBRUARY 22, 2019 BY EDWARD FERGUSON
 MacBook Pro, iPad and iPhone from Apple. A
Five Forces analysis (Porter’s Model) of Apple Inc. reveals an industry environment where the
company must prioritize the external factors of competition and the bargaining power of buyers
in the consumer electronics, computing technology, and online digital content distribution
markets. (Photo: Public Domain)

Apple Inc. has achieved success as one of the most valuable companies in the world.
This Five Forces analysis gives insights about the external factors influencing the
company’s success. Michael E. Porter’s Five Forces framework is a strategic
management tool for evaluating the five forces affecting the business organization:
customers, suppliers, substitutes, new entrants, and competition. A Five Forces
analysis of Apple Inc. sheds light on what the company does to ensure industry
leadership despite the negative effects of external factors in the competitive landscape
of the computer software and hardware, consumer electronics, and online digital
content distribution markets, which involve firms
like Microsoft, Google, Amazon, Walmart, Samsung, Dell, Sony, and Lenovo.
Established in 1976, Apple has succeeded to become a dominant competitor in the
industry under the leadership of Steve Jobs. Based on this Five Forces analysis, the
company addresses competition and the bargaining power of buyers, which are among
the most significant external factors impacting the business. Also, this Five Forces
analysis indicates that Apple Inc. must focus its strategic efforts on these two external
factors to keep its leadership in the industry.

This Five Forces analysis (Porter’s model) of external factors in Apple Inc.’s industry
environment points to competitive rivalry or intensity of competition, and the bargaining
power of buyers or customers as the primary forces for consideration in the company’s
strategic formulation. Nonetheless, all of the five forces influence the company’s
business situation, together with the effects of others external factors, such as the ones
identified in the PESTEL/PESTLE analysis of Apple Inc.

Five Forces Analysis of Apple Inc. – Overview

Apple’s strategies are partly based on the need to address forces in the external
business environment. These forces can limit or reduce the firm’s market share,
revenues, profitability, and business development potential. This Five Forces analysis,
based on Porter’s framework, points to the following strengths or intensities of external
factors in Apple Inc.’s industry environment:
1. Competitive rivalry or competition: Strong force
2. Bargaining power of buyers or customers: Strong force
3. Bargaining power of suppliers: Weak force
4. Threat of substitutes or substitution: Weak force
5. Threat of new entrants or new entry: Moderate force

Considering the five forces, Apple must focus its attention on competitive rivalry and the
bargaining power of buyers. This external analysis supports the company’s current
position of continuous innovation. Through rapid and continuous innovation, Apple
effectively addresses the five forces in its external environment, although much of the
company’s effort is to strengthen its position against competitors and to keep attracting
customers to Apple products. An applicable recommendation is to intensify research
and development for innovation to develop novel products that will complement the
iPhone, the iPad, and other existing products.

Competitive Rivalry or Competition with Apple (Strong Force)

Apple faces the strong force of competitive rivalry or competition. This component of
Porter’s Five Forces analysis model determines the intensity of the influence that
competitors have on each other. In Apple’s case, this influence is based on the following
external factors:

1. High aggressiveness of firms (strong force)

2. Low differentiation of products (strong force)
3. Low switching cost (strong force)

Companies like Samsung and LG aggressively compete with Apple. Such

aggressiveness, observable in rapid innovation, aggressive advertising, and imitation,
impose a strong force in the industry environment. Moreover, in terms of product
differentiation, available products in the market are generally similar in fulfilling specific
purposes. For example, many popular apps are available for Android and iOS devices,
and cloud storage services from different companies are available to iOS users. In
Porter’s Five Forces analysis model, this condition creates a strong force by making it
easy for customers to switch to other sellers or providers. On the other hand, the low
switching cost means that it is easy for customers to switch from Apple to other brands,
based on price, function, accessibility, network externalities, and related concerns. The
combination of these external factors in this part of the Five Forces analysis leads to
tough competitive rivalry that is among the most significant considerations in Apple’s
strategic management.

Bargaining Power of Apple’s Customers/Buyers (Strong Force)

The bargaining power of buyers is strong in affecting Apple’s business. This component
of Porter’s Five Forces analysis model determines how buyers’ purchase decisions and
related preferences and perceptions impact businesses. In Apple Inc.’s case, buyers’
strong power is based on the following external factors:
1. Low switching cost (strong force)
2. Small size of individual buyers (weak force)
3. High buyer information (strong force)

It is easy for customers to change brands, thereby making them powerful in compelling
companies like Apple to ensure customer satisfaction. On the other hand, each buyer’s
purchase is small compared to the company’s total revenues. Porter’s Five Forces
framework indicates that this condition makes customers weak at the individual level.
However, the availability of detailed comparative information about competing products’
features empowers buyers to shift from one provider to another. This external factor
enables buyers to exert a strong force on Apple and other brands. Thus, this part of the
Five Forces analysis shows that Apple must include the bargaining power of buyers or
customers as one of the most significant strategic variables in the business.

Bargaining Power of Apple’s Suppliers (Weak Force)

Apple Inc. experiences the weak force of the bargaining power of suppliers. This
component of Porter’s Five Forces analysis model indicates the influence of suppliers in
imposing their demands on the company and its competitors. In Apple’s case, suppliers
have a weak bargaining power based on the following external factors:

1. Moderate to high number of suppliers (weak force)

2. Moderate to high overall supply (weak force)
3. High ratio of firm concentration to supplier concentration (weak force)

The global size of its supply chain allows Apple Inc. to access many suppliers around
the world. In Porter’s Five Forces analysis context, the resulting high number of
suppliers is an external factor that presents only a weak to moderate force against the
company. In relation, the moderate to high overall supply of inputs, such as
semiconductors, makes individual suppliers weak in imposing their demands on firms
like Apple. Also, the ratio of firm concentration to supplier concentration further limits
suppliers’ power and influence in the industry. This external factor reflects the presence
of a small number of big companies like Apple and Samsung, in contrast to a larger
number of medium-sized and big suppliers. Thus, this part of the Five Forces analysis
shows that the bargaining power of suppliers is a minor issue in developing Apple Inc.’s
strategies for supply chain management, value chain effectiveness, innovation, and
industry leadership.

Threat of Substitutes or Substitution (Weak Force)

The competitive threat of substitution is weak in affecting Apple Inc.’s computing

technology, consumer electronics, and online services business. This component of
Porter’s Five Forces framework determines the strength of substitute products in
attracting customers. In Apple’s case, substitutes exert a weak force based on the
following external factors:
1. Moderate to high availability of substitutes (moderate force)
2. Low performance of substitutes (weak force)
3. Low buyer propensity to substitute (weak force)

Some substitutes to Apple products are readily available in the market. For example,
instead of using iPhones, people can use digital cameras to take pictures, and landline
telephones to make calls. In Porter’s Five Forces analysis model, this external factor
exerts a moderate force in the industry environment. However, these substitutes have
low performance because they have limited features. Many customers would rather use
Apple products based on convenience and advanced functions. This condition makes
substitution a weak force in impacting the company’s business. Also, buyers have a low
propensity to substitute. For instance, customers would rather use smartphones than go
through the hassle of buying and maintaining a digital camera, a cellular phone, and
other devices. This part of the Five Forces analysis shows that Apple does not need to
prioritize the threat of substitution, specifically in management decisions in business
processes like marketing, market positioning, and product design and development.

Threat of New Entrants or New Entry (Moderate Force)

Apple Inc. experiences the moderate force of the threat of new entrants. This
component of Porter’s Five Forces analysis model indicates the effect and possibility of
new competitors entering the market. In Apple’s case, new entrants exert a moderate
force based on the following external factors:

1. High capital requirements (weak force)

2. High cost of brand development (weak force)
3. Capacity of potential new entrants (strong force)

Establishing a business to compete against firms like Apple Inc. requires high
capitalization. Also, it is extremely costly to develop a strong brand to compete against
large companies like Apple. These external factors make new entrants weak. However,
there are large firms with the financial capacity to enter the market. For example,
Google has already done so through products like Nexus smartphones. Samsung also
used to be a new entrant. These examples show that there are large companies that
have the potential to directly compete against Apple Inc. Thus, the overall threat of new
entry is moderate. This part of the Five Forces analysis shows that Apple must maintain
its competitive advantage through innovation and marketing to remain strong against
new entrants’ moderate competitive force.

Apple Inc.’s Generic Strategy & Intensive Growth Strategies

UPDATED ONUPDATED ON JUNE 5, 2019 BY PAULINE MEYER
 An Apple Watch. Apple Inc.’s generic strategy
(Porter’s model) and intensive growth strategies (Ansoff Matrix) are aligned to support the
company’s leadership in various consume electronics and information technology services
markets worldwide. (Photo: Public Domain)

Apple Inc.’s generic strategy and intensive growth strategies directly relate to the
company’s strategies in pricing, marketing, and other areas of the business. Michael E.
Porter’s model for generic strategies defines strategic options that the company can use
to develop its competitive advantages in the consumer electronics and information
technology and services industries. As one of the most valuable companies in the world,
Apple shows that its generic strategy is a major determinant of competitive advantage
against other firms like Samsung, Google, Amazon, Microsoft, Dell, HP,
Lenovo, Sony, IBM, BlackBerry, Huawei, LG, and even Walmart with its content
distribution service, Vudu. On the other hand, Igor Ansoff’s Matrix of growth strategies
presents ways for the technology business to intensively grow in current or new markets
and industries. In this case, Apple’s intensive growth strategies support the ability to
maintain a strong position in the global market. With a high rate of innovation and
emphasis on excellence in product design, the enterprise succeeds even with its
relatively high selling prices. This successful positioning indicates Apple’s effectiveness
in using its generic strategy for competitive advantage, and intensive strategies for
business growth.

Apple’s generic strategy aligns with the company’s intensive growth strategies,
especially in maximizing the use of the organization’s competitive advantages. In
particular, the intensive growth strategy of product development is key to fulfilling this
generic strategy and supporting the long-term growth and success of the company’s
technological goods and services. This alignment between the generic competitive
strategy and the intensive growth strategies provide support for fulfilling Apple Inc.’s
corporate mission and vision statements.

Apple’s Generic Strategy (Porter’s Model) & Objectives

Apple Inc.’s generic strategy is broad differentiation. This generic strategy focuses on
key features that differentiate the company and its information technology products from
competitors. Through the broad differentiation generic strategy, Apple stands out in the
market. For example, elegant design and user-friendliness of products, combined with
high-end branding, effectively differentiate the technology business. This generic
strategy means that Apple always aims to set itself apart from competitors not by price
but by competitive advantages based on product design that attracts customers. Such
design includes seamless connectivity among devices and cutting-edge aesthetics.
Even though this generic strategy makes Apple different, the company still broadly
reaches various segments of the market. The firm’s products are designed for
everyone, thereby supporting a broad market reach. For example, Apple targets
individuals and business organizations through the MacBook product line. In this way,
the generic strategy of broad differentiation supports the company in maintaining its
competitive advantage, leadership, and position as a high-end and high-value
technology business.

The broad differentiation generic strategy has significant implications on Apple’s

strategic objectives. For example, to apply this strategy, the company must continue
emphasizing innovation through research and development. Apple must keep
developing innovative products so that the business maintains its competitive
advantage. Competitors eventually catch up with new technologies and new products,
so the broad differentiation generic strategy compels the company to continuously
innovate to keep itself always ahead of the competition. Thus, continuous innovation is
one of Apple’s strategic objectives based on the broad differentiation generic
competitive strategy. In addition, to maintain business growth, the company must keep
growing its market reach, such as in the global consumer electronics market. In its
generic strategy for competitive advantage, Apple does not focus on any specific market
segment. Instead, the company competes by selling various goods and services that
suit the various segments of the consumer electronics and information technology
services industries. Thus, another of Apple’s strategic objectives based on its generic
strategy is to penetrate markets to ensure a broad reach. Such expansion and business
growth are achieved through intensive strategies for growth.

Apple’s Intensive Growth Strategies (Ansoff Matrix)

Product Development. Apple uses product development as its main intensive strategy
for growth. Product development requires that the company develop attractive and
profitable technology products to grow its market share and business performance.
Apple implements this intensive growth strategy through innovation in its research and
development processes. Through product development, the company uses innovation
as a critical success factor and competitive advantage. For example, the business
continues to innovate products like the iPhone, iPad, and Apple Watch. In this intensive
growth strategy, the company grows because new products allow the business to
generate more revenues, such as through the sale of new iPhone models. The
company’s generic strategy agrees with this intensive growth strategy by focusing on
technological innovation to increase competitive advantage and profits. Apple Inc.’s
organizational structure supports this growth strategy. The structure’s product-based
divisions enable strategic management specific to product development. Also, Apple
Inc.’s organizational culture emphasizes innovation that supports product development.
Market Penetration. Apple Inc. uses market penetration as its second most significant
intensive strategy for growth. Market penetration involves gaining a larger share of the
current market by selling more of the company’s current products. For example, Apple
applies this growth strategy by selling more iPhones and iPads to its current markets in
North America. Also, the company achieves more sales by adding more authorized
sellers to boost competitive advantages in its current markets. This approach penetrates
markets where Apple has not yet achieved a significant position. In relation, under the
market penetration intensive growth strategy, the company uses promotion through
various websites and media outlets. Advertisements encourage more people to buy
Apple products. This intensive growth strategy agrees with the company’s broad
differentiation generic strategy by addressing the need to broadly capture the market
through the sale of more technological products to more customers. Apple Inc.’s
marketing mix or 4P influences the effectiveness of the organization’s competitive
advantage and this intensive growth strategy.

Market Development. Apple uses market development as a low-priority intensive

strategy for growth. Using the company’s competitive advantages, market development
involves selling existing products in new markets. For example, Apple Inc. applies this
intensive growth strategy by authorizing new sellers in markets where the company
does not have any presence yet. This growth strategy agrees with the generic strategy
of broad differentiation by expanding the company’s market reach, such as by
introducing its current consumer electronics to new overseas markets. This generic
strategy for competitive advantage also requires offering products to different market
segments, which Apple satisfies via market development. Through its various product
models of consumer electronics and other goods and services, the company fulfills this
strategic requirement. In relation, the business strengths discussed in the SWOT
analysis of Apple Inc. facilitate the implementation of market development.

Strategic Analysis and Recommendations for Apple Inc.

Apple’s generic strategy of broad differentiation adds competitive advantage by making

the business stand out. Differentiation in product function and design supports the firm’s
goal of leading the market through technological innovation. Innovation is at the heart of
Apple Inc.’s business. However, to improve its application of this generic strategy for
competitive advantage, the company must aggressively penetrate markets. This
recommendation is especially applicable in developing countries where the corporation
has limited market reach for its information technology goods and services.

Apple Inc.’s main intensive growth strategy is product development. Market penetration
and market development have lower priority in this technology enterprise. These
intensive growth strategies agree with and support Apple’s generic strategy. The
company is strong in product development through innovation. However, to improve
performance, Apple needs to emphasize more on market penetration and market
development. These two intensive growth strategies can improve the company’s
resilience against aggressive competitors like Samsung. Also, Apple Inc.’s operations
management can optimize the effectiveness of these growth strategies and the broad
differentiation generic strategy for competitive advantage.

Apple Inc.’s Mission Statement and Vision Statement (An Analysis)

UPDATED ONUPDATED ON FEBRUARY 13, 2019 BY CHRISTINE ROWLAND

Some of Apple’s products. Apple Inc.’s corporate

vision statement and corporate mission statement align to support the company’s success in the
computer technology, consumer electronics, and online digital services industries. (Photo:
Public Domain)

Apple Inc.’s mission statement and vision statement are bases for the company’s
success as one of the most valuable businesses in the world. Established in 1976, the
firm has become a symbol of innovation and elegance in design. This condition
supports the brand, which is one of the major business strengths identified in the SWOT
analysis of Apple Inc. The company’s corporate mission and vision statements motivate
employees to support and contribute to innovation for competitive advantage. Apple
Inc.’s generic strategy and intensive growth strategies define such competitive
advantage, especially to counteract the effects of competitors like
Samsung, Google, Amazon.com, Dell, Lenovo, Sony, and PayPal. Apple has changed
its corporate vision and mission statements over time, to reflect changes in the
company from the time of Steve Jobs to the current leadership of Tim Cook. The vision
statement and mission statement now represent the company’s efforts in addressing
business opportunities in the computer technology, consumer electronics, cloud
computing, digital distribution services, and semiconductors industries.

Apple Inc.’s corporate mission and corporate vision are linked in terms of how they push
for the company’s continuous growth despite challenges in the competitive landscape.
Considering the variety of industries where the business operates, it is essential that the
diversity of strategic approaches for these industries be embodied in the corporate
mission and the corporate vision. Porter’s Five Forces analysis of Apple Inc. shows that
the business deals with strong competition. The company must ensure that its mission
statement defines the strategies to keep the business competitive. In relation, Apple’s
vision statement must direct business efforts toward a future of leadership in the global
market.
Apple’s Corporate Mission Statement

Apple Inc.’s corporate mission has changed over time. The company considers the
changing business landscape, which influences the possibilities of what the business
can do. The company recognizes the changing market and industry environment.
Apple’s current mission statement is as follows:

Apple designs Macs, the best personal computers in the world, along with OS X, iLife,
iWork and professional software. Apple leads the digital music revolution with its iPods
and iTunes online store. Apple has reinvented the mobile phone with its revolutionary
iPhone and App store, and is defining the future of mobile media and computing devices
with iPad.

Considering such a corporate mission statement, Apple Inc. is specific in enumerating

its organizational outputs. For example, these outputs include Macs, iPods, iPhones,
and iPads. Another characteristic of Apple’s corporate mission is its emphasis on digital
distribution services via the Internet. For instance, the iTunes online store enables the
company to distribute digital content. In this regard, the mission statement highlights the
company’s focus on computing devices and related online services. The business
outputs enumerated in the corporate mission partly determine Apple Inc.’s marketing
mix or 4Ps.

Apple’s Corporate Vision Statement

Apple Inc.’s corporate vision influences strategic management in terms of the decisions
that the company’s managers make to reach a future of leadership in the various
industries where the business operates. Apple introduced a new vision statement under
the leadership of Tim Cook, who stated the following:

We believe that we are on the face of the earth to make great products and that’s not
changing. We are constantly focusing on innovating. We believe in the simple not the
complex. We believe that we need to own and control the primary technologies behind
the products that we make, and participate only in markets where we can make a
significant contribution. We believe in saying no to thousands of projects, so that we can
really focus on the few that are truly important and meaningful to us. We believe in deep
collaboration and cross-pollination of our groups, which allow us to innovate in a way
that others cannot. And frankly, we don’t settle for anything less than excellence in
every group in the company, and we have the self-honesty to admit when we’re wrong
and the courage to change. And I think regardless of who is in what job those values
are so embedded in this company that Apple will do extremely well.

Apple Inc.’s vision statement provides specific details about various areas of the
multinational business. For example, the company specifies innovation in product
development. In addition, in saying, “to own and control the primary technologies behind
the products that we make,” Apple’s corporate vision indicates a strategy of vertical
integration. This strategy influences suppliers and the company’s supply chain. Focus
on excellence is also emphasized. Based on these details, Apple’s corporate vision
statement functions like a specification of values and business philosophy. These
beliefs influence Apple Inc.’s corporate culture. The corporate vision helps set the
strategic objectives for different areas of the computer technology, consumer
electronics, online digital distribution services, cloud computing, and semiconductors
business.

Apple’s Corporate Mission & Corporate Vision – Recommendations

Apple Inc.’s mission statement satisfies conventions regarding ideal corporate mission
statements. For example, the company’s corporate mission provides information about
products, customers, target markets, and technology. However, some adjustments can
improve Apple’s mission statement. Ideally, the statement should contain information
about corporate philosophy, corporate image, and employees, among other
components of the business. Currently, Apple’s corporate mission focuses on products
and leadership in product development. Thus, it is recommended that the company add
information on corporate philosophy, corporate image, employees, and the current and
possible future strategic aims of the business. In addition, the company’s mission
statement lacks information about new products like Apple Watch, as well as other
products in development. In this regard, another recommendation is to make the
corporate mission’s product details more abstract to encompass the current and future
products of the business.

Apple’s vision statement is comprehensive and detailed enough to show the firm’s
future direction. It satisfies many of the conventional characteristics of ideal corporate
vision statements. For example, Apple’s corporate vision is clear in terms of what the
company aims for, such as leadership in product design and development, vertical
integration, emphasis on innovation, and excellence as a business organization. Also,
the company’s vision statement is abstract, inspiring, and stable to encompass the
future of the business. However, to improve this vision statement, it is recommended
that Apple Inc. make it more concise. Instead of providing a detailed list of beliefs and
values, the company can make its corporate vision more concise, to make it easier for
employees to understand and apply in their daily work activities. The resulting concise
vision statement would be easier to integrate into more aspects of Apple Inc.’s
business, including new operations in the future.