Apple company strengths and weaknesses

SWOT analysis of Apple Inc – Apple SWOT analysis

June 4, 2020 By Hitesh Bhasin Tagged With: SWOT

The top brand of the world, Apple has many more strengths then weaknesses. And at the same time, the threats against Apple are rising because it is obviously in the target radar of a lot of companies. The Apple SWOT analysis presents the analysis of this innovative company and how it is the leading the market in technology.

Table of Contents

Let us discuss the SWOT analysis of Apple as a company

Strengths in the SWOT analysis of Apple

1. Innovative products – One of the key strengths of Apple over the years has been its innovative product line up. Apple has presented hit products after hit products and that’s been the major strength of Apple. Initially it came with the MacBook, then the iPod, the Iphone, the Ipad, the Iwatch. In short, Apple has covered almost everything that an individual “desires”.
2. Leadership position – As per Wikipedia, Apple is the leading technology company in the world with regards to revenue generated. It is also the second largest smart phone manufacturer. It become the first US company to cross 700 billion dollars and in 2014 was the largest publicly traded company in the world. If that does not define leadership, then nothing else can. Apple is far ahead in the leadership game.
3. Brand equity – Naturally, being in the leadership position requires that your brand equity be high. The brand Apple is the number 1 valued brand amongst all the companies in the world as of 2016. The brand value in 2015 was estimated to be 118.9 Billion dollars!!
4. Design & Technology – The best part of Apple, and the reason for its fantastic brand equity is its design as well as the technology it uses. Apple has always been suave and elegant in its product design. And at the same time, beneath this exquisite design is a machine powered to give ultimate performance. All this runs on the MacOS which is another software known for its efficiency.
5. Distribution – Apple swot analysis tells us that Apple has 470 of its own stores across 17 countries. Besides these stores, it sells through trade partners, online channels as well as through other premium retail stores. Entering an Apple owned retail store is a fantastic experience. Additionally, Apple also launched the Apple genius bar to directly solve customer issues within the retail store itself. Thus, the concentration of Apple on its sales and service distribution is legendary.
6. Steve jobs – One of the key factors and the leader of Apple is also a loved person in the technology Industry. He is an inspiration to all marketers in the way that he led his own people and the way he carried his life and the brand Apple along with him. Since 2011, his departure from this world, Apple has been led by Tim cook who is also showing his genius in growing Apple as a company.
7. Margins – One of the core advantages of Apple as a company is the margins that it commands over its products. Being a technological leader with a top brand equity, Apple swot analysis results tells us that apple keeps a hefty margin for itself to invest in R&D and brand building. Furthermore, its pricingstrategy is such that the price does not break in the market and you will always find Apple selling at the same price in various retail stores.
8. Consumer focus – Apple always designs its products with a focus on consumers while keeping their mind in the future. They always try to imagine the things which even the consumer has not imagined yet. As per Steve jobs “if you ask the consumer what he wants, by the time you give him the same thing, he will want something else”. This ideology is the reason of success for Apple.

Weaknesses in the SWOT analysis of Apple

With a company which is a market leader and innovative, we can expect very few weaknesses. Still, here are 3 weaknesses which Apple might be facing.

1. Matching Customer expectations – Being a leading company since 1980’s Apple has a major market share and the consumer expectation is going through the roof. People expect great things from apple year after year and maintaining these expectation levels is not easy for anyone.
2. Incompatibility – A key issue in Apple as a company is that many of its products are incompatible with third-party software / accessories. So overall, when you buy a product of Apple, you enter the Apple universe and you have to continue with Apple only. That makes a huge impact on consumer decision making.
3. Dependency on few products – Apple has only 7-8 products in its portfolio in comparison to the various products that its closest competitors Microsoft and Google have. Hence the dependency of Apple on each of its products is very high. If one product fails, then that is a 10% loss to Apple. Hence, there is a common demand from Apple to increase its product portfolio.

Opportunities in the SWOT analysis of Apple

1. Apple cars – Naturally, with Facebook expanding with Instagram, Occulus rift, Whatsapp and others and Google expanding in 10 different ways, Apple wanted to find out some new products which Apple could launch. Apple is now fixated on Apple Car which is supposed to be launched in 2020. Like any other product of Apple, we can expect great things from the Apple car as well.
2. Technological advancement – In the technology industry, technological advancement is always an opportunity. And the one brand we can expect to leverage technology to its best is Apple. We can expect even more advanced MacBook’s, Iphones, Ipads and Iwatches in the coming years.
3. The growing market – Apple is a growing company in a growing market. Equally important to the company is the rising GDP of developing countries, thereby increasing consumption of such premium brands like Apple. Any company which is growing needs a larger market base and the market base is slowly being built via territory expansion for Apple.
4. Iwatch and Apple TV – Two products which can increase the presence even further are the Iwatch and Apple TV, both of which are aimed at the future, for when the digital presence increases. Apple Iwatch already has a 50% market share of Smart watches in US.

Threats in the SWOT analysis of Apple

Apple as a company does not have any threat. But as products, each of the products is facing strong threats from the competition. Being the number 1 company in the world is not easy and you are going to face competition especially from other brands.

1. Market penetration in Smartphones – One of the key threats to Apple is the market penetration by other brands in the Smartphone market. Android is eating market share like anything and currently has 47.5% of the market share whereas Iphone is at 42% market share. Android is being used by Samsung, HTC, Lenovo and practically everyone who wants to enter the smart phone market. Naturally Android being of Google (2nd most valued brand), Apple has to be ready for Smartphone competition.
2. Laptop competition – MacBook is obviously the best there is. But so is Dell, and so is Sony and so is Lenovo. The competition is ever-increasing in the laptop segments. Dell has introduced some beautiful models over the years including the Alienware model. So, although Apple as a brand is loved by everyone, MacBook is facing stiff competition from other brands as well.

Smartphones replacing Ipod – In 2014, Ipod suffered a major decline of 52% in its sale over 2013. Overall, Smartphones have replaced music players altogether because of the various ways that you can utilise music and carry it around. Hence the functionality of Ipod is no more unique. (Other “Only music players” are also finding it hard to exist in the market).

Thank you for reading our article about apple swot analysis

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Apple Inc. SWOT Analysis & Recommendations

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 technology company gives strategic insights on maximizing business 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 operates 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 strong competitive force linked to the aggressiveness of other technology firms, such as Google, IBM, Amazon.com, Samsung, Microsoft, 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 Apple to overcome weaknesses, take advantage of opportunities, and withstand threats in its technology business environment. These strengths are internal factors specific to the conditions within the business organization and its technological capabilities. In this case, the following are the most notable strengths of Apple Inc.:

1. One of the world’s strongest brands
2. High profit margins based on premium pricing
3. Effective rapid innovation processes based on long history of technological innovation

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, such as new lines of mobile devices, by virtue of its strong brand image. In addition, Apple’s marketing mix or 4P involves a 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, such as in the case of MacBook laptops. 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.

Weaknesses (Internal Strategic Factors)

In this aspect of the SWOT analysis, the emphasis is on the weaknesses or inadequacies of Apple and its technological product development and marketing capabilities. Weaknesses are internal factors that are obstacles to business growth, with consideration for relative performances of other technology businesses. The following business weaknesses are the most notable in the case of Apple:

1. Limited distribution network for its goods
2. High selling prices
3. Dependence of sales in high-end market segments

Apple Inc. has a limited distribution network because of its policy of exclusivity. For example, the company carefully selects the authorized sellers of its products, such as iPhones and Macs. The SWOT analysis framework considers this exclusivity strategy as a factor that limits market reach, making the company’s consumer electronics not readily available in all areas. 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 technology company has the weakness of sales dependence on high-end market segments. High prices attract customers from the middle- and high-income brackets, and prevent customers from low-income brackets from easily purchasing Apple’s consumer electronics. This internal strategic factor is a weakness because high-end 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, such as the on-demand digital content market. 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 for wider consumer electronics market reach
2. More widespread and aggressive marketing for higher sales volumes based on rising demand
3. Development of new product lines in consumer electronics and online services

Apple Inc. has the opportunity to expand its distribution network. Such opportunity relates to the weakness of the limited distribution of the company’s products, such as smartphones and tablets. This SWOT analysis emphasizes the need to modify the technology company’s 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 to complement existing ones, such as online services. With further innovation, the business can develop and introduce new products, like what it has already achieved with the Apple Watch. Developing new product lines supports business growth, especially against other technology firms 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 Apple experiences from various sources, such as competitors like Samsung. Threats are external factors that limit or reduce the financial performance of the technology-focused business. The following threats are the most significant to Apple Inc.:

1. Aggressive competition involving large multinationals like Samsung, Amazon, and Microsoft
2. Imitation involving firms that compete based on low prices
3. Rising labor costs in various countries where the company maintains production facilities

Tough competition in the technology industry is partly because of the aggressiveness of firms. For example, 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 the business, indicating the necessity for strong fundamentals for maintaining competitive advantages in computer software and hardware, and online services. In addition, Apple faces the threat of imitation of some products, such as the iPhone. Local and multinational firms could imitate the design and features of Apple’s products. Also, 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 is threatened by aggressive competition and the 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 consumer electronics distribution network. Moreover, the company can use its strong brand image and rapid innovation processes to successfully develop and launch new technology product lines. However, Apple faces the threats of aggressive competition and imitation, which are 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 in developing the company’s products. Technological innovation reduces the adverse effects of imitation. Also, it is recommended that Apple further enhance the automation of its production processes, and support the automation of its contract manufacturers, as a way of addressing rising labor costs. Another recommendation is to establish partnerships with more distributors to improve the overall market reach of the company’s consumer electronic products.

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