Apple is one of the leading companies in the world that are providing us with robust technology products with exceptional software services. Based in Cupertino, California, Apple Inc. was founded by Steve Jobs in 1976. Since its inception, the company has exponentially grown in terms of products and services.
Apple Inc.’s success is attributed to its ability to utilize business strengths while overcoming the weaknesses and threats and effectively exploiting the opportunities in the industry. This Apple Inc. SWOT analysis will give insights on the strategic actions of the business, more so in optimizing its growth based on its strengths and opportunities.
- Brand Identity
Brand identity is one of the biggest strengths of Apple Inc. All their products reflect their beautifully designed logo, aesthetic, simplicity, and creativity. The concept comes out during Apple’s simplistic yet vibrant dance commercials for the iPod touch.
Apple is a renowned brand worldwide. Its names goes a long way with a loyal customer base thus any product that is associated with Apple Inc. is often pre-ordered. Moreover, Apple uses its brand to sell a lifestyle of creativity and sleekness. This is the market strategy they use to market their products, not as simple devices but as a way into their carefully designed world. It is, for this reason, Apple’s profit margins are always high with every new device they launch into the market.
- Innovative Products
Producing innovative products has been a key strength of Apple Inc. over the years. Since its inception, Apple has continued to present into the market high-grade products one after another. At first, it came with the MacBook, then the iPod, the iPhone, the iPad, and the iWatch. In a nutshell, Apple Inc. has covered almost all the aspects that one can desire.
- Loyal Customer Base
This is another key Apple strength. Apple customers hardly switch to other mobile and other product brands. The primary reason Apple to maintain a loyal customer base is its unique customer experience, innovation, and simplicity. For instance, Apple commands up to 87 per cent of customers across the U.S and the European countries.
- Brand Value and Reputation
Apple Inc. recognizes itself as the second most valuable brand in the world, after Google. The Apple brand value in 2006 stood at $15.98 billion but slightly over ten years later in 2018, its brand value hit the $300 billion mark. This proves how Apple is regarded by its customer. Just wonder what value will it be in the next few years?
- Marketing and Advertising
When it comes to advertising and marketing, Apple is considered as the master since the old days of Steve Jobs. Apple’s advertising is done by creating a buzz about its upcoming upgrades and products. The advertising process is so powerful that creates a word of mouth campaign to build an appealing brand perception while increasing the product desire.
- Distribution Chain
Apple Inc. has 470 stores across 17 countries across the world. Apart from these stores, it also sells its products through trade partners, through online channels and other premium retail stores. Visiting an Apple-owned retail store is an amazing experience. Besides, Apple has inaugurated the Apple genius bar where customer issues can be solved directly within the retail store. As such, the concentration of Apple on its sales and service distributing is nothing but legendary.
- Consumer Focus
Apple Inc. has always designed its products with a primary focus on consumers while keeping their mind in the future. They tend to ponder on things that not even the consumers have imagined yet. The founding father of Apple, Steve Jobs contends that if you ask the consumer what he or she wants, by the time you give him/her the same thing, he or she will want something else. This is the ideology that drives Apple to success.
- Proficient Research
Apple Inc. has put a lot of emphasis and dedication into the design of its products. Before any product is created, a thorough study is done to help understand the customer needs and requirements.
- Brand Equity
The idea of being a leader requires that your brand equity be high. And Apple ranks among the most valued brands across the world. By 2018, the Apple brand value was estimated to be $300.6 billion.
- High-Profit Margins
Bearing in mind that Apple is a technological leader with top brand equity, it keeps a high-profit margin that it commands over its products. These hefty profits are then reinvested in R&D as well as brand building. Besides, its pricing policy is such that the price doesn’t break in the market thus you will find Apple selling at the same price tag in different retail stores.
In SWOT analysis of a company, the emphasis is always on the weaknesses or inadequacies. This is because weaknesses are obstacles to the growth of the company. The following are the most recognizable weaknesses in Apple Inc.
Incompatibility is the main issue in Apple as most of its products are not compatible with third-party accessories and software. As such, once you buy an Apple product, you enter the Apple world and you just have to remain there. So, this makes a big impact on consumer decision making.
- Matching Consumer Expectations
Apple is a leading company in the technology world since the 1980s. As a leader, Apple has a huge market share coupled with consumer expectations that are currently shooting through the roof. Customers expect better things from apple year in year out and living up to these expectations isn’t easy for anyone, at least not Apple.
- Dependency on other few products
Apple has about 8 products in its portfolio when compared to the different products that its closest competitors like Google and Microsoft have. The dependency of Apple on each product is therefore quite high. As such, if a product fails, about 10 percent loss befalls Apple. There is a mutual demand from Apple to raise its product portfolio.
- Limited Distribution Network
Apple Inc. has a very limited distribution network due to the company’s strategy of exclusivity. Apple carefully selects the authorized sellers of its products. This exclusivity strategy results in a limited market reach. This weakness exists even with the advantages that come with exclusivity like strong control of the distribution of products. Apple has a limited distribution network across the world with only 470 distribution centers.
- Premium Pricing
Although Apple can charge premium pricing and generate hefty profit margins, price-conscious consumers switch to competitive brands like Samsung and dell which offer the same specs products but at reasonable prices. For instance, India, China, and Pakistan customers are moving to android phones such as Samsung because of its excellent features and reasonably low prices.
- Dependence of sales on High-end market segments
With premium pricing of its products, Apple largely depends on high-end market segments to sell their products. High-end markets mostly attract people from the middle- and high-income brackets hence closing out those from low-income brackets who easily purchase products from Apple’s competitors like Samsung. Generally, high-end market segments only represent a minority of the world market.
- Lack of competition
Apple Inc. does not have any competition against its competitors. This is because it rarely markets its products. You only hear about Apple when it is launching a new product or when there has been a recent update on its software or products.
- Lack of marketing and promotions
Apple Inc. is known for its efforts of establishing and maintaining a loyal customer base even with its poor marketing strategies. Owing to its success, Apple doesn’t feel the need to roll out extra investments towards marketing and promotions.
Opportunities are external factors that are based on the industry atmosphere. It is the opportunities that influence the policy direction of the business. The following are Apple Inc.’s most important opportunities:
- Steady Customer Growth
Over the years, Apple has dominated the technology arena. They have provided some top of the range of technology products that offer cutting-edge customer experience. This is why they have been able to maintain more than 90 percent customer retention rate. Nonetheless, Apple relies on the influence that comes with the internet for tomorrow’s opportunities to gain new customers and forge new alliances.
- Qualified Professionals
Apple Inc. has employed top researchers, developers as well as product specialists who have a vast experience in branding consumer products. However, this team needs to be expanded so that the company continues to build on new opportunities with confidence.
- Lack of Green Technology
The company is yet to roll out products that are produced using green technology. This is an opportunity that Apple is yet to embrace in creating sustainable technology that is environment- friendly.
- Smart Wearable technology
Smart wearable technology is soon dominating the world and according to Forbes, these technology devices sales will double by 2022. It has been estimated that it will be a 27 billion U.S dollar plus market with over 233 million unit sales. Apple Inc. has the opportunity to exploit this smart wearable technology.
- Use of Artificial Intelligence
To increase profit margins and command a stronger market base, Apple should consider utilizing artificial intelligence. Although Apple has extended its Al portfolio, acquired Al startup and DeskConnect to integrate its intelligent search to the Photos app on iPhone, it should consider extending its Al portfolio to have a strong foothold in the coming days.
- Expand Distribution Network
Apple has an opportunity to expand its distribution network to increase its sales and growth. Presently, Apple’s distribution channel is limited thus experiences a minimum growth rate. If the company focuses on expanding its distribution network, it can generate higher sales and revenue. Besides, the company stands to benefit from diligent marketing and promotions.
- Apple Electric Car
When it comes to the tech industry, Apple is a big player who always wants to take the lead. Just like Facebook is expanding to Instagram and Whatsapp and Google expanding in different ways, Apple is trying to launch some of its new products. For instance, the company is keen on automobile production with an inaugural Apple car expected in 2020. Just like any other product of Apple, consumers are expecting great automobile products.
- Iwatch and Apple TV
Iwach and Apple TV are two products that will increase the Apple brand presence. These two products are futuristic for when the digital presence is at the top. Iwatch is already commanding a 50 per cent market share of Smartwatches in the U.S.
Apple Inc. has exhibited a potential benefit of collaborating with various strong and existing brands that operate in their market place. For instance, with its new AirPods, it has teamed up with Beats headphones to create a new wireless BeatsX alongside their iPhone 7. Besides, Nintendo is collaborating to bring a new game – Mario Run to iPhone. Combining Apple name with a renowned iconic game will bring Apple a huge number of customers from Nintendo fans across the world.
Presently, innovations can be ridiculed or mocked but the opportunity from collaborating with other dominant brands around the world will profit the Apple brand significantly, as long as they continue developing these partnership relationships.
Considering the external business environment and the wide global demand, it can be deduced that these are some of the best opportunities that Apple has at the moment. These opportunities will not only catapult Apple’s growth significantly, but they can also be used to drum up the present product sales.
Despite the strengths and opportunities that Apple anchors on, this SWOT analysis also highlights some of the glaring threats the company faces.
- Counterfeit Products
Apple Inc. has become a victim to third world countries that are illegally using the brand image to sell counterfeit products. The illegal dealers sell Apple counterfeit products at the same price as the original Apple products. Counterfeit products make potential customers think that it is an Apple product but made with low quality tainting the Apple brand before the public.
- Market Penetration
Various brands in the smartphone market have made a significant change in market penetration. Brand such as HTC, Samsung, and Lenovo are using Android software to create new smartphones making Android command a 72.23 per cent market share while Apple has a mere 24.55 per cent of market share globally. This greatly threatens Apple’s market penetration.
- Increased Competition
Even though Apple is a top brand, it faces serious competition threats from companies like Samsung, HTC, Dell, and Google among others. As technology advances so are the competitions. For Apple to emerge the victor in this competition, it has to introduce new cutting-edge technologies in their products or consider revising its pricing strategy. Otherwise, the competition will only get tougher.
- Rising Labor Costs in Other Countries
The rising cost of labour in foreign markets is an aspect that is putting a serious dent in Apple financial muscle. The costs involved in contracting manufacturers from countries like China, greatly shrink the profit margins or push the prices a bit higher.
- Laptop Competition
Dell is one of the primary computer manufacturers that pose a great threat to Apple. For instance, Dell launched its new XPS Laptop Model which is giving Apple’s MacBook a serious competition. Other laptop brands like Lenovo and HP are producing affordable computer products for consumers around the world thus marginalizing Apple’s expensive MacBook to the majority upper-income earners.
Several cases of lawsuits have been filed against Apple in different instances. However, consumers are more upset by the fact that Apple admitted to deliberately throttling CPU performance on iPhone models with older and degrading batteries. In its defence, Apple said that it took those measures to prevent unexpected shutdowns. Even with this clarification, consumers felt betrayed since Apple was not transparent enough. This action has led people to file several lawsuits against the company alleging that Apple’s actions considerably affected the resale value of their products besides forcing some users to upgrade to newer versions prematurely.
Apple Inc.’s SWOT Analysis Recommendations
Based on this SWOT analysis, it is evident that Apple Inc. has major strengths that can effectively influence the company to address its weaknesses. Apple Inc. can use its strengths to efficiently exploit the opportunities that it has such as expanding its distribution network. Besides, the company’s strong brand and excellent innovation process can successfully be used to develop and launch new product lines.
Nonetheless, the company faces serious threats of imitation and tough competition from major brands like Samsung hence affecting its presence in the global market for consumer computer hardware and software, electronics, and online digital content distribution services.
Guided by the strategic issues highlighted in the SWOT analysis above, it is advisable Apple Inc. to aggressively continue developing and innovating new products. Such innovations of new technologies limit the impact of imitation. It is also recommended that the company established collaborations with more brands and distributors to enhance general market penetration. Besides, the company can consider automating the processes of contracting manufacturers as a way of curbing the increasing labour costs that come with involving Apple product manufacturers.
Also read: Tesla SWOT Analysis