Apple Inc. Company

Abstract.

This paper widely explains about the apple Inc. company. The paper talks briefly about the background of apple Inc., its founders and purpose of founding the company and how the company transforms from their original cause of developing computers to a wider range of developing software, hardware and offering online services to its consumers. The paper then narrows down to apple’s Inc. innovations plans considerations where it tackles the value chain analysis of the company looking at specific primary factors that directly affects the company and possible effects to the company’s innovations. Some of the mentioned valuable activities of the company being, inbound logistics, operations, marketing and sales, services and outbound logistics. The paper goes on further to explain Apple’s competitive advantages over other markets and it’s competitors. Apple Inc. apparently stands out for exclusive factors like its enclosed ecosystem, its vertical integration i.e. the software and hardware, it’s retail strategy, its brand appeal, it’s high financial muscle amongst other advantages. These advantages keep apple’s position ahead of its competitors. Porter’s five forces, being a major consideration in a company’s innovations analysis is also discussed here. Apple’s considerations being the bargaining power of its customers and also the power of its suppliers. Competitive rivalry is also a force considered alongside threats of new market entry’s and substitutive products. Some of the forces required prioritizing in considerations while others are no need for alarm. Finally the paper outlines some of the weaknesses Apple as a company is facing and the reason for their weaknesses. This should further help Apple to improve in their weaknesses so as to cut on losses and increase their output.

Keywords; innovation, value chain, competitive advantage, porter’s five forces.

Apple’s Inc. innovation

Apples background.

Apple Inc. is a worldwide multinational organization that was formerly referred to as apple computers Inc. It was formed way back in April 1977 by the following 3 gentlemen; Steve Jobs, Steve Wozniak, and Ronald Wayne. Later in 1977, the organization drifted its aim from mere design, development and sales of personal computers to a wider range of variables consumer electronics. In 2016, 1st April the company celebrated its 40 years with a broad improvement of not only electronics but also a hand in computer software and offering online services.

Recently, Apple has been declared the world’s best amongst all information technology companies.(trott et al, 2008.) This is not only because of their largely invested capital but also its big revenue, high number of employees and its high manufacturing numbers. Actually Apple rates second best in product manufacturing right after Samsung (Ganguly, et al., 2009).

Under its current CEO, Tim cook, Apples Inc. changed its system of hierarchy in a manner that slightly drifted from Steve Jobs original hierarchy plan. Originally, all matters concerning the company had to go through Steve Jacobs’s office unlike now where cook has introduced the ‘spoke and wheel hierarchy’ where various department now collaborate in taking charge of the company and the company’s vice presidents having more autonomy power. In its new structural format cook has also introduced the ‘product based grouping’ an aspect that allows the company to address widely issues concerning particular products and the ‘function based grouping’ an aspect that requires all the senior vice presidents of the organization to tackle all issues of the company in relation to function areas. This new structural hierarchy has proved worth and more suitable to the current market and industry demands.

Apple’s products.

Apple as a multinational corporation has a wide range of varieties and it keeps surprising the market with new innovations on a daily scale. Some of its current products include the pro iPad, Macintosh, apple watch, macOS, macOS sierra, iOS, keynote, iOS 10, numbers, final cut, logic pro, iPhone, ilife among others with a variety of options within a single product e.g. iPhone having varities like the iPhone 6 iPhone 7 and so on. Its products keep on fascinating the market due to its creative innovations, features and life span of the products. Many Apple customers’ wouls stick to apple products only due to their credible services.

Value chain analysis.

Being a long term incorporation and deeply rooted, apple has its value of chain analysis that is believed to make it special, unique and a great competitive advantage. Amongst others, apple primary activities prove the greatest value chain.

Inbound logistics.

Apple Inc. has managed to outlay a broad field of its supplies having multiple sources supplying most components. Some of its supplier countries include china, Europe, United States and some Asian countries. Moreover, apple has come up with a way of pushing the suppliers into competing with each other hence leading to best supplies to the company. A reduced number of supplies come from single suppliers and its hardware is supplied from a partner primary in Asia. Apple is also known for its bargaining power with its suppliers hence having the chance to reduce its production cost giving the company an advantage towards its costs.

For acquisition of their basic raw materials, the company directly works hand in hand with the OEM in ensuring the process but for better and standardized materials it also provides further supervisory for quality purposes.

The company has also come up with automatic ways of ensuring a speed-up reception of goods which helps by reducing time lag and also storage space of the materials.

Operations.

Apple has its operations spread across America, Europe, china, japan and Asia with an approximate of 116,000 fulltime employees. This spread of activities is basically a way to push production costs of some components to areas where its production is low majorly because its where the source of the raw materials and other necessities are. Apple has also been able to produce harmful free products i.e. materials with no toxic effects, no BFR’s in addition to highly recyclable aluminum enclosure products.

Marketing and sales.

Apple one of the largest marketers in the world with it leading in terms of sales in the US. It is world wide spread in 19 countries with 486 retail stores and reachability of 39 online stores. It use direct and indirect means of distribution like retail shops, apple retailers, apple online shops, direct sales force, wholesalers, value added resellers and third party cellular network carriers. Its marketing highly involves advertisements whose rate has been increasing in Tim Cook’s era. The company is also establishing extensive networks towards channel partners as a way of extending its market towards enterprise sales e.g. the Apple-Cisco partnership of 2015.

Services.

Apple Company is widely known for its welcoming customer care services. The services which include pre-purchase, during purchase and post purchase are all handled in same response to ensure good seller-buyer response. In addition the post purchase care always notify the customers in case of additional features and upgrades in their systems. The products are also easy to use and assistance of apple staff during pre-purchase in case of a difficulty who easily familiarize the customer to the product. The products also come with a warranty which can be replaced and this helps in building more trust in customers. More so, the operating system in the products is secure and ensures total security of information. This increases customer’s reliance in addition to trust.

Outbound logistics.

Apple has played well its outbound logistics by its warehouses and distribution channels all over hence a ready reception on the other end. E-commerce is also one of their major outbound tool as it has proven less costly than direct sales at the stores. The firm is also putting more efforts in building more of apple retailer shops across the world to ensure its products are bought at a high number and quality. The company has also come up with a way to economize on their product packaging by producing slimmer and lighter products for efficiency of portability and also from research it reduces emissions that are normally released during transportation.

Apple’s competitive advantages.

Vertical integration.

Apple is fully responsible for the manufacture of its hardware and its software. This makes them own their customers fully and fully understands the products they are setting out to the market. Apple actually believe that they are the only ones worthy of making their own hardware and software. Besides that, apple also is known for its great OS i.e. the iOS that run only on apple devices hence restricting apple customers from diverting to other OS companies and hence the need to keep purchasing the apple OS. This feature can categorize apple as having a protected eco-system from which they enjoy a competitive advantage.

Retail strategy.

Apple’s idea of opening and spreading retail shops seems to have been an advantage to its market. This not only improved its value chain but also allowed wide spread distribution of products all over the world. The idea, though criticized by many other competing companies, Apple overwhelmed the critics and ventured into the shops. It proved its power in controlling its priorities in market and mastered ability of selecting their retail shops location. Their location choice of big malls and big shops is a booster as their targeted consumers are seemingly already in a shopping mood. The retail shops have also reduced the seller-buyer distance hence customers can now be able to consult, get repairs and even brainstorm better ideas and features for the company which is a great advantage as the company finds ways of bettering the products.

Brand appeal.

Apple has been known to produce commodities that are beautiful, charming and attractive to the market. Its products are considered luxury brands and they are also well recognized for their gifting as they can sell best hardware at a premium price in comparison to other companies like Samsung amongst other android sellers. The Apple products keep appealing the market not only for their luxuriant appearance but also for their prestige standards and innovation levels. No wonder the Steve Jobs quotation; ‘half of what separates the successful entrepreneurs from the unsuccessful ones is pure perseverance. Innovation distinguishes between a leader and a follower.’

Apple spends so much in advertising its products which leads to a great connection to their customers. The risk they take in advertisements is so great which gaps any other competitive company. This has made apple products so strong that their consumers not only use the products but also evangelize it.

ITunes and digital asset management.

Apple has proven to be not only a software company but also managers of digital assets. Through iTunes consumes have trusted apple even with their credit card information hence proving the trust and confidence that apple consumers have with them. From an announcement made on September 2009, Apple had personal credit information of about 100 million consumers thus making them the largest digital retailers in the world.

Financial stability.

Apple is also known for its great finances. The company is approximated to own a cash of $55 billion in cash without counting its profits of about $10billion per quarter. This criteria only gaps it way much farther from its competitors hence enjoying some kind of competitive advantage.

Quality manpower.

Apple is known for handsomely giving back to its employees in gifting, trips and rewards for their contributions there is also personal cheques written as a giveback thank you to individuals. This is a great asset as it attracts excellent, bright and innovative brains to the company. This also pushes the employees to work harder and hence improving the company. Over years, Apple employees have been known to be faithful and loyal to the company which brings a lot of cohesiveness within the company making it easy to understand each other, brainstorm ideas and further leading to more advantages to the company.

Porter’s five forces.

Bargaining power of buyers.

Apple customers have a strong bargaining power considering the prices of the products. Since apple is much concerned with customers and their satisfaction, this tend to be a great challenge in the company. But a s much as they consider consumers bargains, the consumers individually are not contributing to a significant amount to the company but since Apple takes customers into priority, they tend to be affected with their bargains. The customers bargain tend to be a threat because they seem to have several options other than Apple. This ends up affecting Apple as the wish to keep their customers. Hence Apple needs to put this strategy into their innovative strategies.

Bargaining power of apple suppliers.

Apple has a lot of competitive suppliers for their products. Supplier’s bargains towards the company should appear as a minor threat to the company because in case of one supplier leaving, the company will still have several to choose from. One supplier leaving the company will affect the company but at a very insignificant value hence this gives apple a strong force. From this, Apple does not need to feel threatened or to put into consideration the suppliers bargain in their innovation strategies.

Competitive rivalry.

Apple being amongst the highly invested companies in technology, has several competitors within the same field as well. This kind of force is considered very strong when it comes to the porters five analysis. This is because rivalry companies can easily become aggressive, more innovative and come up with ideas that may outsmart Apple. This may drift customers attention towards their products considering customers always want something better. Competitors may also decide to lower their products costs. This will definitely shift consumers to their products hence a great shift from apple. Hence, there is great need for Apple to watch over its competitor’s activities, work smarter and overwhelm them to remain outstanding in the market. Apple therefore has to consider this factor in their innovation strategies.

Threat of new entrants.

This force may be an average force onto apple simply because of its high financial status. Apple is strongly rooted on the market because it had a very large capital therefore any entrant in the market with intentions of competing towards apple must as well be well financially positioned. This gives apple an advantage as very less companies can do that. From history only Google and Samsung could manage that kind of entry. A new entrant would also require to match Apple products which would be so hard considering all the improvements and modifications Apple has done with its products hence giving apple room for laxity. However apple should not ignore this force because if Google and Samsung were able to enter into the market and compete favorably, it means there’s room for any expectations. Hence they should better their products, invest more, innovate more to remain stronger. Therefore there’s need for a consideration of this force.

Threat of substitutes.

Possible substitutes for Apple products exist all over the market e.g. use of landline phones instead of iPhones or use of digital cameras instead of iPhone cameras. However the existence other products in the industry does not pose such a great challenge to apple. This is because, Apple products are way much better in quality in comparison to the substitutive products. One would simply prefer an iPhone cell because apart from the communication there is also quality camera alongside other distinctive features. Substitute products may also pose as a challenge because of their cheap prices and easy accessibility but they cannot outdo Apple with its single product comprising of many enclosed services. Therefore, Apple needs to consider its substitutes but not put this force as priority threat.

Apples takeaways.

Closed ecosystem.

Apple’s closed ecosystem also acts as a weakness despite it being a major competitive advantage. Due to its closed ecosystem, Apple is forced to venture into a lot of other businesses just to survive the costs offered by competing industries. Also, he closed ecosystem limits only insiders to the system hence any improvements, modifications or repairs can only be done by an insider. This tends to be limitation as a lot bright ideas cannot be poached from outside for improvement of the system.

Pace of innovation.

Apple has set a high standard for its product which has also become a weakness besides an advantage. It limits its company to throw experimental products or services to the market for fear of destructing their original commodities. This therefore slows their growth for they have to ensure a products exceptionality and efficiency to completion without experimenting it. This therefore limits its expansion in comparison to its competitors like Google. It also makes the company to be dependent on a limited number of products for lack of recent ones as compared to Google.

Leadership.

Study seem to confirm that Steve Jobs is still the ruling name when one mentions Apple Inc. The question remains whether Cook will be able to come up with better products that would raise higher apples name. Apparently, the apple watch, which was in Cook’s era does not have much consumers in comparison to prior products hence a question of whether a change of Cook will bring effective products remain. Other ideas and more visionary plans would be better for the company hence an alteration with the company’s leadership may positively impact Apple Inc.

Conclusion.

In conclusion, apple Inc. company has got its strong points and its weaknesses. In consideration of its competitive advantages and full analysis of its value chain, we can say that it stands at a higher position equated to its rivals. Having a strong financial muscle makes it very strong and have a closed ecosystem makes it very unique. However, the same ecosystem stands as a weakness amongst other threats like new entries into the market, bargaining power of its customers and suppliers amongst other forces discussed in the porter’s five forces. Hence, to improve on its innovation strategies, there’s need for working out its threats and weaknesses and maximizing on its strengths and opportunities.

References.

Trott, P. (2008). Innovation management and new product development. Pearson education.

Ganguly, A., Nilchiani, R., & Farr, J. V. (2009). Evaluating agility in corporate enterprises. International Journal of Production Economics, 118(2), 410-423.