Bargaining Power of Suppliers Hardware Components The bargaining power of suppliers for hardware products is low as the industry

is highly saturated, causing suppliers to be competitive in their pricing. Apple adopts a differentiation strategy which requires the firm to ensure that suppliers provide high-quality components, driving up its supplier costs. However, Apple is partially insulated from the impact of higher supplier costs due to the premium that the firm charges for its products. Furthermore, Apple purchases a large amount of raw materials, increasing its bargaining power as a significant customer. Hence, Apple is able to secure components at a lower price. Microprocessors Intel has been dominating the PC Computer Processing Unit market with 80% of the market share. To provide higher performance desktops and laptops, the entire Macintosh line is now running on Intel chips increasing Apples dependence on Intel. Therefore, Intel has a high bargaining power as a supplier for its PCs. However, for non-PC devices that make up 60% of its revenue, Apple develops its own A4and A5 chips which mitigates its over-dependence on Intel. Yoffie, B. David and Kim, Renee, 2010, pp 5 Operating Systems (OS) Apple develops its own Mac OS X for its PCs and iOS for its non-PC devices. Due to incompatibility of the Mac OS with many software programs, Mac users may prefer to run the Windows OS. This creates a dependency on Microsoft to provide the Mac-compatible Windows OS. However, since Apple is the third largest PC seller in the U.S. market,8 Microsoft would also be dependent on Apple to make the sales for the Windows OS. Hence, this interdependency would result in a low bargaining power of Microsoft. Bargaining Power of Buyers Apple operates in markets for PCs, mobile telecommunication devices, consumer electronics and related software which are highly competitively and saturated. With a large number of firms operating in the industry, there are many competitor product substitutes. This increases the bargaining power of consumers. However, the uniqueness of Apples products and a loyal customer base reduce the price sensitivity of customers. A strong research and innovation base allows Apple to produce groundbreaking products such as the iPad. Coupled with strong brand marketing and successful implementation of its pricing strategy throughout its product range, customers are willing to pay for the firms products. As long as Apple continues stay ahead of the curve by introducing innovative products and builds on its brand marketing, it is likely that its customers will continue to be less price-sensitive. Hence, the bargaining power of customers for Apple is medium. Ogg, Erica, 2010 With Apple's success and growth, balancing stakeholder demands has become increasingly difficult. Managing the sometimes-conflicting expectations of customers, investors, suppliers, partners, legal/governmental entities, and other stakeholders puts an increasing amount of pressure on Apple's

management team. And the company's dependence on Jobs' charisma, vision, and public communication and relationship-building skills puts Apple at risk without a reliable succession plan and a pool of equally-talented brand champions.