Apple Analysis 1

Apple Analysis

Apple Analysis 2

Executive Summary

Apple was created by Steve Jobs and Steve Wozniak over 40 years ago. The current Apple brand is considered to be strong, profitable and stable, but in 1996 Apple almost went bankrupt. Steve Jobs transformed the past Apple brand to the current company most know and love today. His focus was on innovative and technologically advanced non-PC products in the 2000s. The ability for the management team at Apple to understand the data, interpret the data into useful information and the business intelligence and knowledge of Jobs has thrust Apple into the forefront of the market. This paper will review key elements of Apples success. It will break down the strategies that were used to decide how to approach the market space with their current product. Even though the market competition is high, Apple is able to maintain a high market share with their innovative products. The Information Management Systems that Apple was able to apply allowed them to continue to be competitive. These would be the reasons why Apple implemented the technology they did, when they decided to do so. How does Apple continue to maintain competitiveness in the market place? A combination of their accounting, sales, finance, marketing, operations management teams work together to create business ideas. Operating cross functionally within each of these teams, it leverages each of team to create the most effective system possible.

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Apples product I-Tunes, do not give them a competitive advantage in the music download segment. Apple does have a competitive advantage in the I-Phone and I-Pad applications. Initially, Apple had the first mover advantage, since they were the first with a new competitive advantage (Baltzan, 2011). This was quickly duplicated and they have since lost their some of their competitive advantages. A competitive advantage, according to Baltzan (2011), is a feature of a product or service on which customers place a greater value than they do on similar offerings from competitors. Competitive advantages provide the same product or service either at a lower price or with additional value that can fetch premium prices. Competition is quick to duplicate an initial successful product, as is the case for each of Apples main line of add-ons. There is a host of similar products to the I-Tune line of service. Consumers are able to select different providers for music downloading such as, Google Music, Yahoo Music, Quiocity and Amazon as well as many others. Each of these sites provide the same music options as the I-Tunes site at similar costs, sometimes even cheaper. The downloads can be placed directly onto I-Pods thus making these products universal for any MP3 player. The I-Phone and I-Pad applications do provide a competitive advantage. When these apps became available, there were no other companies that provided similar offerings. Currently with the introduction of the Droid line of phones and applications, they have placed a dent in Apples market share yet, many still prefer the I-Phone line of apps. According to the Distimo App Store Report in March of 2011, Apple has a far greater selection of apps available and also a higher number of paid applications. This shows the quality gap between the Droid vs. Apple lines of applications. Because the

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Apple app store can be used also with the I-Pad a clear advantage is also had. Again, there are few tablet makers that provide this service and those who do also use the Droid platform. Apples line of applications has impacted the industry for the better. It has provided the consumer with better pricing, more options and better ideas. The competitive advantage that Apple currently has with their I-Phone and I-Pad will be short lived. Competition from Droid and other providers will continue to gain market share. Eventually applications will be available from either store, based on consumer preference.

Apple had the first mover advantage with most of its products currently has a competitive advantage with others. Their ability to have the first mover advantage is attributed to Apples need to compete in todays information age. Core drivers of the information age are data, information, business intelligence and knowledge (Baltzan, 2011). Data is described as the raw facts that describe the characteristics of an event or object (Baltzan, 2011). The collection of data from their consumers has allowed Apple to view trends of buying habits of customers. Apple is able to collect data on the number of units sold of each product. When this data has been converted to meaningful text, information, it helps guide Apple to their next product release. Having the ability to review the data and understand how that information can be used to Apples advantage is crucial.

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They have understood when new products need to be released based upon past successes with other product lines. These decisions have been compiled from a number of different resources that enabled Apple to make these strategic business decisions. This is called Business Intelligence (Baltzan, 2011). Understanding how their product directly affects the market, has enable Apple to position themselves as a top player in the industry. The management team, developers and sales team have the knowledge which is the final element that allows them to be competitive in the information age. Each of these team members understand the data, information and have the business intelligence to make decisions that are beneficial to the company. Steve Jobs and Steve Wozniak have over 40 years of industry knowledge and this has enabled them to put together a team that is extremely proficient in every aspect of growth and achievement.

Apples competitive advantage was not by chance. They were able to analyze all of the information and data provided which enabled them to create this advantage. Porters Five Forces Model analyzes the competitive forces within the environment in which a company operates to assess the potential profitability in an industry. Its purpose is to combat these competitive forces by identifying opportunities, competitive advantages, and competitive intelligence. If the forces are strong, they increase competition; if the forces are weak, they decrease competition. The five forces are the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers (Baltzan, 2011).

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The threat of substitute products has taken a bit of Apples market share away. This is a high threat because most of every product that Apple has produced has been copied in some shape or form, as discussed previously. This has enabled pricing to stay lower because consumers have alternatives to Apple products, yet they have offered additional value with wider product distribution. They have more phone applications and a customer loyalty that helps with the competition of substitutes. Initially entering the market with the I-Phone, Apple was the only touch phone of its kind. They reviewed this market and saw an opportunity to capitalize because there were no current substitutes. The threat of the entry of new competitors is also high in this industry. Apple has become very profitable and other competitors would like to gain a piece of that market share. The ability for competitors to piggy back on the Droid systems and other similar product lines allow for a high volume of competition. The intensity of competitive rivalry is high as well. Competition is fierce and each supplier is looking to provide a broad scope of offerings that will set them apart from the other. Again, consumers have many different options which makes it a more competitive market place.. The bargaining power of the customers is ability for the consumer to put the firm under pressure, which also affects the customer's sensitivity to price changes. Since Apple is seen as an innovator, they have a high demand for their products. Buyers find that Apple does have substitutes for its products, but the uniqueness of its products and their brand make Apple a very profitable company. Finally the bargaining power of suppliers is high as well. Since that have been seen as an innovator, the demand is high. Apple sells most of their products in their own

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retail stores or online stores. Apple addressed this when introducing the I-Phone. Initially it was only available through specific retailers that Apple deemed worthy. They can restrict where their products can be purchased thus they directly influence the pricing of their products. In addition, they able to address the competition though the development of the customer produced applications. This provides Apple with a greater number of applications with not many other competitors other than Driod apps.

Each of these topics must be reviewed thoroughly by the Management Information Team (MIS) within Apple. MIS is a business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decision making and problem solving (Baltzan, 2011). They must understand that within each of Porters Five Forces Model, there is a strong force that increases competition. Knowing that the industry is competitive, the management team has taken the steps to making Apple a profitable company. They must look for ways to continue to enhance their current products. This can be done with continual upgrades and innovations that is characteristic to Apple. Working cross functionally enables the consumer to benefit from each of the internal processes of Apple.

Apple is in a marketplace that has high levels of competition. They are able to continue to be a leader in the industry by offering a wide range of products that appeal to many. The brand loyalty and being seen as an innovator creates a high demand for their products. Apple is following the differentiation strategy which calls for the

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development of a unique product that is valued by its consumers. They have a creative development team, strong sales and reputation for innovation and quality. According to QuickMBA.com, these are some of the leading characteristics of a company that is using the differentiation strategy. They rely on their customer base and innovative products to dominate the market place. This has been the core business strategy of Apple. They continuously produce the newest, most innovative products for their loyal consumers, which has allowed them to become a major force in the industry.

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References

Baltzan, P.(2012). Management information systems: Business driven MIS. In Business Driven Information Systems, 3-39. Retrieved April 26, 2011, from http://highered.mcgrawhill.com/sites/dl/free/0073376825/892707/Sample_Chapter.pdf

Porters generic strategies. QuickMBA.com, (2011) Retrieved from, www.quickmba.com/strategy/generic.shtml