Apple is a technology company that manufactures products like the iPads, iPhones, laptops, Mac and iPods. In the recent past, Apple has improved to become the biggest company among the fortune 500 companies. Apple’s market value has surpassed the $600 billion mark, becoming only the second company to be valued that much in American history. This can be attributed to many reasons. The main reason is the continued demand for the products Apple manufactures. iPads, iPhones, Mac laptops, and iPods sales have always shown an increasing trend (Allen et al., 2010).
Results announced by Apple in the first quarter of the year 2012 indicate that there was an increase in sales, in all products the company manufactures. The company’s profits increased by 94% contrasted to the same period last year. During this first quarter, the company has sold 27 million Smartphones, 10.1 million iPads, 4 million Mac laptops and 7 million iPods. The company results show revenues that surpass those projected by many analysts. Helped by this rise in sales price of the shares of the company continues to gain value rapidly. The share price rose to $12.30 due to the reported strong sales.
Apple has set its focus on the emerging economies to fuel its growth. It has shifted its focus to countries such as China, Brazil, India and Africa continent. The increasing demand for Apple’s products in these regions has helped Apple to maintain its profitability. To show this commitment to the emerging markets, Apple opened its fifth store in Shanghai, Mainland China. Apple is expected to continue to invest to counter the competition from competing firms such as Samsung in China.
The shares of Apple have gained a 30% value in the past two years. The company is the most valued in the world with a market capitalization of $600 billion. The success of Apple can be attributed to the quality of the products it makes. Just this year Apple launched the iPad 3. The iPad 3 saw improved sales, making remarkable sales on the first day of entering the market. The iPad 3 is an improvement of the iPad 2. It has improved features making it the first of its brand in the marketplace. It is the first tablet to possess a high definition screen. Its uniqueness fuels the demand among its consumers translating to increased sales and revenue for the company.
Apple also manufactures Smartphones with its biggest competitor being Samsung. The iPhones and the Samsung galaxy note are two types of Smartphones, which compete for dominance in the market. The sales of the Samsung galaxy note from Samsung Company surpassed those of the iPhones from Apple last year. The Samsung Galaxy Note is a device which can be considered a half Smartphone and a half tablet. This showed the strength of the competition for Apple in the market for smartphones.
Samsung, the South Korea based company, is one of the fiercest rivals of Apple company. The technology firm manufactures products that rival those from Apple. Samsung Company also recorded viable profits last financial year. This was mainly due to the resurgence in sales of its smartphones. The Samsung Galaxy Note was sold to more people in the world than the iPhones and Android-Powered Phones.
Another fierce competitor for the Smartphone market is the Android-Powered Smartphones from Google Company. The sales of the Android-Powered Smartphones have shown an increasing trend. Continuous research and development at the Google Company has seen improvements in the android system. They offer fierce competition to the products offered by Samsung and Apple. The sales of the Smartphones continue to rise also fueled by increasing demand from emerging markets.
To counter this competition, Apple is expected to launch the iPhone 5 so as remain competitive. The Smartphone is expected to have distinctive features so as improve on product differentiation. This will mark a difference between its product and its competitors. This will, therefore, ensure that Apple remains profitable and outmatches its competition.
The main problem faced by technology firms is the rate at which their products are surpassed by those of the competitors. The products easily go out trend and fashion. Therefore, to remain competitive the firms have to set out new products that have improved features. It is necessary to invest in research and development or look for alternative strategies to remain competitive in the market. Market analysts have predicted that the dominance by the Apple technology firms is set to decline. Comparison has been drawn to Sony, Kodak and IBM that dominated during the 1990s but nowadays are struggling.
Samsung has decided to shift focus to the component manufacturing sector. The company recently increased its investments in its component manufacturing firms in China with $4 billion. The company realized that it could not maintain the momentum in the sale of its Smartphone. Therefore, to maintain profitability the company has decided to shift its focus to investment in its component manufacturing factories in China.
The bottom line of Apple has been hurt by claims of terrible working conditions in its assembling factories in China. Unrests from activist groups have mandated Apple Company to address their concerns. The groups have appealed to the buyers of the Apple products not to do so on the basis that they are manufactured in deplorable conditions in factories in China. A wave of employees committing suicides in supplier factories and other concerns has made Apple respond to claims. A recent trip to China by the company Chief Executive Officer, Tim Cook, addressed the concerns by setting up an autonomous commission to probe into the claims while encouraging the factories to develop the working environment of the workers.
Foxconn and other suppliers, however, have expressed concerns of increasing the wages of the workers. They argue that the profits made by the company may not be enough to handle a salary increase. An increase can also discourage potential investors who are attracted by the low wages in the country. This has mandated Apple to invest more funds that improve the working conditions in the factories. The awful reputation earned from incidents like this has hurt the sales of the company’s products.
However, Apple company has experienced and competent leadership. Tim Cook is one of the most experienced managers among the fortune 500 companies. The able leadership is one of the strengths of the company that has enabled it to remain profitable and competitive. The company market value has risen steadily to stand at more than $600 billion. The share price of the company has risen steadily to stand at $12.30. The shares have also gained a 30% value under the leadership. Company is large forming 4% of the shares traded in the S&P 500 in a day. The company suffered a massive blow when its Chief Executive Officer and entrepreneur, Steve Jobs succumbed to cancer. Steve Jobs was a charismatic leader that led the company to profitability and was a valuable asset to the company, but Tim Cook has been able to replace him well (Morrissey & Campbell, 2010).
A lawsuit is another issue that threatens the bottom line of the company. Technology companies are always at risk of infringing patent rights of other companies. A recent case of a lawsuit is over the prices it charges on its e-books. The lawsuits could hurt the company through the fines and charges it has to pay if they lose the case. This could decrease the profits of the company. It could also reduce the confidence of investors in the company reducing the demand for its shares, which will eventually lead to fall in price.
Strength of Apple over its competitors Samsung and Google is that it manufactures its products at low costs. Apple outsources it to be assembling needs to China. The country has cheap raw materials and labor. The wages in China are at the subsistence level allowing the company to produce at low costs. China also produces 95% of the rare earth resources used in manufacturing electronic products. It places embargoes and tariffs on the exports of the raw materials making them expensive for companies that import them. Apple produces its products in China because it keeps its cost of production low ensuring profitability than its competitors. Apple assembles each iPad for $8 and sells it for $499 (Hartung, 2009).
The last weakness of the Apple Company is the increased cost of transportation. Producing in China means that the company has to bear a higher cost to transport the products to the United States. The increased transportation cost could include to the cost of manufacture of the firm. This has the consequence of reducing the profit margins of the products produced by the company as compared to the competing firms that do not bear transportation costs.
Worries are that the growth of Apple Company will slow. However, various stakeholders continue to express the resurgence shown by the company. The company, however, needs proactively invest in research and development so as to effectively compete with its rivals. This can also help it not suffer the same fate as other technology companies that have fallen a victim of slowing or redundant growth (McClure, 2012).