From the Forbes magazine, Apple Inc. products had been one of the most popular among consumers and investors (Mourdoukoutas 2011). Further to this, most investors have been saving a lot of their investment in the company’s stock, thus propelling them to the higher heights. However, this momentum by Apple has been fading recently as most investors and customers have shown little enthusiasm on the company’s latest products (Sawayda 2011). Apple is facing a variety of challenges despite its recent success, the main one being the ever changing competitive market. This paper is analyzing the challenges that Apple Inc. is facing with a lot of emphasis on competition with regard to Porters five forces model of competition.
Analysis of the Challenges Facing Apple Inc
Competition and the level at which technological change is taking place are some of the major challenges that the company is facing. The strategic move by the company to move into the sphere of mobile communication devices and portable entertainment devices exposed the company to stiff competition from all sides. These products exposed the company to the new competitors, low priced products, and possible substitutes, thus threatening to reduce the perceived value of its products and the success of its strategy (Linzmayer 1999). Either, the core competencies of the company, which include marketing, innovativeness, and relationship building and brand management, are also challenged. Furthermore, the varying customer base and increasing new set of competitors are also a challenge. Both, the entertainment industry and its technology are undergoing through rapid and constant changes. The ability of Apple to sustain its brand reputation by means of innovative designs and technological breakthroughs face challenges. Either, managing stakeholder’s demands has tremendously become difficult because of the company’s success and growth. Besides all these, company’s overreliance on Job’s charisma and leadership and lack of a well-drafted succession strategy exposed the company to risk (Ireland, Loskisson & Hitt 2008).
Previously success of Apple has been based on the company range of products, which were no longer based on the internal developed hardware’s and software’s. It is now depending on its ability to secure media content, which is inherent of its own competitive forces, varying entertainment value and ownership issues. Careful thought on its strategic management of these challenges must be applied in order to maintain its success (Ireland, Loskisson & Hitt 2008).
Analysis of the Company
Situation analysis is one of the important steps in strategic management of a company. It involves deeper assessment of the internal and external environment forces that have an impact on the company’s strategy and success over time. Internal analysis of the company identifies the main competencies of the company, which would allow the company to implement it strategies to achieve success, and the shortcomings, which might derail its achievement. The core competencies of Apple include marketing, innovativeness, relation building and strong brand. In the external environment, the company is facing some of it’s the most pressing challenges, which are originating from the industry and competitors (Bennet 2013). A number of current and incoming competitors are ready to battle with Apple for a share of the market. The zeal in competition has increased over the years and especially concerning price of Apple’s product. Most competitors in the market can afford to cut prices so as gain markets or even maintain market share. Besides price, other competitive factors such as product features, quality and reliability of the product, after sale services or products, relative prices, capacity to market and distribute and reputation of the corporation (Callagher 2013).
Currently Apple dominates in the market having a competitive advantage based on advanced solution and innovation combination of hardware, software, and content distribution. However, in this aspects competition is set to intensify as the most competitors imitate the company’s approach to appeal to customers. The largest threat to the company is the collaboration of several competitors and content providers to exclude Apple (Chazin 2013).
New entrants are also another risk, especially from both music service providers and players. The risk is higher when they are from large and established corporations such as Casio, Sony or Toshiba, who provide players and the likes of Yahoo and Microsoft, which are online companies, which offer, downloads. Competitors are expected to enter the market outstanding to the attractiveness of the market and low barriers. Capital is the only primary barrier to the entry of the market, and it is not enough to deter organizations with a wide base of resources. Either the speed of information flow about new technologies enables startup firms to gain legitimacy in the industry tremendously first. The company’s entry in the mobile communication devices market with their iPhone mobile sets exposed it to a new level of competition where large well-funded firms such as Motorola operated (Ireland, Loskisson & Hitt 2008).
Apple depends on revenue from a single market is reduced through relying on its core competencies on different markets for products. Furthermore, differentiation is allowing the company to share its resources, technologies, and activities throughout the product lines. This helps to build a competitive advantage that is hard for rivals to march. The company’s supply chain engagements, reseller relations, wireless contracts, and innovative branders are valued, thus play a pivotal role in the company’s differentiation strategy and powerful connections with the partners. This has provided an integral way of gaining new markets and holding on the market share. Association with strong brand names will either raise Apples’ exposure in the market or build consumer confidence on their products (Ireland, Loskisson & Hitt 2008).
Apples’ core competencies are more likely to determine the success of the company in the new markets of music, video on demand and mobile phone devices. The company actions and commitments should be integrated to the core competencies to gain a competitive advantage and strengthen it and at the same time maximizing its value. This analysis reveals that for Apple to ensure its strategic success, it will be decisive for Apple to protect its brand image and adequately invest in its competitive advantages of marketing and innovation. In order to ensure strategic success I would suggest that Apple Inc.:
- To engage in the low end market cautiously so as to avoid tarnishing its brand name as a technology leader;
- Manage brand exposure carefully;
- Invest in research and development so as to stay ahead of the competitors;
- Keep away new entrants through maintaining and upgrading design appeal;
- Expand its range of products and intellectual property: further enhance its existing products in all aspects so as to maximize on value.
Moreover, they evaluate the products life and constantly assess whether it is moving away from its internal strengths.
Apple Inc. has been the market leader in the sphere of entertainment and information industry for a long time. However, this status has of late changed due to a variety of factors. The main factor is competition. Completion has occurred mainly in the form of new entrants and competitors coming together to have an advantage over Apple. Lack of barriers in the industry has led to wide entry of new payers in the industry. Capital, which is a primary barrier, cannot deter companies with wide resource base from entering the industry. Apple must come up with new strategies to ensure its continued growth and success.