Apple Inc. specialises in development, design and marketing of computers, portable-digital music players and other didgital devices including iPad’s and mobile devices (IPhone). Apple Inc. are also involved in selling multiple supporting software, digital content, third party applications, networking software and services. Apple Inc. predominantly operate from their U.S headquarters in Cupertino, California and involves 72,800 employees (Forbes, 2013). Revenue for APPL in 2013 has risen from $155.97bn in 2012 to $170.87bn in 2013 (Market watch, 2013) which is a 9.6% increase.
The objective of the Porter’s 5 forces model is to identify and elucidate the current levels of competition ...view middle of the document...
“Rivalry in this industry is expressed by aggressive pricing policies, profound product innovation and design, online intensive marketing, direct selling, and afterscale services (Forbes, 2012) The Table below shows the current market cap Of Apple Inc. with its main competitor being Google Inc. Apple Inc. secures its market leadership by providing products and services with unique attributes using differentiation strategy. They also implement focus strategies such as instead of targeting business users, targeting consumer users with the IPhone.
Table 1 : Apple Inc.’s competitive rivalry within the industry
Source : Yahoo Finance, 2012
Bargaining power of buyers
Bragining power within the mobile market is very low to non existant due to the demand from customers for these pruducts. Consumers are willing to pay retail prices because they want the product, and it would be almost impossible to influence apple to reduce its pricing due to the diversity of its products over competitors. It is that product diversity that allows apple to charge high prices compared to its competitors (Nokia, Dell) who have were made slash their prices due to fierce competition within the industry. In addition, another reason of lower bargaining power of buyers is high switching cost for customers due to change of software or hardware (Griffin Consulting Group website, 2012). Apple however must consider how easily accessable substitute products from competitors are and whether consumers will eventually turn to them due to their lower prices which will cause apples customers to have a high bragining power. Apple however is losing out to Dell in supplying education institutions as there software (Windows) is safer and easier to use than IOS provided by apple.
Bargaining power of suppliers
Apple inc. has high bargaining power over its suppliers due to the fact they can outsource many of their manufacturing products, and have enabled themselves to vertically integrate, meaning they can produce some of their own supplies. This vertical integration has given Apple Inc. great advantages over competitors in the market as they are reducing costs whilst increasing resources.
Threat of substitute’s
The technological environment is changing fast every day. There are not many substitutes in this industry because of the high-tech features. However, alternatives are always available from competitors. If some other company such as BlackBerry, Google, Samsung or Microsoft come up with new technology or the same kind of phone at a lower price or with more features at the same price, then this is a problem for Apple (O’ Grady, 2009). Apple Inc. also proactively dodge’s Gharajedaghi's counter-force of inertia by releasing new innovative products when competitors start to release substitutes for their previous product.
Porters Value Chain
‘Every firm is a collection of activities that are performed to design, produce, market, deliver, and support its product. All...