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Apple porter's five forces analysis
Apple porter's five forces analysis
Apple porter's five forces analysis
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Executive Summary
The Operating Systems and Productivity Software Publishing Industry is primarily comprised of companies that develop and publish operating systems and productivity software for computers and servers. According to the 2013 IBIS World Industry Report, “an operating system is the interface with which computer users interact, and productivity software includes basic applications like word processors, spreadsheets and slideshow creation tools.” (IBIS 2013) Over the next five years, revenues for the $38.6 Billion industry is expected to grow at an annualized rate of 6.8% to $53.6 billion (IBIS 2012). This increase can be attributed to the overwhelmingly high demand for integrated cloud computing servers and the high end databases and software that accompany the new technology.
With the 2013 release of Apple Inc’s newest operating system, Maverick, which encompases a variety of features such as battery optimization, icloud keychain storage, multiple displays and enhanced dictation, the company seems to have taken advantage of the changing technological trends that have impacted this industry.
Trend Analysis of the Industry
The concept of Porter’s Five Forces can be utilized to determine the competitive intensity and attractiveness of a particular market. In respect to our chosen company Apple, this tool is useful both in understanding the strength of the organisation’s current competitive position, and the strength of a position that an organisation may look to move into. This section will use Porter’s five forces to understand whether Apple’s products and services will be profitable within the Chinese market as well as identify the company’s key areas of strength, to improve weaknesses and to avoid mistakes.
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...able to identify their unique selling proposition and stay on top of their competitors.
Aaker and Mcloughlin’s Strategic market management global perspectives, divided the consumer markets into three segments: Low-end markets, which are comprised of lower income shoppers and lower priced goods, the mid-end market which is characterized by mid- income level consumer and mid-level or averaged priced goods and/or services; and lastly, the high-end market which consists of the higher income individuals and expensive or higher priced and/or luxury goods. (Aaker and Mcloughlin, 2010). Based on this description, it seems as though Apple has adopted the high value high price marketing strategy which attracts the high-end segment of the consumer market. Below is a depiction of the the strategic mapping position for Apple, Microsoft and Google (Android) within the industry.
As strategy consultants of McCormick & Associates, we use Porters Five Forces Model as a framework when making a qualitative evaluation of a firm's strategic position (Appendix 1.2). These five forces determine the competitive intensity and therefore attractiveness of a market. These forces affect the ability of a company to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the market place.
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
Not long ago computers were non-existent in many homes. When computers were first introduced to the world, they were for the sole purpose of performing business functions. The only people who owned computers were large organizations. Eventually, computers were introduced into the homes of those who could afford to buy them. Today, just about everyone owns some form of system that they use daily to help manage their day-to-day operations. What many once survived without now seems impossible to do without. As technology continues to grow, it has a greater effect on families and the education system. Some companies such as Microsoft and Apple made it possible to reinvent a new form of technology that would change the world. Each company had some form of struggle and overtime had to keep up with the changes of time and the way people communicated. From the first day of its invention, organizations have had to steadily implement new operating systems to keep up with the demands of the people while staying afloat with competitors. The ways of life for many have changed as well as the way people communicate. It is evident that the history and uses of computers have changed the world but these computers could not perform without the operating systems. Various operating systems will be discussed, how they began and how they each changed since they were first introduced. Although, they all had a purpose each varied in how they performed and changed the lives of many and will continue in the near future.
Apple is a company that continues to go above and beyond their customers needs. As this technology advanced generation grows, Apple grows with it. They change as the needs of their customers change like when they decided to make the iPhone. Everyone wished to have internet on the go, then Apple came out with a smartphone that allowed them to take all of their social media wherever they went. Apple’s target market is everyone. Everyone wants to be up to date with what is new. If I had to pin point a specific group though, I would say the younger generation. The reason they keep updating their products is because the younger generation is getting smarter and continues to want the next big thing. Apple’s product strategy is continuing to come up with something better. Not only do they try to make the best product, but they also have a well known packaging and logo that no one forgets. Their distribution strategy allows people to purchase an iPhone almost anywhere. Customers can buy them at places like Verizon, Best Buy, and even online. One of Apple’s promotion strategies is putting in a pair of their good quality headphones with a purchase of an iPhone or iPad. Their pricing strategy allows them to make money off of their products, but to also keep it to a price that is manageable for others to afford. Their prices seem to match up well with their
Apple Inc. uses the Apple brand to compete across several highly competitive markets, including the personal computer industry with its Macintosh line of computers and related software, the consumer electronics industry with products such as the iPod, digital music distribution through its iTunes Music Store, the smart phone market with the Apple iPhone, magazine, book, games and applications publishing via the AppsStore for iPhone and the iPad tablet computing device, and movie and TV content distribution with Apple TV. For marketers, the company is also establishing a very strong presence to rival Google in the advertising market, via its Apps business and iAd network
From 1980 to 1996, Apple’s competitive range in the PC industry was rocky. Although Apples products were unique and well built, they were overpriced compared to competing products from IBM and others. As competitor prices dropped, Apple prices stayed the same and the company saw a decline in sales as customers opted to purchase from its competitors. John Sculley, former CEO of Apple, took many steps to improve the company’s competitive advantage. One of those steps was to compete with price by producing a low-cost computers that appealed to a mass-market. The second step was to form an alliance with rivals IBM and Novel in order to create new operating systems and applications...
Apple doesn't just sell functional benefits for today; it is selling the excitement of a product that would change the future. Apple’s advertising creates emotional triggers such as consumers’ desire to belong to a larger gro... ... middle of paper ... ... shed these devices with added features and improvements. However, they are still the same basic devices.
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
Because the subject matter of strategic management is so inherently complex and because each one of us brings his own personal biases to the analysis, it was suggested early on that virtually all case material in the field be analyzed from the perspective of more than one methodology. Profit theory and industrial chains were selected as the first of a number of viable approaches to the analytical process. It would have been equally correct to select the Five Competitive Forces analysis refined by Michael Porter, one of the major figures in the field of strategic management. This methodology addresses the same issues but differs only in the language that they use to describe corporate behavior. The five forces are:
The Porter five forces model (see Appendix 1) as an external analysis tool was established by Michael E. Porter and firstly announced in his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” in 1980 . The main idea of the Porter five forces concept is that the attractiveness of a market depends on the characteristic of the five competitive forces that have an impact on a company (see Appendix 2).
Through Apple’s innovative enterprise approach, we seek to generate personal computing products which have higher quality at lower unit costs than the previously available one. In order to manage projects effectively in the program,
These five forces include: bargaining power of suppliers, bargaining power of consumers, competitive rivalry, threat of substitution, threat of new entry. The bargaining power of suppliers, threat of substitutes, and threat of new entries are low for AVON, while the bargaining power of consumers and competitive rivalry is high. The beauty industry is less impacted by a recession; Brazil being a prime example. Competition is competitive in all markets both domestic and foreign. AVON entered the Brazilian market before the competition, but is now battle grounds for entry between L’Oréal and Sephora. AVON is the number one company for direct selling method and marketing (AVON, 2016). Porter’s five forces are similar between domestic and foreign
Computers and technology makes it easier for entrepreneurs to enter this market. Not only are major tech companies competing against one another, but they are also competing against little programmers that know how to code. In our time you will never know with certainty when a small group of engineers or computer scientists are going to create, “next big thing”. Apple has been able to have a competitive advantage over its competitor by creating the highest quality products and services. Some of Apple’s current competitors are Microsoft, Google, and Facebook, and a few other tech companies as well. Most people strongly people Apple is one of the stronger company its industry, but then again some other people have biased views. Financially, they are the strongest company in the world. Also people are always willing to pay a premium for their products because of their durability, quality, and prior experiences with Apple products. Apple is always on the look at for new innovative ideas and concept that are being produced by self-motivated entrepreneurs. They are always looking to hire bright minds and let them develop within the company. A lot of entrepreneurs, programmers and engineers do not have a problem working for Apple because of their well-established perks. Apple offers its employees of the best benefits in the world. They also fairly compensate their employees that work in the front-end store as
The significance of the role of the Operation System (OS) in the overall Information Technology employment sector cannot be undervalued. Indeed, it is hard to talk about technical skill-sets or the practical application of such skill-sets without at least some underlying understanding of their context within a computer operating system environment. From hardware specifications and requirements, user technical support, system administration and security, to software development and system implementation, operating systems are an integral part of the information technology and computing world in all its aspects, and it is difficult to form a concrete demarcation between specialized careers in this industry and the concept of the computer operating system.
In the works of Michael Porter, there are five forces that shape the industry competition that appeal to the creative arts strategies, as well as, to the whole industry. The five forces are potential entrants, substitutes, buyers, suppliers, and industry competitors. These five forces of competitive strategy determine the profitability of each player in the industry, and the goal of competitive strategy of each company is to find a position of best defense. The following graph illustrates these forces (Porter,