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Apple Proter Five Forces Analysis

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Nicolle Illieva

on 24 October 2013

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Transcript of Apple Proter Five Forces Analysis

O MUNDOS DOS APLICATIVOS
A Apple já comercializou até hoje 25 bilhões de aplicativos.
Ela está disponível em 155 países
A Apple detem 30% de todas as vendas
Serviços Apple
A maior loja de musicas virtual do mundo
A iTunes Store, tem um catálogo de 20 milhões de músicas
Comprar ou alugar filmes
Simples e facil
FIM.
One job opening is the enterprise sales representative in Boston, Massachusetts, United States, posted on May 22, 2013.
he job summary is: At Apple, great ideas have a way of becoming great products, services, and customer experiences very quickly. Bring passion and dedication to your job and there's no telling what you could accomplish.
esponsibilities include: Execution of sales strategies within assigned accounts, territory planning and management, opportunity forecasting, demand generation, and fulfillment logistics, leadership of the extended sales team (telesales, reseller partners, and ISV coordination) to deliver significant market-share growth in this territory.
he successful candidate must have: A strong, positive sales focus, excellent communication and presentation skills, knowledge of Apple products and competitive landscape, plus the aptitude and appetite to learn more, ability to navigate complex enterprise politics, finances, and personalities, and a college degree.
How it was started...
Apple computers was established in Cupertino, California on April 1, 1976 and incorporated January 3, 1977 by Steve Jobs, Steve Wozniak and Ronald Wayne.
Steve Jobs, Steve Wozniak and Ronald Wayne
Historic Outline
WHY IS THE FIVE FORCES ANALYSIS IMPORTANT FOR APPLE?
BCG Matrix for Apple Inc.
Star:
I have categorized iPhone and iPod in Star category which means they both need further investment in product development and there are greater opportunities available in the market for growth.

The growth rate for iPods is currently 28% and for those of iPhone’s its 48%

Apple enjoys 60% more market share in iPod than its closest rival Scandisk in the market.


Cash Cow:
Apples iTunes digital downloading software

Apple clearly is a market leader in this market segment with 82% market share, its closest rival is Napster with only 3% market share.

Question Mark:
Mac Software

There is a possibility to capture further market share if provided with funds for product development and innovation

Apple has a comparatively lower market share in this market segment
Mac Software the growth rate is 32% and relative market share is 0.01%

Apple should pay attention on development of its other products and should divest from Computer market completely


Dogs
Apples Macs

Apple is not a market leader in this market segment

There are few chances of capturing further market share even further investment in product development is done.

External Analysis
Political Factors:
Apple Inc has reportedly obtained 52% of its business from outside US in 2007.
Due to the bad international relations, wars and terrorism might influence Apple Inc in a huge way, and also the organization has no control over these factors.
Apple Inc manufactures a number of its parts and products from outside the US, like Czech Republic, Ireland, China, and Korea.
The bad political relations between US and the other world have bad outcomes for the Apple Inc.

Economic Factors:
The global economic crisis had huge impact on Apple Inc.
The inflation rate went high and so did the unemployment rate in the country, and since Apple Inc products were viewed as luxury products, the customers started pending less on them.
Porter's Five Forces Analysis
Industry competitors
Competitors
• How many direct or indirect competitors are on the market?
As direct competitors we chose the ones that show a high level of competition within the industry: for software Google and Microsoft and for hardware Samsung, Dell, Lenovo, HP, Asus, Acer, HTC, Blackberry, Sony.

New Entrants
Bargaining Power of suppliers
Apple Inc.
Porter's 5 Forces Analysis

• Established on April 1st 1976 by Steve Jobs and Steve Wojniak.
• January 3rd 1977 the company was incorporated in Supertino, California.
• Apple II was first personal computer that included color graphics .It was a hit. The same happened with the first floppy disk , and their sales increased even more.
• In 1987 the Mac II was introduced , around the same time Microsoft was launching Windos 3.0. The market was saturated and their sales descreased significantly.
• In 1994 Apple launched the PowerMac family, which were based on the PowerPC chip.
• In October 2001, Apple introduced its first iPod portable digital audio player.
• In 2007, Apple unveiled the Iphone . Huge Success worldwide.
• From 2005 the stock market value of Apple had increased significantly and by 2010 it overtook Microsoft’s Market value. Along with the Iphone came the Ipads, mini ipads .


Apple's production
Industry Competitors
the Threat of New Entrants
The power of suppliers
Threat of Substitutes
Competitive rivalry within the industry
The size of the Competitors
Smartphones Market Share
Desktop Operating System Market Share
Hardware-laptop and PC Market
Tablets Market share
How diverse are the competitors?
Industry
What is the industry growth rate?
- global business software
-IBM, CA, HP, Apple, Adobe, McAfee, Oracle and EMC
-continue recording strong growth, fuelled by innovation
- global PC and server market include Microsoft, Apple, Hewlett-Packard, Oracle, Acer America, Dell, IBM, Advanced Micro Device, Intel, Fujitsu and Cisco Systems. The PC industry continues to lose market share to mobile devices and tablet PCs.
What are the Strategic stakes?


To adapt well before its competitors
Products
How different is my product?
-design and ease-of-use
-product of its unique values-which are uniquely innovation-friendly and customer-centric.

What are the buyers’ switching costs?
-vertical integration, the buyers’ switching costs tend to be rather high
- synchronization of the devices. This “customer binding” strategy

LOW
High Investment requirements
Economies of scale
Apple's experienced R&D
Product differentiation (Brand identity, customer's loyalty)
Distribution Channels all over the world
What is the bargaining power of suppliers?
Bargaining power of suppliers is measured with the following questions:
- Are there many/large-sized suppliers for the firm?
- Is the cost for the firm to substitute its supplier for another high?
- Are the supplier’s products unique?
- Are suppliers concentrated?
- Are the employees of the supply company loyal?

Who are the Suppliers of Apple?
156 companies
- Apple’s main suppliers: Hon Hai Precision Industry(Foxconn Technology), Quanta Computer Inc., AAC Technologies, TPK, Catcher Technology, Largan Precision Co. Ltd, Radiant Opto electronics, Simplo technology, Cheng Uei Precision Industry(Foxlink), Career Technology(Mfg.).
-They are mostly in East Asia(around 80%), especially in China.
How Strong is the bargaining power of suppliers?
1. The number and the size of suppliers
Not only are Apple’s suppliers counted up to 160, Apple is also dedicated in ramping up this figure. (online registration system, a significant amount of production)
2. Switching costs
3.Differentiantion
4.Supplier concentration
5. Employee loyalty

What has Apple been doing to manage its suppliers’ bargaining power?
-Apple already knew the significance of flash memory for portable media devices, so that it stroke a long-term contract with main flash memory companies like Samsung, Intel, and Micron(Apple Inc., 2008, Harvard Business Case).
- Apple makes a large volume contracts with its suppliers.
.

Recommendations
Apple now should brace for a possible fall in sales. Customers, especially in fast-growing emerging markets, are increasingly turning to cheaper, older versions of Apple's products. The average selling price of an iPhone fell to $581 in the latest quarter, down $32 from the previous quarter.
A substitute product may be defined as a product that can perform the same function as the product of the industry.
The power of buyers
The ‘power of the buyer is actually the choice of the buyer, which can lead to reduction of prices, bargaining for higher quality or more services and playing competitors against each other- all the expense of industry profitability.
Step by step...
1976 - Steve Jobs, Steve Wozniak and Ronald Wayne, Apple Computers inc., California.
1999 - ibook, the first machine to support wireless Internet.
2001 - iPod.
2007 - iPhone.
2010 - iPad.
===>Apple overtook Microsoft’s Market value
Prepared by:
Nicole Ilieva
Miruna Voinea
Anastasiia Babykina
Moonjee Ceci Jeong
Camila Díaz González

opportunities and threats
position in the market
excel over competition
future investment analysis
the potential of profitability in the industry
the power of buyers
The power of setting the entry deterring price
iPhone 5S. Costs and prices
Threat of substitutes
Substitute firms and their products
Apple - own unique software
+ Big players like DELL HP Gateway and IBM use Microsoft or similar program
+online music - record stores,video programs,
illegal file sharing
+iTunes vs Yahoo! Launch Software
+Roxio's online software
- new revenue streams
- entered untapped demand sectors
- volume package discounts
- multiple products, designed in order to interface perfectly with each other
- iPod As a complement - has increased revenues and has captured both PC and DM market
Cross-selling
- depends on characteristics of its market situation
- purchases from the industry compared with its overall business
Circumstances responsible for the buyer power
1. Volume of purchases
2.The fraction of buyer costs or purchases
3.Are the products standard or differentiated
4.Switching costs
5.Low profit
6.Threat of backward integration
7.Quality of the buyers products and services
8.How well is the buyer informed
Strategic decisions
- companies choice of buyer groups to sell to - crucial
- to improve strategic decisions- buyer selection
- the buyer bargaining power in Apple's sector is high - wide range of similar products with competitive prices
- moderate threat- demand for new features in Apple products
- price differentiation and performance
- customer loyalty
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