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Internal Environments Of Apple Computer

Paper Type: Free Essay Subject: Marketing
Wordcount: 5445 words Published: 28th Apr 2017

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This project assignment provides a comprehensive evaluation and analysis of the external and internal environment of Apple Computer, which is a good consumer company. The external environment includes the general environment, industry environment, and competitive environment. It is analyzed to determine the driving forces and key success factors. In addition, the external environmental analysis processes are scanning, monitoring, forecasting and assessing. On the other hand, the internal environment analysis evaluates the organization, resource, capabilities, core competencies, objectives, financial performance, and strategies. Furthermore, Apple Computer is identified on several analyses such as strengths, weaknesses, opportunities and threats. Moreover, stakeholders are the individuals and groups who can affect the vision and mission of company as well as enforceable claims performance of the company. There are three types of stakeholders which are capital market, product market and organizational. Lastly, the strategic options are based on recommendation for future plan of Apple Computer.

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The objectives of this assignment are review and analyze the fundamental of external and internal environments of Apple Computer which identify the strengths, weaknesses, opportunities and threats of company. In addition, management of strategies used by the Apple Computer which to enhance the efficiency and effectively of their business and fit with the external and internal environment. Moreover, there are also can realize the operations, business knowledge, decision making, interpersonal leadership and entrepreneurial skills obtained from Apple Computer.

The scope of this case study involves the external and internal environment of organization Apple Computer. The external environment can be seen under marketing scope such as industries and competitive faced by Apple Computer. As well as the internal environment involves inside the organization’s operations such as capabilities, core competencies, and competitive advantage. Furthermore, it also related to globally that Apple Computer Incorporation is a famous and successful multinational corporation which creates consumer electronics, computer software, and commercial servers.

The limitations for this case study which obtained information from journals, internet news, online books, and Apple’s web site. This also can be extensive studies of accessible data from library or bookshop to search related books of Apple Computer Incorporation. There are no interviews and questionnaire surveys were made.

2.0 Background to the organization

Apple is a multinational corporation as a computer company which started in 1976. The company also known as hardware products includes Macintosh computers, the iPod, the iPhone and the iPad. However, Apple has expanded into a very complex company that produces product diversify which specializes in much more than just computers. In 2001, Apple becomes the dominant market leader in music players such as iPod. As well, in 2007, Apple joined the phone industry with the iPhone which has been widely successful.

Apple is a consumer goods company that evaluates its value requires to understanding its products and consumers. On April 1, 1976, Steve Jobs and Stephen Wozniak began the partnership that eventually becomes Apple Computer. In early 1976, Wozniak had been working on combining video monitors with computers. His idea was to invent o user-friendly computer that ordinary consumers could buy. Therefore, Steve Jobs told his friend Wozniak that they should go into business together and sell computers themselves. Their first computer, the Apple I, was built in the garage of Job’s parents known as a “kit computer”, the original Apple consisted merely of a circuit board and did not even have an exterior casing.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

The Apple Computer Incorporation brings the greatest personal computing realization to the all kind of people around the world with their own life style. Apple came out with the variety kind of product through its innovation. The market strategies evolved should be economical, efficient, durable, and flexible and allow the Apple to respond rapidly to both market and customer needs. Apple Computer Incorporation keep on top of technology to ensure the customers have the best tools available to them.

3.0 situation analysis

Situation analysis is used to analyze both the internal and external environments of organization which understanding the capabilities, customers and business environment of Apple Computer Incorporation. The situation analysis consists of several methods such as general environment analysis, Porter’s five force analysis, and SWOT analysis. The situation analysis also looks at both the macro- and micro-environment that affect many firms within the environment and specifically affect the firm.

3.1 general environment analysis

Understanding the external environment of the technology industry is necessary in order to better understand the internal environment of Apple Computer Incorporation. There are consists of seven segments: demographic, socio-cultural, political/legal, economic, global, technology, and physical environment.

3.1.1 Demographic

Demographic is defined as statistical data relating to the population and particular group within it. It also a particular sector of population.

Apple Computer Incorporation Known as one of the world most valuable technology companies. Studies consistently show that Apple Macintosh computer is a higher-priced brand compare to other standard- priced computer and tending to target people who are higher standard of living. Some studies showed that Apple’s users turn up to be younger and younger nowadays. Besides that, Apple’s users consider themselves early adopters of new technology. Usually, the products in Apple’s Macintosh computers are consider higher price and high quality compared to Microsoft Windows- based competitors.

During economy declined, Apple CEO – Steve Jobs said that the company would not lower the prices of its Apple Macintosh computers even though consumers might choose not to buy Macintosh computer but choose to purchase lower – priced computers. Based on Erik Arvidson, Steve Jobs said that ‘there are customers we choose not to serve”. Jobs indicate that Apple continues targeting customers who were high standard of living and less sensitive to price, even there is economic recession- from CNET. According to the survey, the ages of Mac users are between 18 and 34, more toward youngest trend. In addition, most of the users are more likely live in city, and they want to be perceived as unique and make different from others.

Over the past several years, the American middle class has experienced increasing of cost of many products or service such as healthcare and the CPI, but the salary is flattening and remains stagnant. The high cost to purchase Apple Mac computers may send potential users or customers into the hands of competitors when the consumers can’t afford to buy the Mac computers. Due to the intuitive of Apple Mac, Apple’s perceived value has directly brought benefits to them during the economic declined; they have continued to experience growth and benefit while other competitors suffered.

3.1.2 Socio-cultural

The current environmental trend and quest to go green has led a shift in consumer attitude towards more sustainable products. Apple Computer Incorporation has an Apple Recycling Program that reduces impact on the environment to improve products’ environmental performance. Therefore, Apple designs to use less material, ship with smaller packaging, be free of toxic substances, and be as energy efficient and recyclable as possible. Apple measures the performance environment one product at a time by using the Product Environmental Reports which a way to design the process of products manufactured, used, and recycled represents the largest percentage of Apple’s total greenhouse gas emissions in better environmental performance. Inside the Product Environmental Reports consists of several categories: climate change, energy efficiency, material efficiency, restricted substances and recycling.

In manufacturing sectors, there is the part extraction of raw materials and product assembly to accounts of Apple’s total greenhouse gas emission. Therefore, four importance things need to be focused which are material use, toxic substance removal, environmentally conscious material and responsible manufacturing. The products of Apple are designed in pioneered the development of smaller, thinner, and lighter. As the products become more powerful, then they require less material and generate fewer carbon emissions. For example, the size of Apple computer becomes smaller rather than traditional at a same time there are more powerful. From the glass, plastic, and metal in products to the paper and ink in packaging is a goal of Apple to leading the industry in reducing or eliminating environmentally harmful substances. Although not every products of Apple are free of harmful toxics, but some products are qualified thousands of components to be free of element bromine and chlorine. In addition to eliminating toxins and designing products with highly recyclable aluminum enclosure, Apple works with environmentally conscious materials including recycled plastics, recycled paper, biopolymers, and vegetable-based inks. Another that, Apple is committed to ensuring that working conditions in supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible. A significant portion of greenhouse gas emission Apple is come from the products when plug in products and start using it. Hence, energy efficient of product will be designed in both hardware and operating system to make sure work together to conserve power.

3.1.3 Political/ Legal

The success of Apple Computer Incorporation depends on effective and consistent public policies and rules that encourage a healthy business environment. The regulation and legislation can significantly affects how the Corporation conducts its business affairs and creates value for shareholders. The corporation takes part in the political process in order to protect and enhance the corporation’s interest. Apple Mac Computer Inc. strategy is to engage in the political process with a view to the long term interests of Apple and its shareholders.

Apple currently belongs to some major trade associations which are American Electronics Association (AcA), Business Software Alliance (BSA), the Consumer Electronics Association (CEA), and Information Technology Industry Council (ITI). The purposes to engage in those associations are to advance the common goals and interests of the member companies and their customers. Besides that, the purposes include addressing issues as reduce piracy, opening access to foreign markets, ensuring consistent product standards, and promoting strong intellectual property protection.

Apple faces political or legal issues both domestically and abroad. Government focused on the environmental issues that restrict manufacturing of the units. Environmental concerns are issues that directly affect computer manufacturer. EPA- the profile of the Electronics and Computer industry code updated by the Environmental Protection Agency in order to provides directives the must be follow by the companies that manufacturing components of computers. In effort to promote product stewardship from environmental perspective, Apple has intelligently promoted the buyback and proper disposal of computer parts.

There are many competitors appeared in the market of computers line. Apple faces the battle of overcoming the market dominance of the PC based computers but does have tremendous opportunity present in the iPod and music associated industry. Apple also faces and recognized the pirating and copying issues. The government imposed law to protect their benefits and interests.

In addition, Government provides the basic regulations and restrictions that influence the computer corporations in producing and selling personal computer. In computer’s software area, bodies such as the Copyright Arbitration Royalty Panel (CARP) or the Recording Industry Association of America (RIAA) can provide an important impact through imposing new laws in order to limit the digital music industry in its efforts to grow and expand. For example, CARP indicated company that produce audio or radio for the World Wide Web (WWW) which know a s webcasters should pay per song, per stream royalty. The high rate of 0.07 cent would force many corporations out of market or business. The RIAA claiming that the high rate does not affect music’s fair market value and those who can’t able to pay the fees should be first out of business. Those fees imposed on downloadable music content could affect the business because the consorts could totally disappear and the profit margin of Apple will become narrow. The government regulating the industry through imposed the music online competition act in order to solve various aspects of the US Copyright Act with update.

3.1.4 Economics

The economic environment was under unpredictable scenarios and was challenging to the Apple Computer Incorporation but the company managed to cope up with the challenges. After receiving competition from other products in from other companies, one of its products Mac managed to survive in the market. It is because Apple Inc. can successfully access the economic environment as it understands the foreign economic environment. It can help to predict the trends and events in those environments that may affect the performance of their products in foreign countries. Sometimes, it may also influence the decisions made. For example, when Apple came up with iPad in year 2010, it performed differently on both the home and international markets. Because of its high price, it kept on rising and falling. Apple Computer Incorporation was aware of the up and down changes and it would have been likely to come from a particular country imported components.

After all, the U.S. economy has improved and there are signs of full recovery looming the outlook is not certain. This uncertainty leaves consumers weary of big-ticket purchases like computers. The premium pricing of Apple leaves the firm at a disadvantage to less expensive competing products. However, when the consumers feel that the economy is improving, they will increase their spending on Apple products. Consumers seek to “treat” their own economic upturn with Apple’s luxury products. Thus, they may be attracted to Apple’s premium portables as Apple is known for its high-quality, reliable machines, and excellent customer services. This may be seen as presenting the best value of products than its competitors with fewer prices.

3.1.5 Global

The definition of global is allowed all the market from the world being one of the markets for trading. For information, the global market is also increased the dependencies of and relations of business and economics from the world. The computer industry exception that the Apple brand is not affected by the global environment because Apple successful to innovative revolution of products. For example, Apple reported sold 17 million of I-pad in the world. According the information, the European country is facing the unemployment rate, inflation and problem. The most serious is the bankrupt problem. Even though Europe is facing the problem, but the number for I-pad selling is still kept increasing. Another example can be seen that Apple Computer Incorporation plans to increasingly the retail presence out in the other countries since that the market not enough stock for supply to the customer. Hence, the Apple would like to increases the retail presence for the market in the foreign country. It can be evidence that the number of retailer store of Apple has 208 stores if compared the recent year, just has 177 stores around the market that increased about 17.51 percent.

Apple was lately established their brand in China in year 2011. The Apple has six retail outlets in Beijing, Shanghai and Hong Kong. From the information that I found, the young generation of the China are favorite to sell Apple product, especially I-pad. Furthermore, Apple has make agreement with the Foxconn Technology Group, Taiwanese firm. The Taiwanese firm helps the Apple package the I-pad and other electronic. The factory located in the Shenzhen which hires about 25,000 employees for working. Besides that, the Apple organized the campaign namely “I-Mac”. Meanwhile, the Apple spent about $100 million budget as their start point to enter the global. They start in the United State, European and Japan. Hence, the number of the I-Mac has been number one in the computer industry.

3.1.6 Technology

Apple Computer Incorporation provides more amazing successful technology products in the worldwide technology industry. Especially the revolution Apple I becomes to I-Mac. This is because Apple offers advanced technology that is flexible enough for individual researchers and scales to support larger collaborative efforts. There are many benefits from the consistency of one operating system, Mac OS X, from client to server. In the hardware part, for example, the Mac Pro, Apple technology provides the power and ease use in high-performance computing. With its state of the art graphics capabilities, Mac Pro makes the perfect visualization workstation as well as graphics technological provides the ability with brilliant clarity contrast, and detail. In addition, the Macintosh is the ideal system for publishing scientific work that Microsoft Office runs natively on Mac OS X as well as favorite writing, reference and publishing tools.

On the other hand, the platform of Apple can combine the power, security, and stability of UNIX with the ease of the Mac interface. For example, Mac OS X provides the ideal platform for scientific research. The Mac also allows people to publish, communication with other people, and browse the Internet. These are the benefits for advance the technology of Apple Computer Incorporation.

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Apple’s most recent iPod to date, the iPod Touch (September 2008), is the first iPod to have a touch-sensitive screen and include Wi-Fi wireless networking. The home screen features multiple ‘touch-buttons’ to play music, videos, see photos and maps, surf the Internet, check email, etc. Users can also access the iTunes Media Store and download content with the touch of a ‘button.’ With up to 32GB storage, the iPod Touch offers 36 hours of audio playback and 6 hours of video playback.

3.1.7 Physical Environment

The recycling approach of Apple begins in the design stage, where create compact, efficient products that require less material to produce, material used including arsenic-free glass, high-grade aluminum, and strong polycarbonate. Even packaging uses recyclable materials wherever possible.

All e-waste collected by Apple will be controlled voluntary and regulatory programs worldwide. The recyclers must comply with all applicable health and safety laws and Apple does not allow the use of prison labor at any stage of the recycling process. Nor they allow the disposal of hazardous electronic waste in solid-waste landfills or incinerators. Apple recycling programs are once an Apple product reaches the end of its useful life. The weight of the materials recycle each year is compared to the total weight of the products Apple sold. Apple global recycling once again exceeded 70 percent goal.

For more than 20 years, Apple has been working on ways to minimize the impact company and products have on the environment, which developed and formulated the first environmental policy in 1990. Since, Apple will be continued to make the products more energy efficient, eliminated many toxic substances, and embraced renewable energy in facilities. In addition, Apple has dramatically changed the traditional consumption model of CDs, DVDs, and DVD-ROMs associated with music, movies, and data storage into the modern model of iTunes, App Store, and iCloud. Apple has also revolutionized how people purchase and consume books, magazines, and newspapers with the introduction of the iBookstore and Newsstand.

3.2 industry conditions – porter’s five force analysis

The Porter models involves scanning the environment for threats from competitors and identifying problems early on in order to minimize threats imposed by competitors. Porter’s five forces model can be applied to a country to help gain insight into creating a competitive advantage in the global market as well as help businesses compare and analyze the profitability and position with the industry against indirect and direct competition.

Threat of New Entrants

The threat of the new competitor is very high. This is because the Apple Computer Incorporation is large economies of scale makes its return of profit effectively. For example, the apple earned the higher profit about $88.7 million per year for iPad as the best seller one of the computer beside the IMac. Hence, the apple competitor, such as Samsung also manufacturing the Samsung tab, contain almost function with the iPad. For the information given that the number of Samsung tab is kept increasing and the revenue of Samsung also increasing.

The technology of the computer being maturity such as the Apple and competitor has the maturity technology to manufacturing the computer to meet their customer needs. A new company would have to create competitive software that a rapidly changing technological advancements within the computer software market. For example, the personal computer market provides Microsoft’s Windows compared with Apple Computer Inc. provides Apple’s Mac OS X.

Another threat is the cost of manufacturing between Apple Computer Inc. and its competitors. As an example, the competitor Samsung offers the cheaper price of the products than Apple Computer Inc. whereas the products of Apple have a higher quality. In addition, the barrier of new entrants would be face legal barriers which mainly in the form of patents such as copyright the computer design patent as well as technology.

3.2.2 Bargaining Power of Suppliers

The bargaining power of suppliers for hardware products is low as the industry is highly saturated, causing suppliers to be competitive in their pricing. Apple adopts a differentiation strategy which requires the firm to ensure that suppliers provide high-quality components, driving up its supplier costs. However, Apple is partially insulated from the impact of higher supplier costs due to the premium that the firm charges for its products. Furthermore, Apple purchases a large amount of raw materials, increasing its bargaining power as a significant customer. Hence, Apple is able to secure components at a lower price.

The microprocessors of Intel have been dominating the PC Computer Processing Unit market with 80% of the market share. To provide higher performance desktops and laptops, the entire Macintosh line is now running on Intel chips, increasing Apple’s dependence on Intel. Therefore, Intel has a high bargaining power as a supplier for its PCs. However, for non-PC devices that make up 60% of its revenue, Apple develops its own A4and A5 chips which mitigates it over-dependence on Intel.

In addition, the Operating Systems (OS) of Apple develops its own Mac OS X for its PCs and OS for its non-PC devices. Due to incompatibility of the Mac OS with many software programs, Mac users may prefer to run the Windows OS. This creates a dependency on Microsoft to provide the Mac-compatible Windows OS. However, since Apple is the third largest PC seller in the U.S. market,

Microsoft would also be dependent on Apple to make the sales for the Windows OS. Hence, this interdependency would result in a low bargaining power of Microsoft.

Bargaining Power of Buyers

The bargaining power of buyers is low to consider the customers would have to buy the products in very large volume. Apple has 98 national and 4 international retail stores as well as online store carrying the full line of Apple products. Therefore, the Internet is a huge selling point for Apple computer with the popularity and benefits of at-home shopping. There are the high bargaining powers of businesses to purchasing Apple computers in bulk for office use compared with home users that they have literally no control over Apple when it comes to their pricing.

Apple focuses on product differentiations that have a signature style and innovation features to set apart from their competitors. This makes buyers less price sensitive and avoids the same features or stylish look with other products of competitors. According the information mentioned that once Apple sells to the end user it has essentially secured future sales of its hardware and software due to a lack of third party options. This gives buyers even less relative bargaining power to shop for better prices or alternatives for their hardware or software needs.

3.2.4 Threat of Substitute Products

Threat of substitute of product toward Apple Mac computer is very high. Apple work to pursue their customers that their product is superior compare to its competitors. The more differentiation of product compare to substitute, the less likely the switch to a substitute will occur. Apple has to provide justification for increase if the prices are higher than other PC company. Apple’s operating systems with higher differentiation can expertise higher pricing when Apple presented it product to the creative designer community, but not to the individual computer buyers unless those buyers are purposely looking for such enhanced graphic capabilities.

In average, all of the PC industry is a very competition intense sector with the technology undergoing paradigm shift. PC industry has to come out solution to cope with these changes. Coping with these changes can make life difficult for the player in the PC sector. Apple has been able to manage and retains its technological expert and designer approach to come out of this difficulty. Besides this, Apple could convert some of these problems or difficulties into opportunities by looking at its SWOT analysis.

A readily amount of substitute products threatens Apple’s market due to buyers easily can switch from one device to another. Apple persists to make different with their Mac computer series from the common PC market. Therefore, Apple isn’t as directly affected as Dell, HP Compaq, Asus or IBM. As Apple is operating in a fast cycle market in which the firm capabilities that contribute to competitive advantage and have protection from imitation by other PC industry where imitation is often rapid and inexpensive. Apple has always differentiated on the innovation and design. Apple has to adapt and offer new services to keep itself from the competition. Steve Jobs is very good in coming up an innovative product to keep this as advantages from falling over. It is very difficult for firm competing in fast cycle market and innovation play an important role to avoid them from being out of market.

The pressure from substitute products is considered to be high if products of different business or industries can basically satisfy the same customer needs. Consumer preferences can change any time especially in high technological market. Apple currently can avoid the threat of substitute products as technological innovation will not produce big changes in the near future. In despite of this, Apple has to be aware that the external environment can change rapidly to the disfavor of Apple.

3.2.5 Intensity of Rivalry among Competitors

Apple Computer Incorporation faces strong rivalry from its existing competitors due to the huge number of competitors in the similar industry in which it operates. In the Personal Computer (PC) industry, its main competitors include Hewlett-Packard (HP), Dell, Lenovo, Compaq, Acer, Gateway and IBM.

In the personal computer market, Apple was the leader who came out first with Apple I and soon able to make the Apple II became a family commodity. After IBM transformed the PC from proprietary systems into open structure, PC has been dominated by Wintel (Windows + Intel) structure. Compaq, HP and many other producers started to show in the market to produce IBM compatible PC. It was an intense competition for Apple. Apple lost the PC market because of ignoring industrial changes as it insisted in selling their products as a high price proprietary system. The hardware and software were so different and not compatible with IBM machine. Besides, Intel created competitive disadvantage for Apple by releasing faster processor every quarter. This made Apple failed to respond in time. After all, Apple tried to develop new iMac to win the market back but unfortunately it was a failure as it focused on the wrong market.

Although the companies are aware those PCs are weakly differentiated but they are still active in innovation. For example, Windows operating system make Windows Intel platform more valuable and thus create additional pressure for Apple especially high switching cost for consumer to switch to Apple. However, Apple success with unique selling points in “ease of use”, “industrial design”, “tech elegance”, and “powerful graphic application”. Apple’s products are highly differentiated in terms of design and functionalities as compared to its competitors’ products. As a result, Apple is insulated from intense rivalry due to strong brand loyalty arising from its positive reputation for high-quality and unique products. It is proven that in 1990, the majority of IBM and compatible users ‘put up’ with their machines, but Apple customers love their Macs. They will continue to be loyal to Apple until their needs and desires are let down. Apple would be able to sustain this competitive advantage as long as it continues to innovate and meet the customers’ expectation.

description of key stakeholders

3.3.1 Capital Market Stakeholders

The shareholders are concerned with the stock price of the company. They want to make sure their investment is profitable and has a future. Steve Jobs as the co-founder, chairman, and chief executive officer of Apple Inc. He was widely recognized as a charismatic pioneer of the personal computer revolution and for his influential career in the computer and consumer electronics fields. In the late 1970s, Apple co-founder Steve Wozniak engineered one of the first commercially successful lines of personal computers, the Apple II series.

After losing a power struggle with the board of directors in 1985, Jobs left Apple and founded NeXT, a computer platform development company specializing in the higher-education and business markets. In 1986, he acquired the computer graphics division of Lucasfilm, which was spun off as Pixar. He was credited in Toy Story (1995) as an executive producer. He served as CEO and 50.1% majority shareholder until Disney bought Pixar in 2006. Jobs received 7% of Disney shares, and joined the Board of Directors as the largest individual shareholder.

In addition, the organizations who offer the Apple MacBook Finance will surely look into the consumers’ pocket prior to their financing the deal. Depending upon the sort of revenue structure, consumers will get the financial from t


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