Apple SWOT Analysis

Apple SWOT Analysis

When it comes to technology products with top-of-the-range software services, Apple is no doubt one of the leading companies. Founded by Steve Jobs in 1976, the California-based firm has experienced outstanding growth in its products and service delivery.

The success of Apple Inc. is due to its ability to use its business strengths while overcoming its weaknesses and threats. It also exploits the opportunities that arise in the industry.  As such, in this Apple SWOT analysis, we delve into the insights on the strategic actions of Apple Company, especially in maximizing its growth centered on the strengths and opportunities.

So, let’s get started with the strengths of Apple in line with its business model.

Apple SWOT Analysis

Apple’s Strengths

  • Strong Brand Identity

A strong brand identity is one of the notable strength that Apple Inc. has in its business model. All their products come with their attractive brand logo that features simplicity and creativity. With this concept, Apple comes out as simple yet very vibrant in dance commercials, especially for the iPod touch.

Apple is a known brand across the world, and its name resonates well with a loyal customer base. Therefore, any product that is associated with Apple Inc. is usually pre-ordered. Besides, Apple utilizes its brand to market a lifestyle of ingenuity and sleekness. With this market strategy, Apple sells the products that it carefully designs for the world. For that reason, Apple prides itself on high-profit margins in the new products they introduce into the market.

  • Innovative Products

Producing highly innovative products has been the primary strength of Apple for many years. From its founding, the firm has been consistent in launching very innovative products into the market. From the MacBook, the iPod, the iPhone, the iPad, and the iWatch, all these products have been high-grade.

  •  Brand Value and Reputation

Apple is perhaps the second most valuable brand in the world, right after Google. In 2006, the brand value stood at $15.98 billion, but about ten years after in 2018, it hit the $300 billion mark. Today, the Apple brand value is way above $350 billion, which is an indication of the firm’s respect in the market. Can you imagine what value the brand will be in the next 10 years?

  • Loyal Customer Base

By having a loyal customer base, Apple can launch new products that are widely accepted by its customers. Loyal customers don’t switch to other mobile brands or other product brands. However, the main reason Apple has managed to maintain its customer base is due to its innovative products, simplicity, and the unique customer experience it offers. It is, for this reason, Apple Inc. can command up to 87% of customers in the U.S and Europe.

  • Marketing and Advertising

Apple Inc. is considered the master in advertising and market since its founding. For once, Apple’s advertising is done by creating a buzz about its imminent upgrades and products. Its advertising and marketing process is so influential that it builds word of mouth campaigns to create an alluring brand perception while increasing its products’ desire.

  • Consumer Focus

Over the years, Apple has designed and manufactured its products, with the primary focus being on consumers while keeping their minds in the future. Their software engineers often tend to think of things that customers are to imagine yet. The founder of Apple Inc., Steve Jobs, contended that if you ask the consumer what he or she wants, by the time you give him/her the same thing, he or she will want something else. That is the driving force behind Apple’s road to success.

  • Distribution Chain

Apple Inc. operates 470 stores in 17 countries across the world. Besides, the firm also sells its products through trade partners, online channels, and other premium retail stores. Moreover, Apple has a genius bar where customers’ issues are solved directly and promptly within the retail store. Therefore, Apple’s concentration on its sales and service in distributing its products is nothing but fabulous.

  • Adept Research

Apple Inc. puts a lot of emphasis, resources, and time into researching and designing its products. As such, before any of its products is created, it has to undergo thorough research and study to help understand the customer needs and requirements.

  • High-Profit Margins

Keeping in mind that Apple Inc. is a leader in the technological world, it maintains a high-profit margin, which it commands over its products. These huge profits are often reinvested in R&D and in building the brand.

  • Brand Equity

Commonly, when you’re in a leadership position, it requires that your brand equity is high. Apple is one of the most valued brands in the world, with an estimated brand value of over $300.6 billion.  

Apple’s Weakness

In most SWOT analysis of a company, the focus is mainly on the weaknesses or the firm’s inadequacies. These refer to the obstacles that hinder the growth of a business or organization. So, let’s look at the notable weaknesses in Apple Inc.

  • Matching Consumer Expectations

Apple has been a leader in the technology world since the early 80s. As a leader, the firm commands a large market share that features numerous consumer expectations that are currently shooting through the roof. Naturally, consumers expect better things from apple year in year out, and living up to these expectations is not easy for any company, and Apple is not exceptional.

  • Premium Pricing

Apple charges premium pricing on its products to generate hefty profit margins. However, price-conscious customers will often switch to competitive brands such as Dell, Samsung that offer the same specifications but at affordable prices. For example, customers in Pakistan, India, and China are shifting to buying android phones like Samsung since they offer equally excellent features but at affordable prices.

  • Lack of Competition

Apple Inc. doesn’t have a formidable competitor. That is because its products are rare in the markets. The only time you will hear about Apple is when it is launching a new product to the market or upgrading its software or products.

  • Dependence of Sales on High-end Market Segment

With premium pricing on its products, Apple mainly depends on high-end market segments to sell their products. The high-end markets mostly attract people from the middle and high-income brackets. Therefore, closing out those from low-income brackets who commonly buy from Samsung and other brands but offer nearly the same features in the same industry. Without a doubt, high-end market segments represent the minority of the world market.

  • Lack of Marketing and Promotions

Apple is renowned for its efforts of developing and keeping a loyal customer base even with its poor marketing strategies. However, due to its success, the firm doesn’t feel the need to invest more in advertising, marketing, and promotions.

  • Limited Distribution Network

Apple is one of the companies with a limited distribution network owing to its strategy of exclusivity.  Apple is prudent when it comes to selecting its authorized sellers for its products. As such, this strategy leads to a limited market reach. The weakness exists even with the advantage of exclusivity such as a great control of the distribution of products. For instance, Apple has only 470 distribution centers across the world. 

  • Incompatibility

Incompatibility is one of the main weaknesses in Apple owing to most of its products not being compatible with third-party accessories and software. Therefore, if you buy any product from Apple, you are ushered to the Apple world, and you have to stay there. Keeping this in mind, a customer has to make a big decision.

  • Dependency on Other Few Products

Apple has around 8 products in its portfolio compared to the various products that its competitors, such as what Microsoft and Google have. Therefore, the dependency of each of these products is pretty high. So, if the product fails, a 10% loss befall Apple. With this in mind, Apple should consider increasing its product portfolio.

Apple’s Opportunities

Opportunities refer to external factors within the industry environment. Opportunities significantly influence the policy direction of the firm’s business. So, the following are Apple’s opportunities: 

  • Qualified Professionals

Apple has employed highly qualified researchers, developers, and product specialists who have many years of experience in branding consumer products. Nonetheless, the team requires to expanding as the firm continues to expand on to new opportunities with poise. 

  • Use of Artificial Intelligence

To increase its profit margins and command an even stronger market base, Apple should employ the use of artificial intelligence. Even though the firm has extended its AL portfolio, developed an AL startup, and DeskConnect to integrate its intelligent search to the Photos app on iPhone, it should now consider extending the AL portfolio to command a strong foothold in the future. 

  • Growing Market

Apple brand is a growing company in a growing market. Moreover, the firm is rising in developing countries, thus increasing the consumption of high-end brands like Apple. A company that is growing needs a large market base that has to be built through territory expansion like Apple.

  • Expand Distribution Network

Apple has the opportunity to significantly expand its distribution network to increase its sales and growth. With the current limited distribution network, the firm experiences minimal sales. Hence limited growth. An expanded distribution channel can deliver huge sales and revenue. Moreover, Apple will greatly benefit from meticulous advertising, marketing, and promotions. 

  • Steady Customer Growth

For a long time, Apple has dominated the technology field by delivering top-of-the-range technology products that provide exceptional customer experience. For this reason, they have been able to keep over 90% customer retention rate. However, the firm mainly relies on the influence that comes with the internet for future opportunities to attract new customers and forge new agreements.

  • Lack of Green Technology

Apple Inc. is yet to develop and roll out products produced using green technology. As such, this is a great opportunity that the firm is yet to embrace building eco-friendly and sustainable technology.

  • Apple Electric Car

When it is to the tech industry, Apple is a major player that always wants to take the first position.  Like Facebook is expanding to Instagram and Whatsapp and Google expanding in various ways, Apple intends to launch some of its new products. For example, Apple is optimistic about launching its car in 2020. Like the other exclusive products, the car is without a doubt expected to be great.

  • Smart Wearable Technology

Smart wearable technology is undoubtedly dominating the world. It is estimated that these technology device sales will double by 2020. Moreover, it is estimated that the technology will be 27 billion U.S dollars plus market with way above 233 million units in sales. Most importantly, Apple has the opportunity to exploit smart wearable technology. 

  • Iwatch and Apple TV

Iwatch and Apple TV are some of the two products that will definitely increase the Apple brand presence. Iwatch is already controlling about 50% of the market share of Smartwatches in the U.S. These two products are futuristic for when the digital existence is at the peak.

  • Collaboration

Apple has shown potential in collaborating with various strong and existing brands that operate in the technological arena. With its new AirPods, the firm has collaborated with Beats headphones to build a new wireless BeatsX alongside their iPhone 7.

Moreover, they are collaborating with Nintendo to bring a new game to their iPhone – Mario Run. Collaborating Apple’s name with a popular iconic game will deliver Apple a high number of customers from Nintendo fans across the globe. 

Keeping in mind the external business environment and the large global demand it can be deduced that these are the best opportunities Apple Inc. has currently. Even though these opportunities will not propel Apple to exponential growth, but they can boost significant product sales.

Apple’s Threats

Regardless of the strengths and opportunities that Apple anchors on, we can’t finish without highlighting some of the threats the firm faces.

  • Market Penetration

Different brands in the technology field have made significant penetration in the market. Brands like Samsung, Lenovo, HTC all use Android software to create their new smartphones, thereby making Android command about 72.23% of market software, leaving Apple with a mere 24.55% of the market share worldwide. As such, this threatens Apple’s market penetration.

  • Counterfeit Product

Apple Inc. has often become a victim to developing countries that are illegally using the brand image to sell fake products. Selling the counterfeit products at the same price as the original Apple products makes potential customers think that Apple products are of low-quality thereby tainting the brand.

  • Increasing Competition

Regardless of Apple being a top brand, it still faces serious competition threats from brands such as Dell, HTC, Google, among others. Moreover, as technology advances, so are the competition. Therefore, for Apple to emerge the leader in the competition, it has to produce exceptional technologies in its products or consider renewing its pricing strategy. Otherwise, the competition will definitely get even harder.

  • Laptop Competition

Dell is the main computer manufacturer that poses a great threat to Apple. For example, Dell launched its new XPS Laptop Model, which is giving Apple’s MacBook tough competition. Laptop brands such as Lenovo and HP are equally launching top-of-the-range laptops that are reasonably priced, thus grabbing Apple’s customers who prefer affordable products but with similar features as the MacBooks. That leaves Apple with the upper-income earners who are the minority.

  • Rising Labor Costs in Other Countries

The ever-rising cost of labor in foreign markets is a serious threat to Apple’s financial muscle. The capital involved in contracting manufacturers from counties such as China significantly reduces the profit margins or pushing the pricing a bit higher.

  • Lawsuits

Numerous cases of lawsuits against Apple have been filed on various occasions. Nonetheless, customers were upset by Apple’s admission of deliberately throttling the iPhone CPU with older and degraded batteries. It took these measures to prevent sudden shutdowns. Regardless of these admissions and clarification, customers still feel betrayed and not being transparent enough.

Conclusion

Going by this SWOT analysis, we can deduce that Apple Inc. has main strengths to influence the Company in addressing most of its weaknesses. It can use its strengths to effectively exploit the opportunities it has such as expanding its distribution channels. Moreover, Apple is a strong brand with an excellent innovation process that can significantly be used to establish and launch new top of range products.

However, Apple faces threats of counterfeit products and tough competition from major technology brands such as Samsung, HTC, among others. Thus, this affects its presence in the world market for consumer computer hardware and software, online digital content distribution services, and smart electronics.

Guided by the factors and strategies highlighted in the SWOT analysis, it is no doubt that Apple can aggressively continue producing and launching innovative new products into the market. Such innovative products serve to limit the effect of counterfeit. Moreover, Apple should establish collaborations with more distributors and brands to improve its overall market penetration.

Moreover, Apple should consider automating the entire process of contracting manufacturers to curb the increasing labor expenses that involve Apple product manufacturing.

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