Apple inc. Essay Example

way for future revolutionary products such as the iPhone, Mac Book line of laptops, and most recently, the announcement of iPad on January 27th, 2010.

Introduction: The purpose of this report is to conduct a strategic logistic analysis for Apple Inc. with the aim of identifying opportunities to improve the company's logistic capabilities. This analysis will involve assessing Apple's logistics perspective by examining its SWOT analysis, Five Forces analysis, and Porter's Generic Strategy.

The report examines the main strategic options for logistics that Apple Inc. can choose, and also investigates the management issues related to implementing a new logistics strategy, considering the current resources in terms of capital, technology, and personnel. Additionally, it analyzes emerging trends and the significance of innovative technology in shaping future logistics strategies for both Apple Inc. and new enterprises. Furthermore, it provides a critical assessment of how the strategic progress of new technology and business trends can impact Apple Inc.'s forthcoming logistics strategies. The success of Apple Inc. in the IT sector is attributed to its diverse product portfolio and the strength of Mac OS X technology.

Apple Inc. is renowned for its devoted customer base and has recently made improvements to its desktop and laptop options. The company's popular offerings encompass the iPod, iPhone, Macintosh Computer, Mac operating system, and iTunes software. Additionally, Apple Inc. provides a diverse selection of third-party products that are compatible with Macs, iPhones, and iPods through their online and physical stores. These products include application software, printers, storage devices, speakers, headphones as well as various accessories and peripherals. Moreover, they offer digital content and applications via the iTunes Store.

Apple sells its products to various customer groups, including

consumers, small and midsized businesses, education institutions, enterprises, government agencies, and creative customers. The Apple SWOT Analysis offers valuable insights for top-level management by examining the company's business structure and activities. It provides updates on revenue lines and strategy (Data monitor April 2009, page 30). One of Apple's key strengths is its proficiency in developing both software and hardware.

The iTunes Music store is a lucrative source of income for Apple as it can be easily accessed on the Windows platform. Apple has a unique target market that enables them to steer clear of direct price competition and brings innovation to their desktop and computer products. Their online access technology functions as a means to enhance product visibility and drive sales.

Apple Inc. has strong brand loyalty and a powerful research and development department. It has a low debt ability, making it more maneuverable. Since 2006, it has been affiliated with Intel computers. However, there is no strong connection between Intel and Microsoft.

The business sector shows weak dominance for Apple. The short life cycle of most Apple products results in revenue concentration on the launch of new products and services, mainly focusing on the education and publishing markets rather than others. Additionally, there is a slower response time for highly demanded products.

Despite previous communication issues between the founder and employees, Apple is currently facing a significant decrease in market share when compared to Microsoft, its main competitor. Consequently, the company's reputation has suffered. However, there are various opportunities that Apple can capitalize on. Firstly, there exists a substantial consumer base that remains loyal to specific brands. Secondly, the continuous prevalence of computer viruses creates an

ongoing need for anti-virus software. Thirdly, through collaborative ventures with other companies, Apple has the potential to strengthen relationships. Furthermore, given the rising popularity of music downloads and MP3s, Apple can tap into a growing market.

The online computer market, particularly laptops, is undergoing considerable growth. Hence, Apple Computers must prioritize the improvement and creation of new laptop models to cater to individual customers' needs. However, there are challenges that Apple must address, such as compatibility issues with software from other companies. Furthermore, competitors like Dell, HP, Sony, and Toshiba pose a significant risk in the laptop market. Additionally, the presence of free music downloads and software on external websites significantly impacts Apple's sales in their online store for music and MP3 downloads.

The decline in Apple's market share is attributed to the higher prices of its products compared to competitors. The ongoing recession may also affect sales due to the company's pricier offerings. On the other hand, Microsoft Vista Windows 7 is gaining popularity and capturing market share. In addition, there is a rapid technological shift happening. According to the SWOT analysis, Apple Inc. has strengths it can leverage to enhance its brand, increase market presence, and outperform competitors.

Apple achieved great success in June 2005, with a second quarter profit of $320. The company's triumph can be credited to the booming sales of both the iPod music player and Macintosh computers. The iPod has effectively penetrated new market segments for Apple, while the Mac notebooks contribute significantly to the company's high earnings. Additionally, Apple's brand name is widely recognized and admired, known for its commitment to customer satisfaction.

Apple announced in early 2005 that it would switch

from IBM to Intel as its supplier of microchips, causing concerns about customer confusion. The music industry pressured Apple to raise prices for MP3 players and music downloads, as other companies relied more on iTunes for revenue instead of CD sales. Despite this, Apple sold 22 million iPods and had 500 million song downloads through its iTunes store, capturing an impressive 82% share of legitimate music downloads in the US. Users could easily track and download music by connecting their devices with a USB cable on the iTunes music store. Additionally, the software allowed users to pause their music when receiving calls. Consequently, this shift created new technological strategies and partnership opportunities for Apple.

Another new software is the Podcast, which is downloadable media done via the internet and played back on later events to suit the user's preferences. It offers a free subscription, but Apple has the option to make it a paid subscription to generate more income. Apple Inc's biggest concern is the intense competition in the IT markets. Being a successful company, they face high competition and therefore have to focus on extensive market research to maintain their position in the market. The iPod and Apple Mac are highly popular and in high demand, but their sales could be affected if economies decline and demand for their products falls. There is a significant level of close product substitution effect within the innovative and fast-moving IT market.

Today, the iPod and MP3 players are popular, but in the past, CDs, DAT, and Vinyl were the trend. In the future, technology may change completely and wireless technologies could replace music players. Michael Porter developed the five

forces strategic analysis, which is commonly used for industry analysis (Johnson et al., 2005).

The understanding of the five forces enables organizations to develop strategies that best fit their market and ensure success (Thurlby, 1998). Apple operates in two industries, namely Computing - Hardware and Software Delivery of Entertainment and Media. It faces fierce competition in the computer, software, and entertainment sectors. Figure 1 shows the five forces analysis for Apple Inc, including its top competitors such as Dell, Microsoft, HP, Alienware, Gateway, and IBM. The goal of strategic positioning is to achieve profitability and gain a competitive advantage.

Apple's strategic position is aimed at providing users with the most exceptional computing experience through innovation in hardware, software, and Internet services. Apple Inc. conducts an environmental analysis as a multinational corporation specializing in the design and production of consumer electronics and computer software products. The external environment comprises the various institutions and individuals outside of a business organization that exert influence on it, such as governmental entities, trade unions, competitors, customers, suppliers, etc. Consideration of the external environment is crucial in the organizational design process. (Ed.)

Jonathan Law analyzes Apple's external environment, which consists of three components: the remote macroeconomic environment, the industry environment, and the operating environment. The success of Apple is affected by significant macroeconomic factors including inflation, unemployment, and competition. Inflation, being one of these factors, occurs when aggregate demand increases without a corresponding rise in aggregate supply.

Various factors can lead to inflation, including an unanticipated rise in the money supply or a decline in aggregate supply due to increased production input costs and reduced productivity. Despite high demand for products like the iPod touch

and iPhone, Apple has successfully maintained affordable prices for consumers.

Unemployment is a crucial macroeconomic element that affects Apple Inc. It denotes the proportion of individuals who are actively seeking employment but are currently without a job. Unemployment levels may vary among countries due to changes in the labor market.

According to McConnell C.R. and Brue S.L. (2004, p.140), the unemployment rate in the United States was lower than Canada's from 2001 to 2006 due to two factors: different natural rates of unemployment and being in different phases of the business cycle.

The high unemployment rate suggests that Apple may have had to lay off many employees due to economic conditions, which will lead to decreased productivity. Additionally, the unemployment rate affects wage levels in the industry. If there is an economic downturn and employee layoffs at Apple, current employees may face prolonged periods without wage growth or even a decrease in wages. Another important macroeconomic factor impacting Apple is the gross domestic product (GDP).

The gross domestic product (GDP) is a crucial measure of a country's economic performance, representing the market value of all final goods and services produced within its borders in a year. It serves as an indicator of production and is closely tied to the standard of living. An increase in GDP typically signifies economic growth, while a low or decreasing GDP indicates an unfavorable economic climate and weakened economy. The ongoing global recession has had significant impacts on the world economy, resulting in reduced consumer disposable income and decreased spending on luxury items.

Apple is expected to experience significant repercussions due to a decrease in demand resulting from cautious consumption. However, the company has effectively

positioned itself in the market and implemented a robust sales strategy by launching a new iPhone at a relatively affordable price, thereby stimulating consumption. Despite the worldwide economic downturn, Apple has consistently maintained a strong profit margin over the last three years. Nevertheless, it is unrealistic for any company to sustain continuous profit growth during a period of declining national GDP.

Apple, Inc. faces various opportunities and challenges. One notable opportunity is their cautious approach to opening stores, ensuring profitability for each. In contrast, other companies that expanded excessively during the boom may need to significantly scale back as customers become more hesitant to spend. This situation enables Apple to negotiate better lease terms in struggling shopping malls, presenting further opportunities. Additionally, as Apple continues to establish international stores, this segment of their business becomes less susceptible to financial issues in the United States. However, a constant challenge for Apple remains maintaining affordability for their products.

Apple has implemented a strategy of offering reasonably priced products, enabling them to achieve substantial profits in the computer and electronics sectors, even amidst economic downturns. According to www.macobserver.com, Mac sales growth exceeds average PC sales growth by threefold, while their iPod sales have surpassed competitors with a total of 120 million units sold. Additionally, Apple has successfully ventured into the mobile phone market, strengthening their brand recognition among consumers. Consequently, Apple has made considerable investments in enhancing their customer service.

Some question the ability to maintain the same speed as they try to implement a fresh logistics strategy in Apple. In contrast to the conventional Windows and Intel collaboration, Apple has historically followed a significantly distinct approach. While Microsoft supplies the

Windows operating system to external hardware manufacturers like Dell, Apple has achieved complete integration of both the operating system software and hardware within the company.

A consumer running Microsoft Windows has a wide range of systems to choose from, all of which are based on the Intel processor. However, a consumer running Apple's OS X is required to purchase Apple hardware. Apple is changing this approach by transitioning their microprocessors from IBM and Motorola PowerPC to Intel. Experts predict that by the end of 2006, the Intel-based Macintosh will have the capability to run Microsoft Windows applications. (Burrows) To appeal to traditional Microsoft Windows users, Apple has positioned their computers as an immediate option. Through Apple Boot Camp, users now have the ability to use Mac OS X or Windows on an Apple computer. (Sutherland). This move by Apple has effectively lowered the switching costs for traditional PC users by allowing them to run Windows on an Intel Mac.

Apple has the potential to attract customers who are willing to pay a higher price for a system that can run both Windows and Mac OS X. The company also has the option to license its technology to clone makers like Dell, although past attempts at licensing have failed due to Apple's strict demands. Many technology leaders, including Bill Gates, have criticized Apple for its closed architecture. Even Apple co-founder Steve Wozniak believes that requiring customers to buy their hardware at a higher price to access their operating system was a mistake. It remains uncertain whether Apple would consider reversing their vertical integration strategy.

Despite his previous opposition to licensing Apple technology, Steve Jobs may consider a move that

could result in annual revenue of up to $1 billion by allowing other companies to use Apple's hardware. This move would cannibalize some of Apple's own hardware sales. Jobs had a negative view towards Mac clone producers, referring to them as "leeches" and terminating Power Computing's license in 1997. Despite a weakening economy, Apple has been able to maintain a fast inventory turnover rate and meet customer demand. UBS data shows that Apple currently has five days worth of inventory, surpassing Dell's seven days worth.

Compared to other PC manufacturers, Apple has demonstrated superior inventory efficiency. Lenovo and HP have an average inventory turnover of 15 and 32 days respectively. In contrast, Intel has a slower turnover rate of 89 days, while D-Link's inventory stands at a staggering 131 days. It is possible that Apple's rapid turnover can be attributed to its preparations for the recently announced updates to the iMac, Mac mini, and Mac Pro.

The company released a new desktop computer model on March 3, and by keeping inventory low, it ensured that there would be fewer previous model machines left on store shelves. While maintaining a higher inventory level can help a company deal with sudden increases in demand, it can also indicate the company's inability to accurately assess market interest in their products. Currently, Apple seems to be managing its inventory better than its competitors (Jeff Gamet). In the future, Apple Inc should focus on logistic strategies that involve the development of their coverage device. Once developed, this convergence device from Apple will offer a wide range of functions and powerful processing capability, which can be applied to enhance efficiency and modernize the

medical care industry. Apple should collaborate with medical device companies and care providers to establish a set of criteria for necessary capabilities that should be considered while developing the platform.

The device will be an essential part of an updated system for recordkeeping, care giving, and medical administration in the twenty-first century. The device and its software will utilize compatible equipment to measure, document, and store measurements, symptoms, and diagnoses in a medical files system that is easily accessible and portable. This system will simplify care giving, administration, and claims filing by getting rid of excessive paperwork and complex filing systems. In conclusion, this research will provide an overview of Apple Inc's logistics implementation strategy and how it can enhance its supply chain network presently and in the future.

The text mentions various references and sources related to Apple. These include the website http://www.brighthub.com/computing/mac-platform/articles/65346.aspx#ixzz0jRgxpiYB, a report by Michael Dougherty from researchandmarkets.com, a page from Data monitor's April 2009 issue, an article about Apple's SWOT analysis posted on November 23rd, 2009, by Adam on the website www.mba-tutorials.com/marketing/273-apple-swot-analysis.html, an article by Jeff Gamet on macobserver.com titled "Apple Beats Competitors at Inventory Turn Over," and a lesson on marketingteacher.com about competitive forces. Additionally, the text mentions the book "Competitive forces are also subject to change" by Thurlby B (1998) and the book "Exploring corporate strategy: text and cases" by G. Johnson, K. Scholes, and Whittington (2008). Lastly, it includes references to McConnell, C.R. and Brue, S.L.

(2002).. Economics: Principles, Problems http://www.macobserver.com. http://www.spoke.com/info/pY9wQEu/KarenBurrows