- Apple is known for innovative products like the Macintosh, iPod, iPhone, and iPad. Their core philosophies of continuous innovation, direct sales model, customer focus, and brand power have driven their success. - Strong leadership and ability to develop desirable new products under Jobs and continuous platform development under Cook have kept Apple at the forefront of innovation. However, pricing remains a weakness as some find Apple products too expensive. - In personal computers, tablets, and smartphones, Apple faces competition from Lenovo, HP, Dell, Samsung and Google but has maintained leadership through superior design and ecosystem lock-in. Continued new product introductions will be important to maintain this edge. - Strengths include understanding customers

1. Case Study: Apple Inc.
“Apple Inc. is [known] for bringing to market such products as the Macintosh desktop and
portable computer, iPod and iTunes, and…the iPhone” (Mallin & Finkle, 2011, p. 49). Apple’s success
hinges on their product design and marketing strategies. “As a computer and consumer electronics giant,
Apple [has] expands itself with four core philosophies, which are “Think Different” (continuous,
innovation spirit), direct sale business model, customer-focused services and Apple brand power” (Jinjin,
2013, p. 94). These core philosophies are what has given Apple their edge in the industry and continues to
allow Apple to be successful. The companies “philosophy has always been to create products that
consumers will find easy to use and marry innovative technology to work productivity and personal
entertainment” (Mallin & Finkle, 2011, p. 49).
The driving force behind Apple’s business model was in the way that Job’s approached product
innovation. “Jobs famously said that ‘customers don’t know what they want until we’ve shown them.’
Indeed, he had a remarkable, but not infallible, ability to develop products that consumers would buy and
savor, as well as the confidence, courage, and drive to bring them to life” (Katzenbach, 2012, ¶ 11).
Because of strong leadership “Apple is not only an illustrious innovator and inventor, but also a
successful imitator and strategist” (Jinjin, 2013, p. 94). Apple’s success in business lies in its ability to
“continuously develop the potential of its platform” (Shaughness, 2013, ¶ 4).
By “2003 [Apple made] a decisive turning point in the business model through the integration of
two new technological platforms, the iPod and the iTunes Music store (iTMS). By controlling the
interface between its hardware and content, Apple was able to gain complete control of the multi-channel
platform. By controlling the multi-platform allows Apple to dictate terms to both suppliers and
customers.” (Montgomerie & Roscoe, 2013, p. 291-292). With Apple now being led by Tim Cook things
within the company have changed. The chart below shows how Steve Jobs and Tim Cook Think
Differently in how the company should be ran.

2. (Lashinsky, 2015, ¶ 8).
Ask you can see Tim Cook and Steve Jobs run things very differently of one another and while it
has to be seen if this change is going to be good for Apple in the long run. Cook has been working on
taking Apple into new markets.
Porter’s Five Forces Model for Apple
(Dudovskiy, 2015, ¶ 1).

3. In the consumer electronics industry “the threat of new entrants is medium” (Jinjin, 2013, p. 95).
With the high cost of entry into the market and with Apple’s brand power new competition would be in
form of already established companies such as Google. “Customer loyalty, as well as initial investment
costs is [another] form of barriers to entering this industry” (Valuewalk Staff, 2012, ¶ 9).
In the five forces model “the bargaining power of suppliers is low” (Jinjin, 2013, p. 95). This is
true for Apple since their suppliers are highly reliance on them since their “purchases accounts for 30% to
50% of the various suppliers’ revenues” (Valuewalk Staff, 2012, ¶ 7).
“The bargaining power of buyers is high” (Jinjin, 2013, p. 96) with the number of choices and
low cost of switching in the market. Since Apple has control over suppliers they are able to “choose the
supplier it deems cheaper than the rest, which results in price competition among the suppliers, to Apple’s
benefit” (Valuewalk Staff, 2012, ¶ 8).
“The threat of substitute products is medium” (Jinjin, 2013, p. 96). Substitute products war comes
in the form of when a company changes “the kind of material it uses on its next gen products, which
opens the door for substitute products” (Valuewalk Staff, 2012, ¶ 10).
“The intensity of rivalry among competing firms is very high” (Jinjin, 2013, p. 96). Suppliers face
rivalry among themselves in order to work with industry giants such as Apple. “The suppliers here can
also use aspects such as product differentiation, in order to harness price competition” (Valuewalk Staff,
2012, ¶ 11).
Apple’s Rivals in the Personal Computer Industry
Apple’s systems differences with their Macs made PC users “hesitant to purchase a Mac because
of…pricing and…the learning curve involved with mastering its…operating system” (Marino, 2012, p. C-
192). In an “aggressive bid to win over Windows users” Apple has launched their “Switchers campaign”
(Jinjin, 2013, p. 98). In the personal computer industry Apple faces rivalry major with Hewlett-Packard

4. and Dell. “Apple Chief Executive Tim Cook doesn’t think much of his competitors at Hewlett-Packard
and Dell, slamming his rivals in the personal computer business in front of shareholders” (Caulfield,
2012, ¶ 1). While Apple may not be worried about Dell and HP they do need to look out for Lenovo who
has “widened its lead over rivals Hewlett-Packard , Dell, Acer, and Apple in the PC market during the
third quarter of 2014, according to research firm IDC. Lenovo, evolved into a personal computer giant
after acquiring IBM's PC business a decade ago, now controls a fifth of the world's PC market” (The
Motley Fool, 2014, ¶ 1).
Hewlett-Packard (HP) was “broadly diversified across segments of the computer industry with
business divisions focused on information technology consulting services, large enterprise systems,
software, personal computers, printers and other imaging devices, and financial services. The company’s
Personal Systems Group (PSG), which manufactured and marketed HP and Compaq desktop computers
and portable computers, was its largest division, accounting for revenues of almost $40 billion in 2011”
(Marino, 2012, p. C-193).
Dell offers “a wide range of desktop computers and portables, ranging from low-end, low-priced
models to state-of-the-art, high-priced models. The company also offers servers; workstations; peripherals
such as printers, monitors, and projectors; and Wi-Fi products. Dell also offered an Android-based Streak
tablet computer line and a Windows Phone 7 smartphone in 2012” (Marino, 2012, p. C-194). Dell has
also worked hard to ensure that their customer service is the best that it can be. “Competitors, including
Dell, HP and Compaq, IBM and Gateway, are all pursing even larger market shares, generating more
profit, dreaming of dominating and cornering the computer market” (Jinjin, 2013, p. 96).
In 2010 Apple “entered the market for tablet computers with its…launch of the iPad. By mid-
2012, Apple held a 68 percent share of the market for tablet computers” (Marino, 2012, p. C-192). With
hopes that “Google’s Nexus 7 tablet computer might challenge the iPad” the Nexus 7 just ended up in
competition with “other Android-based tablets such as the $199 Kindle Fire” (Marino, 2012, p. C-193).

5. HP made a huge mistake in the way that they handled the news of the arrival of the iPad instead
of remaining calm they “overreacted…with a series of painful blunders” (The Motley Fool, 2014, ¶ 10).
Dell followed after HP with also overreacting to the launch of the iPad. While their competition “Lenovo
reacted calmly to the rise of tablets that started with the debut of Apple's iPad in 2010. Today… Lenovo's
Yoga laptops are easily recognizable with their foldable ‘tent’ form factor, its Yoga tablets continue to
surprise customers with innovations such as built-in projectors and subwoofers, and its phone business
will get a lot bigger when the acquisition of Motorola Mobility from Google closes next year” (The
Motley Fool, 2014, ¶ 7). The actions of HP and Dell did not only cost them “the PC market, but they also
missed the opportunity to capture a meaningful share of the mobile space” (The Motley Fool, 2014, ¶ 12).
Apple’s Rivals and Position in Personal Media Player Industry
While Apple was not the first one to come up with a portable digital music player Apple did hold
“a 78 percent market share in digital music players in 2011” (Marino, 2012, p. C-194). Apple’s “rivals in
the media player industry [were unable] to achieve a market share greater than 5 percent in 2012” since
“most consumers did not find…reasons to consider any brand of media player other than Apple” (Marino,
2012, p. C-194). For Apple “The iPod was an instant success, becoming the default for the MP3 player
consumer electronics product category, because of its cool design and rich features, including capacity,
download speed and ease of use” (Reder, 2009, p. 193).
While “Apple may be the undisputed digital music player champ with its iPod family of players,
but that doesn't mean it doesn't have its wannabe competitors nipping at its' heels” and now Android has
come out with their own “portable media player” (Daw, 2011, ¶ 4). Other than facing competition in the
Apple’s once winning combination of their iPod/iTunes set-up Apple’s recent changes to “iTunes is
riddled with user interface design problems” (Vihn, 2015, ¶ 1). Apple addressed these issues by updating
their iTunes system to meet the needs of their customers. With the rise of “Apple’s iTunes, the iPod, and
even the iPhone has allowed anyone to carry thousands upon thousands of songs right in [their] pocket”

6. (Smith, 2013, ¶ 1). Many challengers haven’t been able to compete with Apple “until Spotify arrived in
the U.S.” (Smith, 2013, ¶ 1). The main difference between the two is with iTunes you own the music
though purchases and with Spotify you join a monthly subscription service and stream the music.
Apple’s Rivals and Position in Smartphone Market
“The smartphone industry was once dominated by Canadian giant Research in Motion”
(Investopedia, 2015, ¶ 4). However they were quickly displaced with the release of the iPhone which
“was named Time magazine’s Invention of the Year in 2007” (Marino, 2012, p. C-195) Apple has been
able to be a top competitor in the smartphone market. “Apple’s App Store [has also] helped the company
build strong competitive positions in the markets for smartphones and tablet computers” (Marino, 2012,
p. C-195).
Since “Apple content can only be played on Apple devices” (Montgomerie & Roscoe, 2013, p.
291) this has become a weakness that Google has capitalized on in making its Android platform available
to all hardware companies and not limiting its operating system. “With the market for smartphones
growing rapidly and supporting high average selling prices, competition was becoming more heated.
Google’s entry into the market with its Android operating system had allowed vendors such as HTC,
Motorola, and Samsung, to offer models that matched many of the features of the iPhone” (Montgomerie
& Roscoe, 2013, p. 291). This lead Apple into a patent war with its competitors and “in August 2012 a
jury awarded Apple more than $1 billion in a copyright infringement case against Samsung” (Marino,
2012, p. C-197).

7. (Barrett, 2012, ¶ 8).
Even after the lawsuit “Google’s Android operating system has allowed Samsung to leapfrog
over Apple to become the largest seller of smartphones in 2011 and early-2012. Most of Samsung’s
market share gains came at the expense of RIM, Nokia, and HTC, since Apple’s share increased as well,
but it seemed clear that Google and its Android partners seemed resolute in the strategic intent of
attacking Apple in its key market” (Marino, 2012, p. C-197).

8. SWOT Analysis
(Christina Cecil, 2015).
Strengths:
One of Apple’s strengths lies in its core which are to “understand and serve the customer better
than anyone else, forget about everything else, and make sure every little thing you do serves” a purpose
(Allen, 2011, ¶ 3). These core values are what Apple is made of and are a part of everything Apple does.
Apple also shows its strength in its innovation strategies. “Apple, rose to prominence behind the
visionary leadership of Steve Jobs, has had a knack for staying ahead of the fast-moving technology
curve” (Hellman, 2014, ¶ 3). This has been evident in the launch of the iPad, iPhone, and iPod which
have all given Apple great success in the market. “And while questions linger about whether CEO Tim

9. Cook possesses the magic touch of his legendary predecessor,” it is believed “that innovative new
products will remain a hallmark of Apple” (Hellman, 2014, ¶ 3).
Apple’s distribution system is one of its strengths in that “Apple Inc. has established different
production plants to cater to the needs of its consumers in different parts of the world” (Goyal, 2012, ¶ 2).
This gives them a huge advantage in their distribution system.
Apple prides itself on having a strong customer services strategy. “Apple thrives because it
recognized that the more human technology behaves the more intimate we allow it to become--less a
computer than a consort” (Guzzetta, 2015, ¶ 3). Apple not only works hard to make sure that their
customers are happy but as Steve “Jobs said. ‘It's technology married with the liberal arts, married with
the humanities, that yield the results that make our hearts sing.’ [Since] Apple’s achievement isn’t just in
identifying an intersection between technology and the humanities” (Guzzetta, 2015, ¶ 2). This shows
how “Apple’s approaches to anthropomorphism and attraction are ingenious: it doesn’t create products
that look like us, but rather products that seem like us--and seem to like us” (Guzzetta, 2015, ¶ 18).
Apple continues to have strong brand power since their customer loyalty is to the core.
“Whenever Apple has problems with its products, its customers are incredibly forgiving and patient. They
understand that issues can sometimes arise and they’ll continue to buy Apple products despite any
mistakes they might make” (Goodson, 2011, ¶ 5).
Weaknesses:
Since “Apple content can only be played on Apple devices” (Montgomerie & Roscoe, 2013, p.
291) their product capability issues still remain a problem for Apple. Only recently has Apple been
working to make their products more compatible with windows. With Apple’s iWork program you can
now transfer documents from Office to iWork but the caught is that “the simpler the document, the
greater the compatibility between iWork and Office. Complex documents don’t do well moving back and

10. forth between been Office and iWork, because you’ll lose something with every translation” (Rizzo,
2008, ¶ 44).
Apple’s premium pricing is a major weakness for them. “Apple's iPhone carrier subsidies have
previously been cited as a risk for the company, based on the reasoning that, were mobile providers to
drop the program, users would be pushed toward cheaper phones and be more hesitant to pay the
premium price of iPhone-class hardware” (Dilger, 2013, ¶ 3). With their pricing their “luxury positioning
has made it difficult for Apple to make big inroads overseas, in countries where the pressures on ordinary
consumers are considerable. It also renders the company vulnerable to price competition” (Hellman,
2014, ¶ 5).
Apple continues to suffer from low financial performance. “Apple Inc. has lost more than $100
billion in market value, as the technology giant’s stock has suffered the worst selloff in over two years”
(Kilgore, 2015, ¶ 1).
Apple continues to be under fire over their factory conditions with the “poor treatment of workers
in Chinese factories which make Apple products” (Bilton, 2014, ¶ 1). While Apple continues to state that
they are addressing these issues these issues such as “the poor conditions in Chinese factories [that] were
highlighted in 2010 when 14 workers killed themselves at Apple's biggest supplier, Foxconn” (Bilton,
2014, ¶ 12) continue to a problem for Apple.
Apple suffers from major issues in their supply chain “one of primary bottleneck in Apple’s
supply chain is its problematic reliance on Foxconn for the assembly of both of the new iPhone models”
(Noël, 2014, ¶ 3). Along with other issues in the time it takes for production overseas.
Apple also faces a weakness in their product recalls. “Last-minute speculation indicates that
Apple might in fact be able to solve problems with software even if the problems are hardware-related”
(Buskirk, 2010, ¶ 3). Their ability to quickly announce recalls and their customer’s loyalty has helped

11. them. In recent news Apple has declared a recall for their Beats Pill XL after having “received eight
reports of the Pill XL overheating, and one user is said to have suffered burns as a direct result” (Welch,
2015, ¶ 2).
Opportunities:
Apple has a great opportunity to address factory condition issues that they face and they have
started to work on addressing these issues. “Apple published a set of standards spelling out how factory
workers should be treated” (Bilton, 2014, ¶ 13).
Apple also has an opportunity to address supply chain issues one way to do this would be for
“Apple [to] persuade suppliers of content – such as music, books, movies, and Apps — that they would
be better off making that content available to users of its devices” (Cohan, 2012, ¶ 12).
With Apple’s new Beats Electronics deal this gives the company several opportunities with “the
up-and-coming music properties [that] will likely prove to be a nice complement to Apple’s free iTunes
radio service” (Hellman, 2014, ¶ 8).
Apple also has a huge opportunity to penetrate growing markets. “According to a new report
from Strategy Analytics, India will unseat the United States as the second largest smartphone market
within the next two years, with China remaining the clear leader of the pack” (Chang, 2015, ¶ 1).
Threats:
Apple’s threat from competition is a big issue for them. When “considering the relentless product
cycles, the typically rapid move toward commoditization in the sector, and the fickle nature of today’s
consumers. They are especially susceptible to price discounting by low-cost rivals” (Hellman, 2014, ¶ 9).
Apple still suffers from their products lack of adaptability with other computer programs. Since
Apple products “can only be played on Apple devices” (Montgomerie & Roscoe, 2013, p. 291)

12. Apple’s gross margin pressures that they face “could stem from stepped-up competition, product
shortages, or rising component prices. An unfavorable mix shift away from the dominant iPhone line
could also squeeze profits” (Hellman, 2014, ¶ 10).
Apple also suffers from their dependency of outsourcing their materials. With Apple “outsourcing
as much work to Samsung as they have…it’s impossible not to wonder whether Tim Cook’s
announcement [of] bringing back Apple’s manufacturing to the USA is the beginnings of an attempt to
rectify the problem” (Allworth, 2012, ¶ 3).
Strategic Choices and Recommendations
While Tim Cook has been working on “revamping the company’s supply chain and improving
overall efficiency” (Marino, 2012, C-187) Apple still needs to work with their suppliers to improve plant
working conditions. Currently Apple has refused to heed complaints over their labor practice which is a
mistake if they consider how successful the anti-sweatshop campaign was at damaging the Nike and The
Gap brands (Harrison & Scorse, 2006, p. 150). If Apple were to work to improve working conditions and
wages for their plant workers they “would not only improve the lives of hundreds of millions of the
poorest workers, but companies operating in developed countries would no longer be forced to compete
‘unfairly’ with developing country manufacturers who can draw on unlimited pools of cheap labor”
(Harrison & Scorse, 2006, p. 144). Because of the issues with Apple’s “working conditions in regards to
criticism over Chinese industrial giant Foxconn” (Gustin, 2012, ¶ 11).Tim Cook has worked hard to move
aggressively to address these issues. “Since Mr. Cook became chief executive in August, shortly before
the death of Mr. Jobs, Apple has taken a number of significant steps to address concerns about how Apple
products are made” (Wingfield, 2012, ¶ 11).
Apple also needs to address issues with the fact that they “Apple requires many key suppliers to
keep two weeks of inventory within a mile of Apple’s assembly plants in Asia, and sometimes doesn’t
pay until as long as 90 days after it uses a part, according to an executive who has consulted for Apple

13. and would not speak on the record for fear of compromising the relationship” (Satariano & Burrows,
2011, ¶ 9). This level of control that Apple exerts over their suppliers puts strain on workers and causes
“factories [to] work overtime to build hundreds of thousands of devices” (Satariano & Burrows, 2011, ¶
10). By changing the way that Apple deals with its suppliers and allowing factories to have more time to
products this would give Apple a better social responsibility rating among consumers. “Procurement
processes should be mindful of supplier quality and reliability, and also keep track of budget overruns and
delays to help firms gauge the total realized costs associated with their supply chain model” (Noël, 2014,
¶ 8).
For Apple penetrating new markets such as selling in “China offered the greatest growth
opportunities but also presented challenges to smartphone producers” (Marino, 2012, p. C-195) and by
2010 “Apple began selling the iPhone 4 in China…though its partnership with China Telecom, the
country’s second-largest wireless provider” (Marino, 2012, p. C-197). With new market opportunities for
Apple grow in places such as India which currently “smartphone penetration in India is currently
relatively low, with only 110 to 120 million of the 1.2 billion people in the country able to claim
ownership of such a device, forecasters say this will change very quickly in the coming years” (Chang,
2015, ¶ 1). Apple is also now given an opportunity to move into Iran. “The United States and Iran finally
signed an official nuke agreement today after 20 months of negotiations, and according to a new report,
Apple is already looking to move in” (Hien, 2015, ¶ 1).While it is still unclear if Apple will be welcome
into Iran or even be profitable there it is a great opportunity for expansion.
Apple in 2015
While Apple still has some issues to face and opportunities that they should take advantage of
Apple has also been known to do things that they initially stated that they would never do. Back in 2007
with the launch of the first Apple iPhone Steve Jobs had stated that “nobody wants a stylus, so let's not
use a stylus” (Whitten, 2015, ¶ 2). However, “eight years later, the company has revealed the Apple

14. Pencil, a device remarkably similar to a stylus. The Apple Pencil is designed to aid users in graphic
design, photo editing and document annotations on its new iPad Pro. Unlike styluses, this device detects
the pressure, position and tilts of the pen against an iPad and will create thin and thick lines based on
slope of the Apple Pencil's tip” (Whitten, 2015, ¶ 3).Along with the new Apple Pen device Apple
“released the iPad mini” in 2012.
Currently Apple fans should be looking forward to the second half of the year. “

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24. The Apple Watch, first unveiled in September 2014 and finally released on 24 April 2015” (Casserly,
2015, ¶ 4). As this creation has entered the marketplace it has helped make Apple products “feels far
more competitive” than in the past (Casserly, 2015, ¶ 4). Apple has been working in their improved Apple
watch their “watchOS 2” this new and improved device “claims to be faster, less buggy, and should be
out at some point in the Autumn, along with iOS 9 and OS X El Capitan” (Casserly, 2015, ¶ 17).
Also this year we find Intel “doing everything it can to become a major partner of Apple's next
iPhone manufacturing process, according to a report by VentureBeat” (Kim, 2015, ¶ 1). While this deal
that Intel is trying to get with Apple hasn’t yet been set into stone “a major partnership with Apple will
signal Intel's first step into the mobile business” (Kim, 2015, ¶ 8). With how big and powerful Apple is
only the future will tell if these changes that they need to make will be addressed properly and how these
changes will affect Apple in the long run.