Apple operates in five sections globally and faces various competitive forces. The threat of new entrants is low due to Apple's high brand recognition and differentiated products. The bargaining power of suppliers is moderate as Apple uses some vertical integration and bulk purchasing. The bargaining power of buyers is low since Apple focuses on niche markets with demanding customers. The threat of substitute products is moderate from companies like Samsung. Rivalry among competitors is also moderate as Apple focuses on limited product choices to drive sales. Apple can maintain its advantages by continued innovation, cost cutting, and building relationships with suppliers and customers.

1. APPLE INC.
2. Managing for Competitive Advantage
(Porter’s Five Forces)

2. APPLE INC.
Introduction

3. InApril 1976, Steve
Wozniak and Steve Jobs
were established Apple
together after they
graduated.

4. In the past ten years, Apple
has expanded into a very
intricate company.
Consumer Electronics
Consumer Software

5. The company operates in five
sections:
Americas, Europe, Japan, Asia-
Pacific and Retail.

6. APPLE INC.
 Practices & Operations
 Porter’s 5 Forces

7.  THREAT OF NEW ENTRANTS
- LOW
 Cost of product differentiation
>> Barrier to entry
 Apply patents for inventions
 Target customers with high salary
range
>> Different target market
 Successfully develop its brand name
>> High brand recognition
 Economies of scales
>> Keep costs down

8.  BARGAINING POWER OF
SUPPLIERS
- MODERATE
 Announce plan to use Intel processors
>> High switching cost
 Strong vertical integration
>> Not much relying on third-parties
supplier
 Product differentiation strategy
>> Pass cost to customers
 Buying in large volume
>> Discount in bulk purchasing

9.  BARGAINING POWER OF BUYERS
- LOW
 Focus on niche market
>> Special demand
 Product differentiation strategy
>> Highly demanding
 Target customers who emphasize on
quality
>> Willing to pay higher price
 Developed high brand loyalty
>> Return and purchase
 Using highly compatible closed-systems
>> High switching cost

10. THREAT OF SUBSTITUTE
PRODUCTS OR SERVICES-
MODERATE
-Samsung smart phone &
Table-computer
EX:
Samsung Galaxy S3

11. COMPARISON
 SIZE OF TOUCH
SCREEN
31 May 2012,when
Samsung Galaxy S3 first
-Samsung Galaxy
S3 -4.8 inch made available in M’sia
-iPhone 4S -3.5 inch -RM999
•PRICE OF SMART
PHONE
-Samsung Galaxy S3
–RM2199
-iPhone 4S-RM2499-
RM3099
Image of iPhone 4S

12. Built reputation as
innovator
Differentiation
approach
Concern on quality
Produce "own"
substitutes

13. RIVALRY AMONG
COMPETITORS- MODERATE
Computers companies
-Dell, HP,ASUS, ACER, Sony
& others computer manufacturers.
APPLE
-Toomuch choices Limited products
Difficult for choices,
customers to Drive more sales &
make choice beat competitors

14. Spend heavily on
R &D department
Emphasis on
quality of products
Product
differentiation

15. APPLE INC.
 Pro & cons in application
of
Porter’s 5 forces

16. Product
differentiation
Strategy
 UNIQUE
 Increasing the market
demand
 Enhance
COMPETITIVE
ADVANTAGE

17. •Difficult to
maintain long
term perceived
unique
•HIGH COST

18. Move to Intel processor
Pro
 Coming out amazing products
 Lower production cost and increase sales
Cons
 fight against with other competitors

19. Strong Vertical Integration
Pro
 Coordinate activities in supply chain
 Increase customer exposure
 Enhance product quality and enjoy
unparallel pricing power
Cons
 Bureaucratic cost increase

20. BARGAINING POWER OF BUYERS
Focus on niche market
Pro
 Move efficient and effective
 Generate higher profits as customer
satisfaction achieved
Cons
 Not much sales and profit generated
 Suffer a great loss when market failure

21. Highly compatible closed-system
Pro
 Maintain its cost
 Minimize risk of competitors
 Rising profits
Cons
 Take time come out patch
 Cost satisfaction
 Constantly bear research cost

22. THREAT OF SUBSTITUTES
PRODUCT OR SERVICE
Focus making superior quality
product
Pro
 Reflect high performance
 Reflect non price competition
 Insulated from intensive competitors
Cons
 Increase cost of production
 Possible for losing market share

23. Produce own substitutes
Pro
 Drive up sales and maintain
market share
 Compete with competition

24. RIVALRY AMONG COMPETITORS
Spend heavily on R&D department
Pro
 High brand recognition and reputation
 Expand market share
 Sustain status as industry leaders
 Enhance probability

25. Limited choice within product category
Pro
 Maximize customer satisfaction and
loyalty and increase financial returns

Cons
 Increase pressure
 Ineffective and inefficiency in product
development process
 Possible lost market share and gain loss

26. APPLE INC.
 Recommendations

27. THREAT OF NEW ENTRANTS
 continue using product differentiation
strategy
 invent new technology products constantly
 R&D should find ways to cut costs

28. BARGAINING POWER OF SUPPLIERS
 build good rapport with supplier
 continue using vertical integration in their
operations
 reduce their own bureaucratic costs

29. BARGAINING POWER OF BUYERS
 focus on their niche market
 more technicians for the repairing of the
software

30. THREAT OF SUBSTITUTE PRODUCTS OR
SERVICES
 market-skimming pricing when set price for
their products
 products -provide many features and
benefits
 approach of Apple to offer host of products to
act as own substitutes should be maintained
 preserve their uniqueness of products- retain
customer loyalty

31. RIVALRY AMONG COMPETITORS
 maintain the culture of being innovative
 consider about the problems of increasing
pressure on workers of Research and
Development Department – EAP in
ShenZhen, China

32. APPLE INC.
Conclusion

33. CONCLUSION
 provides numerous type of technology
products:
 iPhone (smart phone)
 iPad (tablet pc)
 iPod (portable music player)
 iMac (desktop computer)

34. CONCLUSION
Porter’s Five Forces Influence of Forces
Threat of New Entrants Low
Bargaining Power of Moderate
Suppliers
Bargaining Power of Buyers Low
Threat of Substitute Products Moderate
or Services
Rivalry of Competitors Moderate

35. CONCLUSION
o Advantages and disadvantages.
o Exploiting strengths and opportunity.
o Correcting weaknesses.
o Minimizing threats.

36. THANK
YOU