Internal analysis of Apple Essay.
Carpenter and Sanders defines internal environment as the company’s capabilities
activities and internal resources, which provide the core competencies which will
enable the company to achieve competitive advantages and gain huge returns.
(Carpenter and Sanders,2009) Internal analysis of Apple Essay.
Applying the VIRO framework to Apple. After much reading and analyzing on
Apple. The resources and competency of the organization is brand name, Hardware,
Software, Ease of Use and Customer loyalty.
Resources/Competencies Value Rareness Limitability Organization Competitive
Advantage
Brand Name Yes Yes Yes Yes Sustained
Hardware Yes No Yes Yes Temporary
Software Yes Yes Yes No Unexploited
Ease of Use Yes Yes No Yes Temporary
Customer Loyalty Yes Yes Yes Yes Sustained
From the VRIO analysis, we can see that Apple’s competitive advantage is mostly
achieved through its brand name and customer loyalty. Internal analysis of Apple Essay.
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Value
According to a article by business insider. A survey was done on why people bought
Apple product instead of the others. And more then 50% said they were buying Apple
because they we the best tech products on the market at the moment. 27% said it is
because of student discount while 23% said it was all about the apps and Apple have
them when others don’t . (Julie Bort,2012) From this simple survey, we can see how
Apple achieve it’s competitive advantage through its own unique operating system ,
combine with a user friendly platform, unique innovative product, a very strong brand
name and of course customer loyalty which are also the features that become the
strengths of Apple which help to defend it from external threats and maintain the
position of leader in the electronics industry
Rarity
If you where to compare Apple to the other electronic manufactures. It is obvious that
Apple have resources and competence which other firms does not. One of which, is
its patented operating systems “IOS” developed by Apple and is only programmed
into Apple’s product. Internal analysis of Apple Essay.
Imitability
All of Apple’s products, software, hardware or operating systems are protected by
various patents. And technologies developed by Apple require huge investments from
people want to imitate. For instance, the macbook air is a very good example. In this
article by Jason Cross, PC world. In the article, Jason mention how HP, Dell, Acer,
Samsung had come out with a slim laptop such as the macbook air. But it cost too
much and the battery life was pathetic. But Apple manage to commission a special
case-less SDD which could fit into a slim design. Lowering the price of a Macbook
Air. By the time other companies manage to imitate Apple’s technologies. Apple have
already come out with a new improve macbook. (Jason Cross,2011) From this article
we understand how strong the brand name, software and hardware is. Internal analysis of Apple Essay.
Organization
Due The management mechanisms and organization structure of the company and its
management mechanism it allow Apple to easily utilize its resources. A good
working relationship and pleasant working environment have encourage and motivate
its employee contribute more to the company which allow Apple to achieved
worldwide success. Internal analysis of Apple Essay.
Strength & Weakness
Strength Weakness
Strong Brand Image Heavy reliance on one product
Strong Customer Loyalty High Cost
Advanced Technology Compatibility of product
User-Friendly Products Change in Management
High Profitability
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Strength
From the VIRO analysis, we can easily spot the strength of Apple. Having a strong
brand image, strong customer loyalty, advanced technology , User-friendly products
and of course its strong company profits. From a article from investopedie, for the
first quarter of the year, the company’s net sales jumped 30% year-over-year to $17
billion. And total net sales of Apple had improved in all the areas as shown below.
(Dan Moskowitz ,2015)
Greater China: + 70%
Rest of Asia-Pacific: + 33%
Americas: + 23%
Europe (includes Middle East and Africa): + 20%
Japan: + 8%
Weakness
Even though Apple is one of the leader in the industry, the business does show some
point of weakness. One of which is its heavy reliance on one product. Even though it
have High net profit we can see from the table below from investopedia.
(all numbers are in thousands)
(Dan Moskowitz, 2015)
From the table taken from investopedia we can see that IPhone took up about 57% of
total net sales each year. Heavy reliance on just one product can be very dangerous. A
unexpected failure can cause a significant impact on the company.As mention in the
article, popular tech products don’t stay on top forever. Internal analysis of Apple Essay.
High cost in its product might also be a weakness of Apple. Having more and more
competitor come out with cheaper alternative. It is easy for user to one day decide to
switch brand due to the pricing factor.
Compatibility of product. As we all know, IOS is not a very user-friendly platform
when it comes to transferring of information. Unlike it’s competitor Android. The
IOS have to go through a 3 rd party program “Itunes” for everything. Which may be
very inconvenient for a lot of user. Even for it’s other product such as Macbook
which runs on a different operating system. Unlike Microsoft, There is still a lot of
products which are not compatible with a Macbook operating system. This
compatibility problem might be one of the factor that will cause Apple to lose its
competitive advantage. Internal analysis of Apple Essay.
Change in Management. In 2012, because of the death of steve jobs, which was the
biggest loss for Apple. Tim Cook became the new CEO. After sometime John
Browettand and Scott Forstall left the firm. Having such major shift in the
organization might have a negative impact on the management.
Value Chain Analysis
In this sector ,we will look into the primary activities of Apple Inc. Below is a
illustration taken from a article by John Dudovskiy
Inbound logistic. Apple Inc works with hundreds of suppliers from all around the
world and had maintain a sophisticated supply-chain management as show above.
According to these article CEO Tim cook get suppliers to compete with each other as
a strategy to reduced the number of supplier. (John Dudovskiv, 2015)
Operations. Apple have a total of 92,600 full-time employees and 4,400 temporary
staff to run their operation. As shown in the illustration above, manufacturing are
done by outsourcing partners located in China. (john dudovskiv 2015) Internal analysis of Apple Essay.
Outbound logistics. According to john dudovskiv article, 28% of Apple’s net sales are
through direct sales while another 72% is through distribution. ( John dudovskiv,
2015)
Marketing and sales. As shown in the illustration. Apply sell its products and services
through 4 main channel. online store, retail store, direct sales force and wholesalers,
retailer and network carrier. It have been shown in the article the Apple marketing
budget of USD 1.1 billion is spend advertising, events and marketing (John
dudovskiv,2015)
Service, Apple is famous for it customer services during all three stages : pre-
purchase, during purchase and post-purchase. Apple sales assistant are well trained
young males or female who are technically savy. Apple also introduce Unique
IPHONE trade-in programs that allow user to upgrade this phone to a new model
without having to pay the full price. Internal analysis of Apple Essay.
Business Model
After understanding the Value chain, and strength and weakness of Apple. I can infer
that Apple uses the time model. Something similar to Google. Apple will always
come out with new innovation and when the industry catch up. Apple will re-develop
a improved version of the innovation which keep people coming back for more.
One of the best example we can see is the Iphone. Apple is the pioneer of developing
a product whereby it’s interface is base on a “touch-screen” technology. When the
other mobile company came out with a similar product. Apple had already develop a
better phone with new functions in it.
IFAS
Internal
Factors
Weight Rating Weighted
Score
Comments
Strength
Strong Brand
Image
0.20 5.0 1 Apple Products
are trusted
Strong
Customer
Loyalty
0.20 4.8 0.96 User look
forward for
new Apple
Products
Advance
Technology
0.10 4.5 0.45 Always
coming out
with new
innovation
Internal analysis of Apple Essay.
User-Friendly
Products
0.05 4.5 0.23 Popular with
user who are
not technically
savy
High-
Profitability
0.05 4.5 0.23 Increasing Net
Profit
Weakness
Heavy
Reliance On
One product
0.10 2.0 0.20 High
Percentage of
Net sales are
still from
IPhone
High Cost 0.10 2.0 0.20 Prices are still
high when
compared with
other brands
which provide
similar product
Compatibility 0.05 2.1 0.11 Products are
Of Product not flexible
Change In
Management
0.15 4.0 0.6 Constant
change in
management
style
Total Score 1 3.98
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As shown in table above, Apple’s total weighted score is 3.98. Which mean that
Apple is exceling compared to the strength and weakness of their competitor in the
electronics industry. Internal analysis of Apple Essay.
http://research-methodology.net/apple-value-chain-analysis/
Carpenter, M. A., & Sanders, W. G. (2009). Strategic Management: A Dynamic
Perspective – Concepts and Cases: Pearson/Prentice Hall.
http://www.businessinsider.com/new-survey-on-why-people-buy-apple-2012-
11?IR=T&
http://www.pcworld.com/article/237992/windows_laptop_makers_can_t_catch_up_to
_the_macbook_air.html
http://www.investopedia.c. Internal analysis of Apple Essay.