Pannasastra University of Cambodia (PUC)

Business Policies and Practice

Topic Discussion: Case #7 Apple Inc.,

Instructor: Eng Kimsan

Student : Ms. Seng Mollyka (ID:58513)

April 2019
Business Policies and Practice Professor: Eng Kimsan

I. Introduction:

Apple Inc. is an international American company that produces computer software, cell phones,
personal computers and consumer electronic products. Company was developed on 1st April, 1976
by the co-founders named Steve Jobs and Steve Wozniak in Cupertino, California. It is the first
company to mass-market a personal computer, had become a minor player in an industry dominated
by Microsoft. After being expelled from the company in 1985, founder Steve Jobs returned as CEO
in 1997 to reenergize the firm. The introduction of the iPod, iPad from 2011. 301 retail stores in 10
countries are operated by Apple in August 2010 (Business Insider, 2013).

Contributors: Kathryn E. Wheelen, Thomas L. Wheelen II, Richard D. Wheelen, Moustafa H.

Abdelsamad, Bernard A. Morin, Lawrence C. Pettit, David B. Croll, and Thomas L. Wheelen

Strategic Management& Business Policy Book: Thomas L. Wheelen& J.David Hunger Page: 23

II. External Environment:

The external factors can be evaluated using PEST because PEST analysis is valuable strategic tool
for identifying the business positions, size, growth, feasible route for operations and to classifying
the market development and decline (Kotler, n.d.).

A. Basic Characteristics of the Environment - market definition, size, growth and

share:

Apple is defined as the leading digital asset management company and global smart phone
provider. It is the only one who generates and runs both soft-wares and hard-wares. It allows
consumers to buy and share contents (applications, music and movies) via Apple devices (iPad,
iPhone, Mac and iPod) by a exclusive selling media platform called iTunes (Digital Marketing,
2011).

In 2012, Apple’s CEO (Tim Cook) said that we are very excited with the sales of iPhone over 35
million and approximately 12 million sale of iPads in March quarter. He also said that the
innovative iPad is off to an immense beginning with new innovation that can deliver only by
Apple (Burns, 2012).

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

Moreover, the sales of iPad, Mac and iPhones have increased by 188% and 7%, correspondingly.
On the other hand, iPod sale was down by 15%. The numbers in Q2, 2012 are down as compared
to Q1, 2012 when Apple smashed all its previous records as you can see in Figure 1. In that period
Apple sold 5.2 million Macs, 15.43 million iPads and 37.04 million iPhones, even iPod sold well
with 15.4 million units (Burns, 2012).

According to IDC’s report (Q1 2012) that in a two horse race with Samsung, Apple was on the second place
in global with the notable growth of 8.8% of total cell phone market ( 4.6% up from a year ago) and 24.2%
of worldwide Smartphone market (18.3% up), as you can see in table 1 (Kahn, 2012).

Table 1: Top 5 Smartphone Vendors, Market Share, Shipments in 2012

Source: IDC

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

B. PEST Analysis:

To gain an understanding of Apple’s business potential, direction of operation and to know situation of future
market, we will use PEST analysis.

B.1. Political Factors

There are many problems which cannot be controllable by the company such as; geopolitical uncertainties,
war against terrorism, authority to work and health issues which can affect the sale of Apple’s product
worldwide. As to reduce operating cost Apple has outsourced in different countries like Ireland, China,
Korea, Czech Republic and Cork. If these countries face any political instability or any problem which causes
to delay in manufacturing operations, will led to spoil the Apple likeness in the eye of consumers and its
dealers (CNetnews 2012).

B.2. Economic Factors

Purchasing power depends on the World’s economic conditions. According to past few years, unemployment
rate is very high in many countries which cause to decrease the sale of Apple products. Another reason was
increase in oil prices which causes inflation in world’s economy. As a result of these economic factors,
purchasing power of people reduced which negatively affected the sale of Apple products due to its higher
price. But now world’s economic conditions are getting better and company has purchased itself foreign
currencies, so Apple revenue has increased in the global market (Apple Inc 2012).

B.3. Social Factors

Two factors always have been on forefront of Apple product throughout the history, the design and the
quality. The purchasing of luxury products have gone up because the purchasing power of consumers has
risen in different market across the world and people prefer to buy iPod, iPhones and latest technology iPad.
As music industry growth has increased which is the biggest social influence on Apple because the main
essential music store is iTunes. Therefore, Apple has gained so much from social factors because it’s defining
a individual’s modern lifestyle.

B.4. Technological Factors

Apple always takes advantage because of its innovative and high technologies products. The large amount
has invested in research and development field by Apple, that’s the reason Apple comes in top of the new
innovative products.

C. Competitor Analysis

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

As everyone knows that Apple is a big industry and it is running so many products. Here are some key
competitors of Apple, according to cell phone industry and other products are following: Google, HPQ
(Hewlett-Packard Company), RIM, Samsung, HTC and Nokia. As you can see smartphone competitors in
figure 2, and Apple’s revenue, gross profit margin, earning per share, price earning and net income with its
direct competitor’s in table 2.

Table 2: Direct Competitors Comparison in Billion.

Figure 2: Apple’s cell phone competitors:

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

D. Analysis of industry competition

Competition in a given industry is defined by the Micheal Porter’s five competitive forces shown
in figure 3. This model can help to evaluate the impact on Apple and its ability to compete in
market.

Figure 3: Micheal Porter’s five competitive forces

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

III. SWOT Analysis:

Apple Company intends, produces cell phones, personal computers, music players and
related services, networking solutions, peripherals and software. The company’s market
position can be measured by its strong operating performance, which has also increased the
confidence of investors. On the other hand, company’s margins can be affected by extreme
competition (Data monitor, 2006).
Table 4: SWOT Analysis of Apple

Source: Strategic Management Insight

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

IV. Strategies used by Apple:

Figure 8: Porter’s model of generic strategies

Source: Papers 4 you/Porter (1985)

A. Differentiation

Apple is using a differentiation strategy by presenting an outstanding design of its products, personalized
services and high-quality products. The easiness of product makes target market varying from beginner to
proficient users.

B. Value Creation by Focus and Cost Leadership

Apple has outsourced his production as to reduce its operating cost to third party through vast economies of
scale. Original Equipment Manufacturers (OEMs) is the company that Apple has outsourced with. Apple
focuses on user interface and industrial design to making a product that not only the highly innovative but
also the user-friendly and stylish in nature. Apple has a command on higher price than average price due to
highly personalized and people friendly devices.

V. Conclusion and Recommendations:

In brief Apple Company is very innovative and early adapters and it is typically the foremost
company who takes new innovative products as compared to other companies. These types of
things usually considered as more risky but it appears to be functioning as Apple’s advantage.

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

Strong market position and consumer loyalty which increases due to closed ecosystem and user
friendly products makes different to Apple Company from its competitors. Another most
important factor is that the Apple Company is the “First most admired company” in the world.
Whereas, it is also credited to first sustainable music downloading business model in history by
its ipod and iTunes online media store. Apple is a profitable company and its future is bright.
But Apple should be careful in legal and political areas because as to reduce operating cost it
has outsourced in different countries and it has to find different alternate to reduce the risk as
Apple buys application processor from Samsung which can create a problem for it.

https://www.academia.edu/7103572/The_Complete_External_and_Internal_Analysis_of_Apple.In
c_and_its_SWOT_Analysis

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

Reference:

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4- Apple Insider, 2013. Apple's iPhone grew to 25.1% global market share in 2012. [online]
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6- Burns, M.., 2012. Apple Q2 2012: 35.1M iPhones, 11.8M iPads, 4M Macs, and 7.7M iPods.
[online] Available at: http://techcrunch.com/2012/04/24/apple-q2-2012-35-1m-iphones-11-
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11- Kahn, J., 2012. IDC: Samsung takes top smartphone marketshare in Q1, as Apple hits 8.8-
percent high of total mobile phone market. [online] Available at:

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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

http://9to5mac.com/2012/05/01/idc-samsung-takes-top-smartphone-marketshare-in-q1-as-
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Seng Mollyka: ID#58513

Business Policies and Practice Professor: Eng Kimsan

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