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Assignment 5: Capstone

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Assignment 5: Capstone
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Assignment 5: Capstone
Introduction
Apple Inc. is one of the most viable and well-known companies known for its designing, manufacturing and marketing of various media and mobile communication devices. Apple also deals with manufacturing of portable digitalized music players, personal computers, laptops together with a number of newly developed services, software, third party digital contents, networking solutions and applications. The core area of operation of a company is within the United States, Asian Pacific and European countries having headquarters located in Cupertino, California. As of September 27, 2014, the company employs more than 92,600 people. On financial grounds, the firm has achieved remarkable revenue of $182,795 million during FY2014 enjoying 7% increase over the revenue of FY2013. This paper would discuss on the various marketing and leadership aspects of Apple.
Company Mission, Vision and Primary Stakeholders
The company mission statement has not surfaced in the digital media before the death of Steve Jobs. However, as per The Economist (2009), Jobs has provided a mission statement in early 1980s which includes a contribution towards the world and having innovative outlook. But, under the Tim Cook’s administration, the mission statement has been transformed into a “list of the product line” (Blodget, 2013). On the other hand, Tim Cook has revealed the company’s vision statement in a promotional video that has supported sustainability and environmental concerns.

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Considering primary stakeholders, the company’s senior management including CEO Tim Cook along with Eddy Cue (Senior VP – Internet Software and Services), Jonathan Ive (Senior VP – Industrial Design), Scott Forstall (Senior VP – iOS Software), Peter Oppenheimer (Senior VP and – Chief Financial Officer), and Jeff Williams (Senior VP  – Operations) to name a few. Each of these stakeholders is pursuing their every possible effort to make Apple one of the leading products all around the world.
Porter Five Forces
Based on the above-mentioned role of stakeholders, vision and mission statement, the company should have to focus on improving those aspects. However, considering the external marketing aspects, Porter’s five forces would allow better understanding of the development of potential strategies. The five forces includes a threat of entry, threat of rivalry, the threat of substitutes, a threat of powerful suppliers and finally, a threat of powerful buyers.
Considering the domain of threat of entry, Apple enjoys quite a differentiated and high innovative line of products. Apart from that, the iOS has become well known during the last four or five decades. It has allowed the company to become much more stable in terms of high innovative and Research and Development (R&D) oriented corporate structure. Hence, the threat of entry is quite comparatively low as compared to its rivals that include Samsung, LG and HTC.
Regarding the threat of rivalries, Apple had enjoyed market dominance as part of its iPod, iPad and iPhones before the inclusion of Android and Windows OS into the tech-market. However, the companies are continually trying to capture the iPod share of the market from Apple. Different firms that include Asus, Lenovo, LG and Samsung, are putting forward their resources in making highly competitive products. Hence, Apple products somehow face a threat at the hand of these companies on the long term basis.
The very same also accounts for the threat of substitutes from any of the counterparts from these firms. However, the company does not suffer from such massive inclusion of substitute due to two basic reasons, which are the development of innovative products and establishment of economies of scale to provide products at lower cost. Apart from that, the brand recognition and market penetration is quite high that has allowed an added advantage against its substitutes.
However, there are different organizations which are operating in electronic consumers’ markets; it is of importance to note that they are quite elastic in accordance with the suppliers’ demand. It means that in the condition of supplier increasing price, the organization seeks for another alternative supplier. Nonetheless, the suppliers have some advantage while they are supplying high differentiated and unique products thereby giving them bargaining power.
Similarly, the threat is buyers is also that much of a threat to Apple. The company already enjoys customers’ base of millions of users worldwide and some of them are unique corporations too. Also, the highly differentiated product leaves a lesser choice for the buyers to shift towards an alternative. In this regard, the price of products can shift the balance and make the consumers move towards inferior and cost effective brands (Porter, 2008).
SWOT Analysis
The SWOT analysis for Apple would look for different strengths, weaknesses, opportunities and threats under current market condition.
Strengths
The first and foremost strength of Apple is its competitive advantage against its competitors via vertical and horizontal integration. Apple has successfully integrated vertically and horizontally. As a result of which it has become a fearless competitors in the electronic consumers’ market. The presence of Apple around the mobile communication and digital media devices is another added advantage for it. Through the incorporation of vertical integration, Apple has enhanced the user experience across all the devices that it features. Apart from that, the company vertical integration strategy has provided a formulation competitive edge against its different competitors.
Another aspect of that, Apple has also launched different successful products as part of a strategy of catering the need of massive customer base. Apple products’ average selling price is having remained quite stable; however, the rest of the market has suffered from a decline in overall average selling price (ASP). Depicting that, the Apple iPhone has been launched at a price of $600 and has remained immune to the very same decline. On the other hand, Android enabled smartphone have suffered from that decline and is now selling at around $247, for Windows phone the price declined ASP is $265 and for BlackBerry, it is $339. Apple’s capability of commandeering high ASPs along with defending it clearly depicts its market superiority.
Apple also enjoys strong growth rates and rejuvenating cash resources. Also, the revenue growth that is achieved by the company has possessed better pricing power and unit sales. The unit growth is derived from the very appeal of the product in the marketplace. The very offshoots of successful product lines have allowed Apple to gain a much more dominant position thereby helping in providing high pricing power. A blend of these factors has allowed Apple for the attainment of better industry’s position.
Weaknesses
The company’s growth rates and revenues are quite commonly dependent on the sales of iPad and iPhone at large. The iPhone and iPad production lines account for more than 72.4% of the total revenues of FY2014. These product lines are the only growth drivers for Apple and any contingency associated with these lines would severely impact the performance of company along with its growth. Hence, depending solely on the selected few production lines would risk the overall operation of a company. The risk can be translated by the reduction in iPad demand or collapse of the tablet market because of new technological advances. As per industry estimates of a third quarter of 2014, has provided iPad share to stand firm at 22.8% in contrast to 29.3% in the third quarter of FY 2013. Similarly, the smartphone market has also suffered from decline thereby leading to a reduction from 29.2% in third quarter of FY2013 to 22.8% in third quarter of FY2014.
Opportunities
Apple has been the home of innovation since its very foundation. Hence, it has a number of opportunities to nullify the threat that the firm is being faced. One of those innovations is Apple Pay, which is expected to have much better incremental growth prospects for a company. During September 2014, the company has started Apple Pay that only works with iPhone6 and iPhone6 plus via NFC (Near Field Communications) design. The launch has brought numerous growth opportunities for the company based on medium to long-term perspectives. It has been estimated that the global mobile payment transaction account to the value of around $325 billion in 2013 having more than 245 million mobile transaction payment users.
The markets of tablets and smartphones are enhancing at quite a fast pace. As per market speculations, the global shipment of the smartphones can read up to 1250 million users in FY2014 as compared to 1004 million users in FY2013. Apple is one of the leading players in today’s smartphone industry having a market share of around 12% in third quarter of FY2014. IPhone is one of the most leading products of the company on the global scale. In FY2014, Apple has sold more than 169.2 million iPhones and 67.2 million iPads in FY 2014. Surely, the robust outlooks of the tablet and smartphone market have tremendous outlooks for increasing sales drive of the company in upcoming future.
Another fruitful opportunity for the company is its focus on enterprise markets during the last five years in order to enhance their revenues by adopting of BYOD (bring your own device) initiative across the enterprises. Firms are quite commonly using laptops, smartphones and wireless to reduce the on-building network infrastructure. As per the industrial estimates, the market for BYODs aids to generate more than $72 billion in FY2013. The company has also joined hands with IBM to offer cloud services that are optimized for its integration with iOS thereby allowing securing, device management, mobile integration and analytics.
As part of developing a scenario of the market, wearable devices are also growing at quite a strong pace. It has been estimated that the shipment volume of wearable devices accounts for around 19 million units within FY2014. Furthermore, sales of wearable electronic goods would expect to generate more than $22.9 billion by the end of 2020. As part of it, Apple Watch has been announced in September 2014. It is a personal electronic device that has the capability to combine the watch technology with the iOS based UI (User interface) that is designed for smaller devices. It also possesses Digital Crown, which is a navigation tool that allows the users for zooming, scrolling, and navigating purposes. Also, it allows the customers to communicate with different ways via their wrists. Also, it includes a technology called Force Touch for allowing users to access the controls within different applications.
Threats
The markets in which Apple’s products and services are located are quite challenging and complex to operate and compete. The market is highly vulnerable to rapid technological advancements and product innovations. The company faces severe competition at the hands of experienced and well-funded peers like Google, Microsoft and Samsung.
Another aspect is that the price can also serve as a source of potential competitive disadvantage for Apple that its competitors can use for gaining much better market share. Apart from that the emerging smartphones market lack the carrier subsidies. Also, the customer base in those specific markets are much more price sensitive. Hence, competition within these markets would be quite difficult for Apple.
Apple’s shipments can also be threatened via different carriers move for cutting the subsidies for smartphones thereby inflicting damage to the profitability of a company. Also, the carrier subsidies have provided themselves vital for the financial viability of the company. As part of the United States market, the carriers like T-Mobile and AT&T are alternating the dynamics of the market for reducing the subsidies for the company (Marketline, 2015).
Strategies and Communication Plans
In order to enhance the profitability and reducing the risk, the company should have to induce strong and high targeted strategies for enhancing their sales. Also, the firm should have to look for different aspects in order to harvest all the opportunities. As part of diversification, the company should have to look for horizontal integration means in smartphone and tablet industries. A variety of production line would not only prove to be a viable alternative for the company but also enhance revenue drives. As part of changing marketing dynamics, new opportunities that include portable and wearable electronics can be linked with fashion industry too. In that manner, those features can also target fashion savvy people. Lack of subsidization of products is another severe aspect faced by the company. In order to mitigate that, separate partnerships should have to be strike with different industries to prevent the abrupt declines in profit margin.
Surely, these strategies would require a strong communication plan. Apple should have to take internal as well as external stakeholders on board before putting forward any decision. For internal stakeholders, allocation of roles and responsibilities is a major issue, and remuneration packages should be offered for personnel working on new products. For having a partnership with different carrier companies, a bargain can be a strike by providing enterprise solutions for their companies at a lower cost (Gregory, 2007).
Corporate Governance and Leadership Effectiveness
The Board is responsible for different aspects of corporate governance. As part of governance, the board put forwards different recommendation regarding ethics, conflict of interest, and term of office and retirement policies. Apart from that, a nomination of senior management officials is also conducted by the very same board members. This mechanism allows better decision making and leadership to produce fruitful results on the long term perspectives (Apple, 2015).
However, in order to enhance the leadership prospects, the decision making should have to be shared with lower level management and hence, provide them with an opportunity to engage in organizational development (Hogan et al., 1994).
Corporate Social Initiatives
As previously discussed, Apple has incorporated environmental concern as part of its vision statement. Also, the CSR initiative would serve to enhance the outlook of the company as a more environment-friendly and sustainable entity. For that, Tim Cook should have to bring forward “Zeal” towards CSR grounds and promote much better understanding of it (Chun, 2015).
Conclusion
All in all, Apple enjoys quite a strong position in electronic goods and gadgets market. However, it has been facing severe threats because of severe competition and market conditions.
References
Apple,. (2015). Apple – Investor Relations – Leadership & Governance. Retrieved 5 June 2015, from http://investor.apple.com/corporate-governance.cfm
Blodget, H. (2013). Apple’s ‘Mission Statement’ Is Making People Worry That The Company Has Gone To Hell. Business Insider. Retrieved 5 June 2015, from http://www.businessinsider.com/apples-new-mission-statement-2013-8
Chun, R. (2015). Apple CSR | IMD. IMD. Retrieved 5 June 2015, from http://www.imd.org/research/challenges/corporate-social-responsability-apple-opportunity-rosa-chun.cfm
Gregory, A. (2007). Involving stakeholders in developing corporate brands: The communication dimension. Journal of Marketing Management, 23(1-2), 59-73.
Hogan, R., Curphy, G. J., & Hogan, J. (1994). What we know about leadership: Effectiveness and personality. American psychologist, 49(6), 493.Marketline,. (2015). Apple Inc.. Retrieved 5 June 2015, from http://store.marketline.com/Product/apple_inc?productid=5B0A0C20-9BB6-4284-A575-AC0F2261F45C
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
The Economist,. (2009). Mission statement. Retrieved 5 June 2015, from http://www.economist.com/node/13766375

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