Apple Inc. in Business History
Today’s society has expanded the use of technology tremendously throughout the last several years. With new things constantly emerging like smart watches, tablets, and wireless headphones, it is hard to keep up with it all. One multibillion-dollar company that is dispersed worldwide, has been able to keep up with these outrageously spiking trends. Apple Computers Inc. was founded on April 1, 1976 by college dropouts Steve Jobs and Steve Wozniak, who brought to the new company a vision of changing the way people viewed computers (Apple Computer, Inc.
). Their original goal was to invent a device that could be used in households that was user-friendly.
The business started off small but was still successful. The two started by building computers in Jobs’ garage and sold them. Monitors, keyboards, and casings was later added to the products in 1977 (Apple Computer, Inc.). Going into the boom of the technology industry, in just two years of business, the two were able to boost their sales by $110 million dollars. Color graphics were later added which as well was one of the largest improvements of the computers causing a drastic increase in sales. Sales jumped from $7.8 million in 1978 to $117 million in 1980, the year Apple went public (Apple Computer, Inc.). Just like any other business, the incorporation started to run into some issues such as the resignation of Wozniak in 1983 and Jobs in 1985.
After much controversary and problems Apple came across, the company started to see a strong decline in its market in the 1990’s. Jobs had handed the business over the PepsiCo’s John Sculley to be president (Apple Computer, Inc.). Due to Job’s plans he already had set in motion for the company, it continued to rise throughout the 1980’s. Back in 1985 Sculley turned down an appeal from Microsoft founder Bill Gates to license its software (Apple Computer, Inc.). This decision hurt Apple, causing a major decline in the business. Eventually, Apple had to seek the help of Jobs to save the business and made him CEO in 2000. Even with the death of Steve Jobs and current CEO being Tim Cook Apple Inc. has become one of the most successful businesses in technology with products being sold worldwide.
Interesting information was found while researching the S.W.O.T analysis for Apple Inc. An S.W.O.T analysis of the company gives a better insight of Apple including their strengths, weaknesses, opportunities, and threats that they encounter throughout the years. This analysis of the company gives insights on the strategic actions of the business, especially maximizing its growth based on its strengths and opportunities (Smithsonian, Nathaniel).
One of the largest internal notable strengths presented within Apple Inc. are their ability to present having a strong brand image. Everyone knows the symbol for Apple products, which is the apple. Having this brand displayed strongly encourages the consumer to purchase Apple products as opposed to other competitors. Having a strong brand image also shows the amount of different products Apple Inc. has produced throughout the years and how much the business has advanced technologically.
Another one of Apple Inc. strengths are their high profit margins. Apples marketing mix or 4P involves the premium pricing strategy, which comes with high profit margins (Smithsonian, Nathaniel). This Internal strategic factor is a major strength because it maximizes profits, even when sales volumes are limited (Smithsonian, Nathaniel). Lastly, Apple Inc. has an extremely rapid innovation process. This company understands the importance of constant innovation. They have challenged their competitors with always inventing the “next best thing”. When it comes to watches, wireless headphones, tablets, cell phones, and computers, they are constantly upgrading their products year after year. Making sure they are the first business to come out with these remarkable technological advances.
Although Apple succeeds in many strengths, it also has its internal weaknesses. The first weakness is its limited distribution network. Apple Inc. has a limited distribution network because of the company’s policy for exclusivity (Smithsonian, Nathaniel). Apple doesn’t just sell their products anywhere. Most of their products are only distributed in major stores such as Apple, Best buy, Walmart, etc. This also becomes a problem for people who live in more rural areas. Some must travel much longer distances to find a store that sells and fixes Apple products.
Another weakness that Apple Inc. encounters are their high selling prices. One of the cheapest products Apple Inc. sells are their wireless Air pods, even those with the lowest selling price of $150 dollars. High prices attract customers from the middle- and high-income brackets, while preventing customers from low-income brackets to easily purchase the company’s products (Smithsonian, Nathaniel). Running aside from their high selling prices, another weakness they face is the dependence of sales on high-end market segments (Smithsonian, Nathaniel). Due to the fact that Apple’s pricing is strategically high, it makes the company rely on a high-end market. This is a downfall considering most of the economy is low income, making it hard for others to purchase their products.
Although Apple Inc. has grown to become an extremely successful business, opportunities to expand and strengthen the company still emerges. One of the opportunities is the expansion of the distribution network (Smithsonian, Nathaniel). Opening the doors and allowing smaller distribution centers to sell Apple products would allow for maximizing sells. This also refers to one of the weaknesses that the company encounters, having a limited distribution network. By expanding the distribution network, Apple will be able to reach some of the consumers that have difficulty being able to find a store that sells their products. Also, an expanded distribution network can help Apple reach more consumers in the global market (Smithsonian, Nathaniel).
Another opportunity that Apple has is its higher sales volumes based on rising demand (Smithsonian, Nathaniel). Home phones are slowly dwindling away, with cell phones almost being the only means of communication when on the go. In relation, the company has the opportunity to increase its sales volumes through aggressive marketing, especially for mobile products (Smithsonian, Nathaniel). Mobile devices are one of Apples highest selling products. With the high demand of this and the opportunity to expand their network, Apple could see a tremendous increase in the sales and profits of the business. Apple also has the opportunity of developing new product lines. The company has already shown its expansive nature by inventing things such as the Apple watch and Apple Air pods which have shown to be extremely successful. Developing new product lines can support business growth in the international market (Smithsonian, Nathaniel).
Through further research of the PESTEL/PESTLE analysis Apple has many more opportunities introduced into the technological business. In this aspect of the PESTEL/PESTLE analysis model, current technologies and technological changes affect business conditions (Lombardo, Jessica). Some of the factors include Cloud computing trend, technological integration, and growing app markets (Lombardo, Jessica).
As with opportunities, also comes threats that the company faces throughout its progression. One of the first and obvious threats is aggressive competition. Apples competitors are also some of the top rated and successful businesses alongside Apple Inc. Apple competes with firms like Samsung, which also uses rapid innovation (Smithsonian, Nathaniel). However, due to the successes of Apple, aggressive competition is the least of their worries. Secondly, Apple faces problems with imitation. Many stores such as Five Below imitate knock-off wireless headphones which are hundreds of dollars cheaper than what Apple sells their products for. Recently, other strong competitors such as Samsung has newly introduced their wireless headphones that are a strong replica of Apple’s. Other products that have been seen imitated are Apple’s tablets, and watches.
Lastly, one of the major threats Apple encounters is riding labor cost in various countries (Smithsonian, Nathaniel). Moreover, rising labor costs involving contract manufacturers, such as those in China, reduce profit margins or push selling prices even higher (Smithsonian, Nathaniel). Through further research with Forbes, if Apple were to make their Iphones in America, they could cost anywhere between $30,000-$100,000 a phone (Quora). For most products to be affordable in America, they must be manufactured in other countries. You also see this in other large companies in America such as Nike. As Apple CEO Tim Cook points out in a recent interview , the U.S. is sorely lacking in certain critical skills required in the manufacturing supply chain, one of these skills is precision tooling and specifically, tooling engineers (Quora).
Apple Computers Inc. was founded in 1976, in a garage, by two college dropouts, Steve Jobs and Steve Wozniak. It only took two years for the two to see a dramatic increase in the business that made it extremely successful. Jobs and Wozniak eventually both left the company in the hands of PepsiCo’s John Sculley. It only took a few short years of Apple to fall into the wrong hands for it to dramatically start declining. The business almost completely went under if it wasn’t for Jobs coming back as CEO in 2000. After Jobs’ return, Apple Inc. became one of the largest and most successful businesses in technological society at the time.
After review of the S.W.O.T analysis of the company, it is shown that Apple Inc. will continuously rise and remain one of the most successful businesses of the century. With high profit margins, a strong brand image, and effective rapid innovation processes Apple will be able to remain at the top of their game. Although Apple does have some weaknesses in the company such as a limited distribution network, high selling prices, and dependence of sales on high-end market segments they are working towards fixing these weaknesses because of their large expansion of opportunities presented to them. Some of these opportunities include expansion of the distribution network, higher sales volumes based on rising demand, and development of new product lines. If Apple can effectively use these opportunities they will be able to overcome most, if not all, of the weaknesses they have. Although Apple also possesses external threats such as aggressive competition, imitation, and rising labor cost in various countries they posses’ strengths that will help them exploit their competitors so they may remain at the top of the totem pole. Apple Inc. has effectively shown their ability as a company to overcome all obstacles that have been presented to them throughout the years and through continuous analysis of the company, will be able to remain one of the top-rated technological companies in todays society and for many centuries to come.
- “Apple Computer, Inc.” Apple Computers: This Month in Business History (Business Reference Services, Library of Congress), www.loc.gov/rr/business/businesshistory/April/apple.html.
- Lombardo, Jessica. “Apple Inc. PESTEL/PESTLE Analysis & Recommendations.” Panmore Institute, 29 Jan. 2017, panmore.com/apple-inc-pestel-pestle-analysis-recommendations.
- Quora. “How Much Would An IPhone Cost If Apple Were Forced To Make It In America?” Forbes, Forbes Magazine, 17 Jan. 2018, www.forbes.com/sites/quora/2018/01/17/how-much-would-an-iphone-cost-if-apple-were-forced-to-make-it-in-america/#2ac2f3e62d2a.
- Smithson, Nathaniel. “Apple Inc. SWOT Analysis & Recommendations.” Panmore Institute, 14 Feb. 2019, panmore.com/apple-inc-swot-analysis-recommendations.