Apple inc swot analysis 2012

Running head: APPLE INC

APPLE INC 8

Apple's SWOT Analysis and Strategic Scorecard

Introduction

One of the most important actions the management of a company can take towards improving a company's performance and competitiveness is to conduct a business environment scan. The output of a scan is the often the company's strengths, weaknesses, threats and available opportunities. The analysis should be followed by a set of recommendations on how the company can make use of strengths and opportunities, as well as how to improve the weaknesses. This paper will conduct a SWOT analysis on Apple Inc, then followed by a balanced scorecard assessment of the company.

SWOT Analysis

The internal environment of a company is a matrix of its financial position, management, employees, objective, and so forth. Apple Inc has enjoyed enviable financial success in the recent past and as such its strong financial position is its biggest strength. Currently, the company can afford to fund big acquisitions of other companies that can be useful in pursuit of its strategic goals. The financial strength means that other companies are willing to work with Apple because its operations can only get bigger. Another internal strength of the company is its team of employees who are innovative and highly motivated (Husso, 2011). The company does not have a hierarchy in management and all employees interact freely. The company also encourages employees to take responsibility for projects they work on. The result is high productivity. Another major strength of Apple Inc is the large portfolio of products that it sells customers which helps in boosting annual revenue as well as creating a brand image. Currently, customers know Apple as a producer of high quality and premium products. This makes it easier for the company to introduce new products into the market (Husso, 2011).

The company's major weakness lies in the high prices they charge for its products. Consumers are becoming more mindful of their spending habits due to economic conditions. Premium pricing has been Apple's marketing strategy but the company could be forced to relook the strategy due to consumer behaviors (Maltz, 2003). The company is also facing court cases regarding copyright infringement and this could result in fines against the company. This could hurt Apple's financial position and possibly force it to withdraw certain products from the company. Critics are also arguing that the company's innovative engine is starting to slow down compared to three years ago. The company's iPhone 5S is seen as only a slight improvement on the iPhone 4S. If consumers realize this they could begin to stop purchasing new products from the company (Husso, 2011).

On the positive side though, the company has an opportunity to make the iPad its biggest product yet. The company's tablet has been received well in the market so far and demand is increasing exponentially. The company also has a chance to acquire many small and upcoming technology companies that will help it improve its innovativeness and market share. Currently, the company has begun offering cloud computing services and the demand is growing rapidly. Therefore, the company has a chance to use this avenue to even out revenues when demand for gadgets slumps (Kossek et al., 2012).

The main threat to Apple's dominance in the devices market lies in the growth of Google's Android Operating system. This operating system is compatible with smart phones from Samsung, LG, Sony and all other major hardware manufacturers. The growth of the operating system is threatening Apple's market share and the company has to find ways to counter this threat by perhaps opening its devices to other operating system. The fact that the dollar is quite strong against many currencies also makes the company's products seem expensive. This is another challenge to the company that quotes all its items in US dollars (Kossek et al., 2012).

Balanced Scorecard

The balanced scorecard helps to understand a company's performance not only in financial terms but also on other fronts that are critical to a company's operations. This section will review how Apple has done financially, in satisfying customer's needs, learning and growth, as well as internal processes.

Financial

Apple's financial growth is mainly to grow its revenue, minimize its cost of sales and overheads so that it increases its bottom line. The main indicators of this performance lie in the company's financial statements that are then used to calculate financial ratios. For Apple, the main indicators of financial performance include a comparison of revenues between the current year and previous one, the gross profit margin, the net profit margin, and the ration between overheads and sales revenue. The company wants the revenues to increase and the main strategy towards achieving this involves lies in increasing the number of products in its portfolio as well as acquiring smaller companies that can make huge revenues when managed properly (Kossek et al., 2012).

Currently, Apple has a lot of products and this has helped boost its sales significantly. Computers were their main source of income about a decade ago, but their focus shifted to the iPod, the iPhone and now the iPad. The company has managed to capture the imagination of their customers continually and thus making them buy new devices and stick to the old ones as well. The creation of customer loyalty and an iPad way of life has helped the company become a global giant in the consumer electronics world. Another way of growing revenue lies in the pricing strategy which targets consumers seeking premium products. These consumers do not mind paying high prices when they are assured that the quality of a given product is high. For Apple Inc, this strategy has helped it earn a high profit margin on all items sold. The company does not have to appeal to the mass market to make its huge profits (Kossek et al., 2012).

Customer Satisfaction

Customer satisfaction is important for the continuity of any business entity because it determines whether a given customer is likely to return for a repeat purchase and also whether that customer will recommend the company to a friend, family, or colleague. For Apple, their main objective is to keep the customer amazed by the quality of products produced as well as the level of customer service the company is willing to provide. Apple begins all innovations with the customer in mind and this has led to groundbreaking innovations such as the iPhone and iPad. When the company developed these products, it was aiming to manufacture gadgets that were so relevant to daily life that the customers could not leave them behind. The company relies heavily on word of mouth for marketing and therefore it has to amaze customers with every gadget they produce (Palermo, 2011).

The main indicators of performance include reviews from customers on social media, the company's website as well as in their distribution stores. The company has call centers in the countries where its products sell and this gives a chance to customers to register their comments. As stated, the customer satisfaction program begins with having the customer in mind when developing products. This stretches to the manner in which the company packages products for customers. It strives to give value to customer by providing regular updates to the programs and operating systems that customers have already purchased (Kossek et al., 2012). This means that a customer could purchase a device today, but still be getting regular updates a year later. This helps Apple to surpass the expectations of customers (Palermo, 2011).

Learning and Growth

As highlighted, Apple benefits from having a team of dedicated and motivated employees that would are willing to go the extra mile to improve their skills and come up with groundbreaking innovations. The company learning and growth objectives include bettering the skills of employees each year and making them feel important and a part of the company. The company allows workers to attend as many useful conferences, seminars, and debates as they would possibly like. The company has a generous research budget that allows people who have ideas within the company to try them and possibly commercialize them. Apple has been ranked severally as one of the best placed to work because of the freedom employees are allowed to explore their creativity (Palermo, 2011).

Apple measures the level of learning and growth at its premises by following the number of innovations each year. A drop in the number of innovations could point to a drop in the level creativity and the company could decide to hire a few people to bring in fresh ideas at the company. Employees are also provided with things such as loans to finance education while the company is always ready to afford employees time-off from work to concentrate on examinations or short courses. This also adds to the company's reputation as an employer of choice (Palermo, 2011).

Internal Processes

The internal processes refer to all activities that have to take place before the company. Apple aims to streamline all its processes to ensure that it keeps all stakeholders pleased. At the same time, these processes have to be carried out in accordance with the law and in such a way that minimizes operating costs. The processes begin with designing of products, which have to be original to avoid patent infringement suits. The company has to ensure that it place orders in a timely manner from reliable partners. It has to ensure that there are no delays in delivery and that suppliers are paid in time. Other internal processes the company has to take care of include recruitment, appraisal, rewards, sales, marketing, and distribution and so forth (Palermo, 2011). The company sets benchmarks against which all these processes are evaluated.

Conclusion

Apple is a company whose internal strengths include a strong balance sheet position, a large portfolio of products, loyal customers, and a strong brand image. The company should leverage on these strengths to continue strengthening its workforce to produce items that satisfy customer needs. The company could to use aggressive marketing to fend off competition from Android in the operating systems market. The company should also bank on the growing demand for tablets and smart phones to increase revenues and profitability in the future. However, the company should have plans to keep up with the rapid changing technology so that it protects its title as a market leader in innovation.

References

Husso, M. (2011). Analysis of Competition in the Mobile Phone Markets of the United States and Europe.

Kossek, E. E., Kalliath, T., & Kalliath, P. (2012). Achieving Employee Well-Being in a Changing Work Environment: An Expert Commentary on Current Scholarship. International Journal of Manpower, 33(7), 738-753.

Kumari, N. (2011). Balanced Scorecard for Superior Organizational Performance. European Journal of Business and Management, 3(5), 73-86.

Maltz, A. C., Shenhar, A. J., & Reilly, R. R. (2003). Beyond the Balanced Scorecard: Refining the Search for Organizational Success Measures. Long Range Planning, 36(2), 187-204.

Palermo, T. (2011). Integrating Risk and Performance in Management Reporting. Chartered Institute of Management Accountants.