Apple SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Apple SWOT analysis:

Strengths

  1. Market leadership for a range of products and services
  2. Strong brand image
  3. Financial strength
  4. Sophisticated supply-chain infrastructure
  5. High profit margin
Weaknesses

  1. Higher prices than competition
  2. Occasional technical issues related to product functionality
  3. Incompatibility of Apple products and services with other products and services
  4. Narrow product range
  5. No major improvements in latest product versions
Opportunities

  1. Investments in research and development
  2. Product diversification
  3. Formation of strategic partnerships
  4. Increasing compatibility of products
Threats

  1. Loss of innovative potential due to decease of legendary founder Steve Jobs
  2. Intensifying competition from China and India
  3. Being found to have infringed on intellectual property rights
  4. Reputation damage due to the tax scandal
  5. Further increase of manufacturing costs

Apple SWOT Analysis

 Strengths

1. Apple is one of the global market leaders with its globally popular products such as iPhone ® , iPad ® , and Mac ®, and services such as the iOS and OS X ® operating systems and iCloud ®. These products and services have proved to be sources of solid revenues for the company and are likely to remain so in the foreseeable future.

2. The company has a strong brand image and Apple has been recognized as the most valuable brand with the value of USD 124.4 billion[1]. Strength of Apple’s brand image is effectively reinforced by uncompromised customer loyalty serving as a solid base of competitive advantage.

3. With revenues of more than USD 182.7 billion and net income of more than USD 39.5 billion generated during 2014 alone[2], Apple has a strong financial base to engage in research and development according to its traditional competitive advantage of innovativeness and superior design.

4. Apple’s supply-chain operations have been ranked by research firm Gartner as the best in the world for the past four years[3]. Sophisticated supply-chain management practices allow the company to facilitate its complex global operations with no or least disruptions.

5. Apple maintains an exceptionally high profit margin compared to industry average and this fact provides advantages for the business at multiple levels. High profit margin can allow the business to maintain its operations in times of economic uncertainties thanks to cash reserves and Apple is also able to commit to vast investments for research and development. Industry analysts note that “Apple isn’t here to sell the most of anything; its overarching goal is simply to generate the greatest possible profit”[4]. As it is illustrated in figure below, Apple profit margin has been generally increasing for the past two years and this has been accompanied by a general increase of its share price.

Apple SWOT Analysis

Quarterly changes in Apple share prices and profit margins

 

Weaknesses

1. Apple products and services are priced in much higher level compared to competition.  For example, 16GB iPhone 6 costs £539/$649, the 64GB handset costs £619/$749 and 128GB costs as much as £699/$849. By comparison, its direct competitor, Samsung Galaxy S5 with additional 128GB microSD card costs only £510/$670 which is cheaper £190/$280 than top spec iPhone 6[5].

2. Occasional instances of technical functionality issues mark another weakness associated with Apple brand. The range of these issues include the latest iOS 9 causing some Apple devices to crash[6], the presence of bugs in the previous iOS 8 like keyboards that suddenly disappear and the most notably, reports from some customers that iPhone 6 and 6 Plus can get bent and stay that way[7]. Such instances of technical problems has weakened Apple brand image to a considerable extent.

3. Apple’s unique hardware and system can only be used with company’s own products. Particularly, majority of programs available in Apple’s Mac computers cannot be used with other computer brands causing massive user inconveniences…

Apple Inc. Report contains the full discussion of Apple SWOT analysis. The report also illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Apple Inc.. Moreover, the report contains analysis of Apple’s marketing strategy, its leadership and organizational structure and discusses the issues of corporate social responsibility.

 

Apple Inc. Report

[1] The World’s Most Valuable Brands (2014) Forbes, Available at: http://www.forbes.com/powerful-brands/list/

[2] Annual Report (2014)

[3] Lu, C. (2014) “Apple had the best supply chain in the world for the last four years – here is what you can learn from it” TradeGecko, Available at: http://www.tradegecko.com/blog/apple-had-the-best-supply-chain-in-the-world-for-the-last-four-years-here-is-what-you-can-learn-from-it

[4] Savov, V. (2016) “Apple’s grand unifying strategy: high profit margins” The Verge, Available at: http://www.theverge.com/2015/9/10/9300231/apple-watch-iphone-sales-profits-strategy-market

[5] Kypreos, E. (2015) “iPhone 6 vs Galaxy S5: Which to buy?” Trusted Reviews, Available at: http://www.trustedreviews.com/opinions/iphone-6-vs-galaxy-s5#DjyiMkWOdy5wx3RM.99

[6] Risen, T. (2015) “New iOS9 Causing Apple Devices to Crash” US News, Available at: http://www.usnews.com/news/articles/2015/09/18/new-ios-9-causing-apple-devices-to-crash

[7] Edwards, J. (2014) “Is Apple Accident-Prone?” Slate, Available at: http://www.slate.com/blogs/business_insider/2014/09/25/apple_screw_ups_recent_problems_with_apple_products_include_iphone_6_bending.html