SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Apple SWOT analysis:
1. Market leadership for a range of products and services
2. Strong brand image and a brand value of USD 170 billion
3. High profit margin
4. Solid financial position of the business
5. Sophisticated supply-chain infrastructure
1. Decline of sales in China
2. Decreasing sales of iPhones
3. Higher prices than competition
4. Incompatibility of Apple products and services with other products and services for users
5. Lack of innovation
1. Further increasing concentration on Services business segment
2. Investments in research and development
3. Product diversification
4. Formation of strategic partnerships
5. Increasing compatibility of products
1. Quality problems with negative effects on sales and Apple brand image
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
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®. Although the sales of iPhone has declined to a certain extent recently, currently it has global market share of 22,85% (see Figure 1 below). iPhone’s global market share a considerable strength as a solid source of revenue for the multinational technology company.
Figure 1. iPhone Global Market Share as of February 2019
Highly sophisticated Apple ecosystem plays an instrumental role in maintaining brand loyalty and consequently sustaining market share in the global scale. Specifically, third-party products are not usually compatible with Apple products and all products belonging to Apple portfolio work well with each-other. Thanks to services such as iCloud, airplay, and airdrop, you can start a task in on one Apple device and continue it on another and there is no need to download or install anything.
2. Apple has a strong brand image. It has been listed by Forbes as the most valuable brand in the world with the brand value of USD 182,8 billion, while Interbrand estimates Apple brand value as high as USD 214,5 billion. Strength of Apple’s brand image and value is effectively reinforced by a combination of factors such as a large customer base in the global scale and high profit margin.
High brand value grants substantial advantages to the multinational technology company in terms of leveraging the brand to add new products and services into the portfolio. Moreover, high brand equity gives the company considerable bargaining power in negotiations with vendors, manufacturers and distributors.
3. Apple maintains an exceptionally high profit margin compared to industry average. 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”. The company’s gross margin for 2018, 2017 and 2016 amounted to 38,3%, 38,5% and 39,1% respectively.
As it is illustrated in Figure 2 below, although the gross profit margin has declined to a certain extent to 37,99% by the Q4, 2018, nevertheless it remains one of the highest in the industry. High profit margin can allow the business to maintain its operations in times of economic uncertainties thanks to cash reserves.
Figure 2. Apple Inc. gross profit margin chart
4. Apple is the world’s largest IT company by revenue. It earned net income of USD 59,5 billion, USD 48,35 billion and USD 45,68 billion in financial years of 2018, 2017 and 2016 respectively. In fiscal years of 2018 the company’s net sales increased by 16% or 36,4 billion compared to the previous year.
By the end of Q1, 2019 the multinational technology company reported USD 245 billion cash on hand, compared with USD237,1 billion the previous quarter. Accordingly, Apple has a strong financial base to engage in research and development further contributing to its traditional competitive advantage of innovativeness and superior design.
5. Apple’s supply-chain operations have been ranked by research firm Gartner as the best in the world. Apple supply chain best practices include data synchronization between the central warehouse and its own stores and customers, and outsourcing manufacturing and as a result reducing the manufacturing cycle time. Sophisticated supply-chain management practices allow the company to facilitate its complex global operations with no or least disruptions.
1. Apple sales in China have started recently to decline. Particularly, in the last quarter of 2018, the sales of iPhone in China fell 20% year-on-year, at the same time when the sales of smartphones by local Huawei increased by 23% during the same period. Apple is also facing issues in China in terms of getting approval from authorities to publish new games to the App Store. Decline of sales in this strategically important market is a major issue for the multinational technology company. Moreover, failure to address this fact can have severely negative implications on the long-term growth prospects of the business.
2. Apple can be criticized as a single-product company for its over-dependence on iPhones. The sales of iPhones are decreasing in the global scale and this is one of Apple’s major weaknesses. “The increasing competition from Chinese manufacturers such as Huawei and Xiaomi – but also from Google, LG and Samsung – has eroded the once dominant position of Apple in the smartphone market”
During the last quarter of 2018, global iPhone sales were 64.5 million units, earning Apple 15.8% market share during the period. That was down from 73.2 million unit sales and 17.9% market share during the last quarter of 2017. This was the biggest decline of any major smartphone maker during the period.
Sales of iPhones accounted to 63% of total Apple revenues in fiscal year of 2018. From this point of view, taking into account over-dependence of the company on the sales of iPhones, it can be argued that unless the company addresses the issue of declining sales of iPhones, consequences for the business can be detrimental…
Apple Inc Report contains a full version of Apple SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Apple. Moreover, the report contains analyses of Apple leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Apple marketing strategy, ecosystem and addresses issues of corporate social responsibility.
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 Source: Y Charts (2019) Available at: https://ycharts.com/companies/AAPL/gross_profit_margin
 Annual Report (2018) Apple Inc.
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