Apple Inc Strategic Audit: Task Environment (Porter’s Five Forces Model)

The Porter’s five forces model facilitates the analysis of the task environment for organizations such as Apple Inc by evaluating various sources of threats to the existing business (Porter, 2006).

Threat of New Entrants

Apple Inc operates in technology-intensive industries where entrant organizations have accessibility to the technological advancements. The technological field is characterized by little restrictive platform and inexistence of bureaucratic requirements (Barrow, 2011). This suggests that entry remains unrestricted. However, new entrants lack the market share commanded by the Apple Inc brand as a provider of superior and reliable quality. In addition, it has a prominent brand presence across the global market that new entrants would take years to emulate. Given that each product is uniquely designed and delivered, it faces low threats from entrants. This arises from its continual differentiation of its products and spread productions that lower the manufacturing cost per unit.

Bargaining Power of Buyer

The presence of cheaper and reliable substitutes from prominent players including Microsoft and Samsung increases the bargaining power of buyers over manufacturers. Although consumers can switch over to rival products with ease, it yields higher threat in competitive business units (Thomson & Baden-Fuller, 2010). However, Apple Inc imposes higher switching costs to the consumers owing to the inoperability feature for its products, unless when used in its integrated ecosystem. Besides, Apple brand boasts millions of buyers comprising individuals, small and medium-sized businesses, alongside large corporations. This allows Apple Inc to retain control over pricing decisions on its differentiated products.

Threat of Substitute Products or Services

The presence of prominent players such as Microsoft poses a high threat for its hardware and software products. In particular, the presence of alternative tablet computers from Chinese manufacturers threatens its iPad generations. Consumers view the Microsoft brand as offering equally reliable products. Its other business units face similar threats, including iPod versus Mp3 players from Samsung and Sony, iPad by Samsung tab, alongside the Samsung Galaxy note to its iPhone generations. Although this presents a higher threat, the inoperability feature in its ecosystem allows weathers the threat, thus yielding recognition for its brand (Jinjin, 2013). However, continual ignorance of the local resellers will see substitutes usurp the Apple Inc brand.

Bargaining Power of Suppliers

Apple Inc strives to expand its supply base, among other Taiwan and Chinese companies to shake off the dependence on Foxxcon. Although this yields an improved end-to-end control over its supply chain, the company faces stiff competition for suppliers of raw materials as prominent players seek to expand their supplies. This translates to a higher bargaining power acquired by its manufacturers as they may threaten to produce standard products as opposed to customized components to suit the Apple Inc brand. In business unit where Apple Inc relies wholly on outsourced suppliers, it faces a compromising business situation where such manufacturers have high ability to dictate its production schedules (SEC, 2013).

Rivalry Among Competing Firms

Apple Inc faces stiff competition from prominent operators that contribute to its declining market share. Presence of products such as Android tablets, Microsoft tablet alongside offerings by operators from mainland China poses a high threat for its future market share. Although Apple Inc differentiates its products and locks consumers in the brand ecosystem, it faces the relentless strive by rivals through their research and development team always seeking the latest technological advancements that yield better performance(SEC, 2013).

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