Apple Company’s Strategic Alternatives and Recommendations

SWOT analysis is always a very important tool that helps in determining the internal ability and limitations of the firm, and the opportunities and threats that are available in the external environment. The strength of Apple Inc has been expressed in a number of ways. The ability of this firm to diversify its electronic products to go beyond computers has helped it increase its revenues in the market. To maintain quality of its different electronic products, this firm has come up with a quality assurance unit in all its subsidiaries in order to ensure that it delivers quality products to the customers.

Ability to deliver quality products to the customer has made it develop a special niche in the market making its brand popular across the world. Apple is one of the first firms that embraced value chain management under the leadership of Steve Jobs. Through this, the firm has been able to continue satisfying its customers at a cheaper cost. The ability of this firm to adopt the emerging technologies has also been considered as its major strengths. The iPhone and iCloud are some of its recent products that demonstrate its capacity to deliver special satisfaction to its customers by bringing products that are a little beyond the expectations of the market. Apple’s attractive revenue offers it opportunity to conduct various activities like market research and new product invention without any stress. The financial ratios below demonstrate this financial strength of the company.

To get the profits of the firm in 2012, the formula below will be used:

  • Return on Total Assets Ratio= Profit after Tax÷ Total Assets
    • 26%= Profit after Tax÷ 150934
    • 0.26= Profit after Tax/150934
    • Profit after Tax= 0.26× 150934

= 39242.84. (Given that the values were given in millions of dollars). The Profit after tax for the year 2012 was $ 39 billion.

Despite the above strengths, this firm has some weaknesses that have impeded its growth to a given degree. One of the main concerns that this firm has not addressed properly is the issue of environmental management. The components of the products of this firm are known to be very dangerous to the environment. Old phones, laptops among other products pose a serious challenge to the environment. This firm has been criticized by a number of scholars, alongside other firms, to be leading in the pollution of the environment through electronic wastes. This firm is yet to come up with a clear structure on how it can manage the environmental pollution caused by its wastes around the globe. The firm still depends heavily on borrowing to finance its projects.

It would also be important to determine debt-to-asset ratio. This would help in determining the rate of the firm’s debt.

  • Debt-to-assets ratio= Total debt÷ Total assets
    • = 48436/150934
    • = 0.3209
    • = 32%

This means that 32% of the firm’s assets have been financed through borrowing.

In every industry, there are always opportunities and threats that a firm may come across in the external environment. There are various opportunities that exist for Apple Inc in its operations in the global market. One of the opportunities that this firm has had is an expansive and unexploited market in the third world countries. Most of the electronics firms have focused their effort on building a large base of loyal customers in the leading economies like the United States and the European markets.

This firm has managed to tap into the emerging markets in Africa and parts of Asia. The stable economic growth in the major economies means that there is increased opportunity for this firm to increase its sales in such countries as the American and European markets. This growth of the economy means that the consumers will always have enough to spend on luxurious goods such as iPhones and iPads. There is an interesting trend in the market where this firm is competing with Samsung for the market share of the tablets. The Samsung Galaxy Note 10.1 and Apple iPad 3 have been competing in the market for supremacy. Although this may be considered as a threat, this competition has offered the two firms an opportunity to acquire a special niche in the industry, outsmarting some of the former industry giant like Nokia and Motorola.

There are threats that exist in this industry that is worth noting. Technology is probably the main threat that this firm faces in this industry. Apple Inc has used technology to reach its current position. It is one of the few firms that have managed to adapt to the emerging technologies very fast. However, it is a nightmare trying to figure out what some of the competitors can do with this same technology. Another threat that this firm faces is the stiff competition posed by rival firms. This industry is one of the most competitive industries in the world. Any slight mistake by the firm may result in a situation where its market share is taken over by other rival firms.

Porters Five Forces model identifies five competitive factors that a firm must deal with in order to remain competitive in the market. In order to manage market rivalry, Apple should consider developing a special niche by offering unique products. To manage the threat of substitutes, this firm should maintain high level of creativity in order to develop new products to compete favorably with those of competitors. Buyer power can be managed by delivering high quality products to the market. The firm should consider increasing the quality of their products in a way that will convince customers that the prices charged are worthy of the products. The supplier power can be managed by forming alliance with the suppliers. The threats of new entry can be managed by moving to new markets as a way of increasing the market share.

Strategic Alternatives

The situation analysis done above gives a detailed understanding of the current position of this firm in the corporate world. It would be necessary to analyze some of the strategic alternatives that this firm has based on the above analysis. One of the main strength identified in the above analysis is Apple’s financial capacity. This can be used to help the firm gain competitive advantage in the market over its competitors.

Innovation is one of the most important success factors in the electronic industry. It is an opportunity offered by the emerging technologies, and firms that are able to be innovative in this industry have been very successful. Apple will need to use its strength of financial capacity, to take advantage of the opportunity that the market has to offer. In this case, it would use its financial strength to nature innovation. This will give it a competitive edge over its market rivals. This firm should also use this financial strength to overcome its weaknesses. The weakness identified above was the fact that substantial part of this firm’s assets is financed through borrowing. This should be reduced as much as possible to eliminate the burden of repaying the loans.

Apple should also use its strength to avoid threats in the market. For instance, the threat of new substitutes can be avoided by coming up with a variety of products that can compete favorably with that of competitors. This can be achieved given the financial strength of this firm. The management of Apple should make an effort to minimize its weaknesses and threats in order to be successful in the market.

Strategic Recommendations

The above discussion has elaborately defined the position of Apple Inc as at March 2012. The strategic recommendations are based on the facts about the firm as analyzed above. One of the most important factors that propelled Apple to success was its ability to come up with new unique products in the market. The management should develop a department that will be fully responsible for developing new market ideas to ensure that this trend is maintained. The financial capacity of this firm can make this possible. Another important recommendation for this firm is to develop a unit within the marketing department that will be fully responsible for analyzing threats in the market. The unit will be reporting to the marketing manager. The identified threats should be addressed as soon as possible to reduce their impact.