Step 5 - Reasons for SWOT (Apple)

SWOT Reasons

Strengths

Innovative thinking to create high quality digital products leading to strong loyalty of customers

1. To maintain the position of the innovator and trend setter in the industry
2. Company’s mission to provide best computing experience to users
3. Difficult for competitors to replicate the products without infringement of patent
4. High degree of freedom in organization culture, and flexibility in product creation

Robust financial performance over the past few years due to continuous cost reduction strategies

1. Reinvention of old products with newer technology to gain competitive advantage
2. Sustainability in growth through increase in sales in many product lines
3. Continuous cost reduction strategies
4. ROI driven company

Trendsetting designs and integration of digital media with a strategy of Mac-only Internet applications

1. Company’s vision to create integration between hardware and software in outstanding product mix
2. Accurate customer-focused design to maximize the potential use of the products
3. Superior products are linked for easy use of online services to enhance the versatilities of the products
4. Create products which fit the needs of diverse buyers

Bricks and mortar offering of Apple products in exclusive retail stores, and 24-hour online sales departments

1. Tangibility of products by customers in showrooms
2. Brand image promotion through elegantly designed showrooms
3. To reach out to market masses, especially computer-illiterate
4. Elimination of middle men & retailers

Offbeat marketing strategies focused on less mainstream computer users. (Leader in niche market)

1. Premium prices paid by less mainstream users
2. The only hardware alternative to PCs
3. Openness to new, non-routine expectations from customers
4. Most competitors focusing mainly on mainstream users

Excellent track record in customer service

1. Build strong customer relationship which increases earnings and revenue per customer
2. To maintain a strong brand image
3. Utilization of word of mouth as the best marketing tool
4. Service staff being perfectly acquainted with Apple’s designs

Weakness

High price of many products compared to competitors

1. Unrivaled quality of products
2. High R&D spending on in-house software and OS for Apple systems
3. Brand premium
4. Elitist product line-up in a niche market segment

Late venture into Operating System licensing

1. Excessive software design focus on Apple-hardware-only policy
2. A policy of greed to sell exclusively bundled hardware and software
3. Lack of management vision on future benefits of licensing a unique software product
4. Lack of management agility in decision making

Restriction of software usage by hardware platform

1. Unique, custom designed hardware platform
2. Product strategy to increase Apple hardware sales
3. De facto standard for Apple hardware platform to avoid infringement of legal rights
4. Inevitable reliability and compatibility issues with PC platform

Over dependence on Steve Jobs especially for new ideas

1. Over-trust in Jobs
2. Jobs being the savior of the company from crises
3. Major decisions made mainly by Jobs rather than by Board of Directors
4. New ideas for products mainly suggested by Jobs

Declining ratio of R&D investment over revenues

1. Sharp boost in revenues in the past few years
2. Recent and present success of the company, leading to over confidence in current product lineup
3. Lack of confidence from third-party software developers to invest in Apple platform
4. Continued decline in R&D adversely affects the future competitiveness

Opportunity

Accelerating growth of the PC market due to diversification and growth of computer buyer demographics

1. Growth of population
2. Increasing dependence on IT
3. Increasing Computer usage by people from all walks of life
4. More affordability of computers

Integration of portable electronics into the lifestyle of urban people (fashion-ability)

1. People naturally follow trends
2. Electronics gadgets as a symbol of modernization
3. Fast pace of life and a need to make efficient use of time
4. Electronics devices as a means of entertainment

Growing preference of the Unix workstation among IT professionals

1. Mac OS being the most widely used Unix-based Operating System
2. Growing vulnerability of PC platform to malware
3. Popularity of UNIX-based platforms for their faster performance
4. Unix being an open-source platform for developers and IT professionals

The rise of the laptop’s popularity

1. Greater need for mobility
2. Need to stay in touch
3. Advancement of micro electronics technology
4. Increasing dependence of education on IT

Growing frustration with the Microsoft mono-culture and incessant worm and virus threats

1. Apple’s immunity to viruses and worms
2. PC being the main target of viruses and worms due to much more users
3. PC being the dominant platform in the corporate sector
4. High cost of antivirus software

Continuous improvement of human-computer interfaces

1. Advancements in speech and gesture recognition technologies
2. Rising customer expectations
3. Enjoyment of interacting with intelligent machines
4. Apple being the innovative leader in human interfaces

Threat

Fierce price and market share competition among computer manufacturers

1. Many other computer manufacturers in Europe, Japan, and Southeast Asia
2. Rapid changes in IT industry
3. Emergence of low-cost PC manufacturers in China
4. Enjoying economies of scale by many manufacturers

Surplus of cheaper PCs and computer parts in the global market leading to lower profit margins

1. Rapid advancements in chip making technology
2. Computers becoming a commodity
3. Advancement in recycling technologies
4. Emergence of generic assembled PCs

Introduction of direct-sales approach and JIT delivery by Dell

1. Accessibility of online sales point from anywhere
2. Easier customization of products according to customer needs
3. Dramatic reduction of inventory costs
4. Elimination of distribution and retail costs

Acquisition of Compaq by HP in 2002, making it the largest company in the industry

1. Competitive advantage of Compaq in PC manufacturing
2. Financial strength of HP
3. Synergy effect
4. Achievement of economies of scale

Introduction of environmental regulations on financial responsibility of companies for recycling and safe disposal of used products

1. Financial costs incurred for proper disposal of used items
2. Health concerns caused in the public
3. R&D costs to make green products
4. Recycling costs and logistics