managing for competitive advantages (porter's 5 forces)- apple inc
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APPLE INC.
2. Managing for Competitive Advantage (Porter’s Five Forces)
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APPLE INC.Introduction
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In April 1976, Steve Wozniak and Steve Jobs were established Apple together after they graduated.
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In the past ten years, Apple has expanded into a very intricate company.
Consumer Electronics
Consumer Software
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The company operates in five sections:
Americas, Europe, Japan, Asia-Pacific and Retail.
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APPLE INC. Practices & Operations Porter’s 5 Forces
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THREAT OF NEW ENTRANTS - LOW
Cost of product differentiation >> Barrier to entry Apply patents for inventions Target customers with high salary
range >> Different target market Successfully develop its brand name >> High brand recognition Economies of scales >> Keep costs down
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BARGAINING POWER OF SUPPLIERS - MODERATE
Announce plan to use Intel processors >> High switching cost Strong vertical integration >> Not much relying on third-parties
supplier Product differentiation strategy >> Pass cost to customers Buying in large volume >> Discount in bulk purchasing
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BARGAINING POWER OF BUYERS - LOW
Focus on niche market >> Special demand Product differentiation strategy >> Highly demanding Target customers who emphasize on
quality >> Willing to pay higher price Developed high brand loyalty >> Return and purchase Using highly compatible closed-systems >> High switching cost
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THREAT OF SUBSTITUTE PRODUCTS OR SERVICES- MODERATE
-Samsung smart phone &
Table-computer
EX:Samsung Galaxy S3
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COMPARISON SIZE OF TOUCH SCREEN -Samsung Galaxy S3 -
4.8 inch -iPhone 4S -3.5 inch
31 May 2012,when Samsung Galaxy S3 first made available in M’sia -RM999
•PRICE OF SMART PHONE
-Samsung Galaxy S3 –RM2199
-iPhone 4S-RM2499-RM3099
Image of iPhone 4S
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Built reputation as innovator
Differentiation approach
Concern on quality
Produce "own" substitutes
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RIVALRY AMONG COMPETITORS- MODERATE
Computers companies-Dell, HP,ASUS, ACER, Sony& others computer manufacturers.
-Too much choices
Difficult for customers to make choice
APPLE Limited products
choices,Drive more sales
& beat competitors
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Spend heavily on R &D department
Emphasis on quality of products
Product differentiation
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APPLE INC. Pro & cons in application of Porter’s 5 forces
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UNIQUE Increasing the market
demand Enhance
COMPETITIVE ADVANTAGE
Product differentiation
Strategy
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•Difficult to maintain long term perceived unique
•HIGH COST
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Move to Intel processor Pro Coming out amazing products Lower production cost and increase salesCons fight against with other competitors
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Strong Vertical IntegrationProCoordinate activities in supply chainIncrease customer exposureEnhance product quality and enjoy
unparallel pricing powerConsBureaucratic cost increase
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BARGAINING POWER OF BUYERS
Focus on niche marketPro Move efficient and effective Generate higher profits as customer
satisfaction achievedCons Not much sales and profit generated Suffer a great loss when market failure
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Highly compatible closed-systemPro Maintain its cost Minimize risk of competitors Rising profitsCons Take time come out patch Cost satisfaction Constantly bear research cost
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THREAT OF SUBSTITUTES PRODUCT OR SERVICE Focus making superior quality
productPro Reflect high performance Reflect non price competition Insulated from intensive competitorsCons Increase cost of production Possible for losing market share
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Produce own substitutesProDrive up sales and maintain
market shareCompete with competition
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RIVALRY AMONG COMPETITORS
Spend heavily on R&D departmentPro High brand recognition and reputation Expand market share Sustain status as industry leaders Enhance probability
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Limited choice within product categoryPro Maximize customer satisfaction and
loyalty and increase financial returns Cons Increase pressure Ineffective and inefficiency in product
development process Possible lost market share and gain loss
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APPLE INC. Recommendations
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THREAT OF NEW ENTRANTS
continue using product differentiation strategy
invent new technology products constantly R&D should find ways to cut costs
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BARGAINING POWER OF SUPPLIERS
build good rapport with supplier continue using vertical integration in their
operations reduce their own bureaucratic costs
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BARGAINING POWER OF BUYERS
focus on their niche market more technicians for the repairing of the
software
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THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
market-skimming pricing when set price for their products
products -provide many features and benefits approach of Apple to offer host of products to
act as own substitutes should be maintained preserve their uniqueness of products- retain
customer loyalty
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RIVALRY AMONG COMPETITORS
maintain the culture of being innovative consider about the problems of increasing
pressure on workers of Research and Development Department – EAP in ShenZhen, China
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APPLE INC.Conclusion
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CONCLUSIONCONCLUSION provides numerous type of technology
products: iPhone (smart phone) iPad (tablet pc) iPod (portable music player) iMac (desktop computer)
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CONCLUSIONCONCLUSIONPorter’s Five Forces Influence of Forces
Threat of New Entrants Low
Bargaining Power of
Suppliers
Moderate
Bargaining Power of Buyers Low
Threat of Substitute Products
or Services
Moderate
Rivalry of Competitors Moderate
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CONCLUSIONCONCLUSION
o Advantages and disadvantages.o Exploiting strengths and opportunity.o Correcting weaknesses.o Minimizing threats.
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THANK YOUTHANK YOU