Strategic Analysis of Apple

Apple Strategic Analysis

Apple is well known as  technology giant and an innovative company that  has brought several superhit products to the market including iPod, iPad and Mac. The company has made a strong return in the recent years. While the computing industry has been seeing a decline in the recent years, in 2017 and 2018, Apple again started climbing the charts to restore its position in the market. Apart from soaring smartphones sales in the market, Apple has also seen its Mac sales rising since the release of Macbook Pro. With 29 Billion in net sales for 2017, the brand is at the top of the world’s most valuable brands’ list by Forbes followed by Google. Tim Cook is currently leading the brand as its CEO with 123,000 full time equivalent employees working for the brand as of September  2017.  The maker of computer hardware, smartphones and iPads operates in the following geographical segments : Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes both North and South America. They are the largest market for Apple products, accounting for more than 40% of its sales in 2017.  Since the sad demise of founder Steve Jobs, nobody had expected Apple to make such a strong return. However, sales of the brand again climbed up as key products like iPhone and Mac continued to retain their popularity. In the last five years, the net sales of the brand rose by around 60 Billion dollars. From 170 Billions in 2013, the brand’s sales rose to the highest at 233 Billions in 2015. Apart from great products, Apple is known for a great marketing strategy and continues lead in the technology world. It is a truly global brand with its headquarters in Cupertino, CA. With a market cap of around 941 Billion USD, Apple is looking sturdier than ever.

SWOT Analysis of Apple 2018:


Brand image and equity:

The biggest strength of the Apple brand is its brand image and the equity it has built over time. World over, it is known as one of the smartest technology brands and despite a premium image is loved for its consumer orientation. It is also a highly trusted brand that has focused on a great consumer experience. It is popular as a brand that never likes to compromise on quality and while it does create quality related pressures for the brand  still, in the long term has led to competitive advantage. A tough competitor for Microsoft, Apple products enjoy a  distinctly high level of popularity. The Apple experience has continued to grow with the release of new products like Apple watch and TV. However, the original Apple experience remains unchanged.

Global presence:

Apple is a truly global brand which is evident in the popularity that it enjoys in most parts of the world. As it notes in its Annual report – “The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific .Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments.” While the product portfolio is roughly the same across all the segments, each of the segments is managed separately which is for better alignment with customer demand and distribution partners as well as to cater to the unique market dynamics of each of the geographic region.

Financial strength:

Apple is a financially strong brand which features on top of the Forbes word’s most valuable brands’ list. In 2015 its revenue reached past 233 billion dollars and then fell to 215 Billion dollars in 2016 and again picked up in 2017 reaching past 229 Billion dollars. Apple’s market capitalisation is around 940 Billion dollars. It is growing at a fast rate enjoying high sales of iPhones and Macs.

Profit margins:

Apple enjoys very high profit margins on its products which can even be higher than 60%. Large profit margins means higher profits earned per unit. In 2017 Apple sold 216 million iPhones. As per an article by Time Money, the iPhone that sold for $649 cost Apple only $225 for production. In this way the MRP of a product is around three times its production costs. This is quite a huge margin and any brand enjoying such high profit margins as well as high level of sales is bound to be rich.

Consumer loyalty:

Apple has a very large base of loyal customers and fans worldwide. It is visible from the sales of its products as well as the frenzy around them. Every Apple products received with much hype and fervour. Moreover, most of Apple consumers like to buy more than just one product from an Apple. While the intercompatibility of these devices is a reason for doing so, on the other hand the unique Apple experience is also an important factor behind it. Apple also does its best to keep its fans engaged and keeps releasing new models of its products from year to year.

Focus on innovation:

Apple products are clearly distinguishable from the huge crowd of products based on their design and quality. Technological innovation has always remained an important focus for Apple since its inception. The brand has always focused on bringing products that  provide the consumers a seamless experience are innovative in design and technology. This is also why the brand incurs a very high level of expenditure on Research and Development. In 2017, it spent 11.6 Billion on R&D which was 1.6 Billion US dollars higher than the previous year. Retaining its focus on technological innovation and has also helped the brand find faster growth and popularity and globally.


Premium image:

Apple carries a premium image based on an enriching customer experience. This also created pressures related to quality and design on the brand since consumers always expect it to surpass their expectations and as such any minor shortcoming can lead to frustration. Moreover, costly products means access to a limited market share. This can create difficulties for the brand during period of low economic activity.

Limited product portfolio:

Compared to most of its competitors, Apple has a very limited portfolio. Apart from the iPhones, Macs and iPads, there are other products in its portfolio enjoy less popularity and limited sales.

Incompatibility with other brands:

Apple products have very little compatibility with the products by other brands. Apple has created an ecosystem of intercompatible and interoperable products. From Mac laptops and OS to smartphone, these products are designed in a manner that they do not have to depend on the software or hardware. While there is limited inter compatibility between its and Microsoft’s or Google’s products, Apple is trying to further reduce their presence in its ecosystem. In the wake of the Facebook data breach, it is trying to further proof its system against software and hardware by other manufacturers to give its consumers a securer and seamless experience.


launch new products:

Apple has a limited product portfolio as compared to its competitors and it can introduce new products to grow its market share and customer base.  While talks have been on about several new products and technologies behind the scenes at Apple, the brand must focus on this area to find faster growth. There are talks of Apple making an iCar or introducing autonomous driving technology. Technological advancements have happened at a very fast pace in the 21st century and there are several areas in which Apple can invest.


Apple has made some acquisitions over its life time from Next to Beats, Siri and Shazam. It can make more similar acquisitions which can make the Apple’s  ecosystem stronger or help it expand into new areas.

Invest in green technology:

The increased importance of sustainability in this decade is well known. There are several areas where the popularity of green technology has risen from transport to power. Apple too can invest in this area since it is expected to grow even popular in the near future.


Heavy competition in the laptop and smartphone industry:

The competitive threat in the laptop industry has continued to intensify and Apple despite being a very popular brand is not at the top in the computing industry. There is intense competitive pressure from other PC brands like HP, Lenovo, Dell and Asus. HP is enjoying the highest market share followed by Lenovo and Dell. While the sales of Apple laptops may have again soared following the release of Mac pro, there is still a lot of catching up to do.

Economic fluctuations:

Economic fluctuations in the global industry are also a cause of loss for big global brands like Apple.  Economic activity has returned in the Americas which has led to soaring sales and higher profits for Apple. However, still fluctuations keep happening in several economies globally and can affect sales.

Stronger dollar:

A stronger dollar is also ruining the profits of the major international brands like Apple. Volatility in currency exchange rates often gets to become a cause of loss and may have a significant impact on the overall revenue of a brand.

Legal and regulatory pressures:

The legal and regulatory pressures in the technology industry have also kept rising in this century. From labor to product safety and data, in all these areas there are several laws which can vary from region to region. Compliance costs are adding to the operational costs of brands and causing pressures and losses. Apple is also feeling the rising pressure of compliance.

PESTEL Analysis of Apple:

Companies operating in the global environment are subject to several pressures. A number of forces affect businesses in the global environment. These forces may be political, technological, economic or even legal in nature. However, they are very important in the context of business and need to be understood well so managers can plan accordingly. Otherwise businesses may face losses if they fail to notice the importance of these factors also known as PESTEL factors.


The importance of political factors has grown in the 21st century. It is because all throughout the world, government oversight of businesses has grown and led to higher pressure on businesses. From taxes to trade related regulations, role of government agencies has increased in the business world. The overall political environment of various nations and markets has continued to play a very important role in the context of businesses. It bears a direct relationship with the economic environment and stability of the region. The higher the political stability in a market, the higher will be the level of economic stability there. Regions that are frequently caught in war and political strife or are under threat from other geopolitical issues like terrorism or militancy get to see lower economic activity. Moreover, brands like Apple doing business all over the world also face a threat from unstable political  instability in terms of supply chain and distribution network management. Political chaos can lead to disruption of supply chain and distribution network which will lead to financial loss. In this way, political factors need to  be treated as a priority in the context of business planning and management. 


Economic factors are central to business growth and expansion. Low economic activity leads to overall low spending and lower sales. The world has faced a period of recession some years ago. It was a period of low economic activity when millions lost their jobs and that led to lower dispensable income in the hands of people. Premium brands like Apple are also under threat from such economic factors. when people have low dispensable income they start cutting costs and try to reduce their spending by turning towards lower priced products. As a result in periods of economic turmoil, prospective customers can gravitate towards affordable products and brands. With economic activity returning worldwide in most economies sales of brands like Apple are soaring again. Especially, with high economic activity in the Americas, it is enjoying very high level of profits. Thus, high economic activity means higher sales and profits while lower economic activity means  lower sales and profits.


Social factors too have kept growing in importance in the context of business which is because changing social trends can affect sales of products. The demographics of the world population have changed and the millennial generation is a highly tech savvy generation. Apple is doing its best to engage GenXers in all possible ways. Moreover, social factors affect business and marketing strategies in other ways As the culture varies form region to region brands need to formulate different sales and marketing strategies for each region. There is no one size fits all strategy for each and every market region. The demand for technology and technological products is especially high in the western nations and it is why Apple enjoys highest sales in the Americas.


Technological factors are now more relevant than ever in the context of business and not just for the technology brands but for nearly all brands. It is not just because technology helps you be more competitive but because it can be a major source of competitive advantage. Apple is a technology brand and technology is central to everything it does. Moreover, it is an innovative brand that is known for offering the best technological products and experiences to its customers. It has to live up to its name and therefore there is always enough pressure related to technological innovation and design on the brand.


Environmental factors have also acquired enough importance in the business. Now it is no more about just reducing your carbon footprint but also about being a leader in the area of sustainability. Apple is also investing heavily in environmental responsibility. The brand has continued to reduce the carbon emissions per product per kg since 2011. Apart from reducing its carbon footprint the brand is also investing in building the greenest corporate headquarter of all. Some other areas where Apple is investing to reduce energy consumption and construct a carbon free ecosystem are renewable energy as well as reduced energy consumption in its products. Overall, Apple very well understands the meaning and value of the sustainability terns and they are here to stay. Moreover, reducing its dependence on nonrenewable energy is going to benefit its own ecosystem and therefore investing in this area can yield results better than expectations. However, it is not just Apple but all bog brands are investing in green technology for the benefits it offers for businesses and the community overall.


the legal factors are also of utmost importance in the 21st century where brands have to focus on compliance and avoid any legal tussle more than ever. the legal net has kept tightening and if brands do not watch carefully, it is easy to fall in the pit. Government and legal agencies worldwide are quite aggressive in terms of legal compliance and any kind of noncompliance has very large repercussions in terms of financial compensation. Fines can range in billions and since the Facebook data scandal, the world towns how stiff laws have gotten. Apple is also trying to foolproof its system against any such data breaches. However, there are a large number of laws in areas from labor to product quality and safety to environment and they can vary from market to market. EU has got a different set of laws and Asian markets follow a different legal structure. Unless brands have dedicated compliance teams, legal hurdles can sometimes make it difficult to have space for innovation as well.

Five Forces Analysis of Apple:

Bargaining power of suppliers:

The bargaining power of Apple suppliers is low. While some of them are big bands and yet they are not sufficiently big to have any bargaining power against Apple. Moreover, these suppliers are scattered globally. Apple has got rules and regulations for its suppliers to follow and apart from high quality raw materials, there are outré performance standards that these suppliers must fulfil in order to remain a supplier.

Bargaining power of buyers:

The bargaining power of the buyers has increased considerably in the 21st century. It is because the new generation is a tech savvy generation and has all the information accessible that it needs to evaluate its products. Moreover increased competition has added to the bargaining power of customers. From premium to affordable, every segment is full of competing brands and products and each brand is quite aggressive about marketing and market share. Additional bargaining power for the customers comes from the legal structure favouring the customers. Overall the bargaining power of the Apple customers is moderately high. the factor that moderate the bargaining power of buyers are brand image and equity, marketing efforts, customer experience and quality of products.

Threat of substitutes:

The threat of substitutes for Apple is moderate and mainly arises from the products by competing brands like HP, Lenovo, Dell and Microsoft. While there are several substitutes in each category, still Apple enjoys very high level of consumer loyalty and that acts to moderate the threat form competing brands to some extent. Apart from that brand image and equity also moderate the threat. Apple products are highly differentiated from products based on quality, design and consumer experience. However, when it comes to prices, the maker is full of substitutes in each category.

Threat of new entrants:

The threat of new entrants is low because to become competing or smartphone brand requires a very large level of financial investment. Even starting at a local and very small level would require significantly large investment. Apart from technology and production as well as supply chain capabilities, there are other investments too related to marketing and HR. Legal and regulatory barriers also keep new brands from entering the market. Only the well established brands in technology industry can extend the ambit of their products or services easily as Google did by introducing a smartphone Pixel. However, due to these very large barriers to entry, new brands hardly dare enter the laptop or smartphone industry.

Competitive rivalry in the industry:

The level of competitive rivalry in both the laptop and computing as well as smartphone industry is very high. There are a large number of brands battling for market share in the laptop and smartphone market. From HP to Dell and Lenovo, the market is full of brands offering a diversified product portfolio in both premium and affordable range. In the smartphone market too from Samsung to Sony and LG, there are several brands competing for market share. All these brands are highly aggressive in terms of marketing and R&D which adds to the intensity of competitive rivalry in the industry.

Value Chain Analysis of Apple:

Primary activities:

Inbound logistics:

Apple has excellently managed a large and global supply chain a very large part of which is located in Asian countries and mainly China.

Its top 200 suppliers include component providers and others that represented at least 98% of its procurement expenditure in 2017 for materials, manufacturing and assembly of Apple products.   Apple enjoys high bargaining power against its suppliers because of its financial strength and brand image. Apple set quality standards for its suppliers and work to manage the standard of its suppliers’ performance. Those who are unable to follow are removed from the supply chain. Its use of a smart supply chain strategy has reduced its need for storage and sped up the procurement process.


Apple products are manufactured in several nations around the globe. However, it is mostly the Asian nations and especially China where these products are made and so there is a tag of Made in China on most of them. Apart from China, Apple is in talks with the Indian government to start local manufacturing there since India is a significant market. Moreover, the importance of the Asian markets is because they lower labor and manufacturing costs.  based on geographical segments, Apple operates in the following areas: the Americas, Europe, Greater China, Japan and Rest of Asia Pacific .Americas includes both North and South America.

Outbound logistics:

Apple has managed a large distribution channel which uses both direct and indirect channels. From retail stores to online retail channel and its own branded stores, Apple has managed a very large channel for the distribution of its products to the customers.  However, it has outsourced a very large part of its logistics and distribution which leaves Apple with little control on these things.

Marketing and sales:

Apple is already a world famous brand whose every small and big stunt creates lots of buzz in the industry. Each of its new releases is received with much hype and fervour. Its products are heavily publicised on media and other online and offline sources. Apart from a large and loyal customer base, there is a large crowd of engineers and developers that eagerly waits new announcements and releases. However, Apple also spends on advertising and marketing. Its use of creativity and imagination is also clear in its advertising strategy. Television commercials, online and outer form of online and offline channels also aid the advertising and marketing of its products. For sales, it uses online and offline channels, its own stores, dirt selling as well as some other channels.

Products and services:

Apple customers receive comprehensive after sales support. Most of its products come with a 90 days complementary support and a one year limited warranty. Apart from it, there is online store help available for the Apple customers. They can check their order status online. Customers can chat with experts or call Apple for help. Customers can get their phones or other Apple products repaired at a local Apple authorized service provider or an Apple store with genius bar.

Support activities:

Technology/Research and development:

Apple is known for technological innovation and spends heavily on research and development. In 2016, it spent more than 10 billion dollars on R&D and in 2017 raised the bar to 11.6 Billion US dollars. Since 2014, Apple has increased its R&D spending by more than 5 Billions. There are three key factors behind this growth in R&D – growing product range, expanding ambit of services and higher focus on the in-house technology development.

Human Resource Management:

Human Resources management is also an important part of the entire value chain of firms. Apple focuses on hiring the best and paying its employees well. This was the norm since the times of Apple founder Steve jobs. Apple has always wanted the best who bring the best set of knowledge and skills. However, the HRM approach has changed a bit with Tim Cook as the CEO. The new CEO has brought several changes meant to make the reputation of Apple in terms of HR better.


Procurement at Apple is well managed and a key focus. The brand has managed excellent relationships with its suppliers, however, also a set of very tight rules. The suppliers must provide the workers with safe working conditions and products and services as per the standards. All these factors are important to remaining an Apple supplier. However, Apple is also a major buyer for most of its suppliers and so it is a mutually beneficial relationship for both sides.

Firm Infrastructure:

Any organization’s infrastructure plays a major role in its success. From management to financial and other resources as well as its culture and structure, constitute the infrastructure of a firm. The better the management of a firm’s infrastructure the higher is its ability to create profits for the firm. Apple, recently underwent a major cultural change in order to gera up for faster growth.

 Core Competencies of Apple:

Excellent design and innovation capabilities: At the core of Apple brand are its excellent design and innovation capabilities. Apple has always pushed the bar higher in terms of quality, design and technological innovation. If it is at the top then the reason is its focus on quality and technological innovation.

Highly skilled Human resources:

Apple has always focused on retaining a talent pool of the most talented engineers and IT professionals. The maker of computer hardware and smartphones relies on a  large pool of talented engineers . They are essential to the growth of the brand since it relies not just on innovation but fast paced innovation to remain ahead of rivals.

Premium products and consumer experience:

Apple has designed  premium experience for its consumers and pushed the bar quit high in this area. Ithaca never tried to compromise on this experience or its standards. However, the brand equity it has built relies completely on its ability to sustain the premium experience. This premium positioning has also offered the brand a unique image which is a major strength and a core competence of Apple. Apple is not just about innovative products but an innovative experience and this does not change about the brand Steve Jobs founded. It is also very difficult or rather impossible to imitate.

VRIO analysis of Apple:

Resources/Capabilities of Apple:

Brand image/equity:

Apple’s brand image is a critical strength. It has built  strong trust on the market which is because of its high standards if quality and design. Its customer orientation has also helped it build a strong impression on its customers.

Global presence:

The brand is present globally from Americas to Europe, Asia and Africa. It sells through several channels including online and offline as well as direct selling.

Premium product range:

Apple offers a premium product range which allows it to enjoys large profit margins. Infant the level of profit margins enjoyed by Apple on its products are among the highest in the industry.

Customer loyalty:

Apple has also built heavy customer loyalty through its focus on innovation and customer orientation. Despite its premium pricing strategy the brand is highly popular among  large group of customers worldwide.

Supply chain:

Apple has managed a string network of suppliers globally. the largest part of its supply chain is in Asia and mainly China which is because the region offers raw material and labor at lower costs than the other parts of the world. Despite the large size of its supply chain, the brand has not compromised on its quality standards.

Design and innovation capabilities:

The brand has excellent design and innovation capabilities. It is known most for the elegant design of its products and the innovative technologies used in them.

HRM & culture:

The brand hires only the best to work with it. It relies on a large pool of highly talented IT professional. During the recent years, it also did a cultural make up in order to make the culture more inclusive. Highly skilled employees are a very important resource given most technological brands compete for them.







Brand image/equity





Competitive advantage

Global presence





Temporary advantage

premium products





Competitive advantage

customer loyalty





Competitive advantage

Supply chain





Temporary advantage

design & innovation





Competitive advantage

HRM & culture





Temporary advantage

Financial Analysis:

Net sales of Apple rose in 2017 primality driven by a growth in the sales of iPhones, services and Mac. There was an overall growth of 6% or 13.6 Billion dollars inhale net sales of Apple for 2017. Apart from Greater China, the brand saw an increase in sales in most geographical segments it operates in. Americas ere the most profitable geographical segment  for the brand accoutring for 96.6 Billion in sales, a growth of 12% over the previous year. Sales grew in Europe by 10%. Net income of the brand also increased by around 2.6 Billion dollars from 2016 to 2017 reaching 48.35 Billion dollars from 45.7 Billion dollars. Gross margin was 38.5% against 39.1% for the previous year.


– Apple must focus on increasing the line of its products by releasing new products.

– It must consider investing in Green technology or expand in this area by acquiring brands that are already operating in this segment.

– There is more scope for investing in CSR and environmental responsibility.

– HRM is a critical area that Apple can pay more attention to.

– Distribution strategy for fast growing Asian markets.