Oligopoly – AppleJE1
An oligopoly is a market
structure in which a few firms dominate. When a market is shared
between a few firms, it is said to be highly concentrated. Although only a
few firms dominate, it is possible that many small firms may
also operate in the market.
Apple is an oligopoly
because there are two firms who dominate the market and they are Samsung and
Apple who have a 18% market share. Also, succeeding in an oligopolistic market
you would need to advertise your products and Apple do this, whenever a new
product is released. Apples products
differentiate form Samsung’s products by the design, logo and many different featuresJE2 . An advantage for apple being in this market
is that not many other new companies could enter this market and succeed Apple.
What is meant by
Demand is how many goods and services are bought at various prices
during a certain period of time.
What is meant affordability?
The meaning of affordability is that an average person afford certain
The latest product of Apple which is the iPhone X is £1,300. This is too
much money for an average person, however people still have a demand for the
product this is called price inelastic. This means that when apple change their
price of a product, they still have demand for that new product. If Apple
decrease the price of their products, demand will increase for their productsJE3 .
Apple priced their latest product at this price, as they know their customers
would pay for it if the design was new and features were improved.
The definition of
competition is the businesses or companies your business/brand is competition
with. For Apple their main competitors are SamsungJE4 , other competitors include Huawei, Sony, HTC, Lenovo and others.. The market Apple are in have a
few competitors but the main competitor’s Apple is competing with are Samsung.
The impact this has on Apple’s demand for their products varies as if Samsung
release new products and Apple don’t, then demand for Apples products will
decrease. However, the other brands will have not much of an impact on for the
demand for Apples products. Apple also make tablets, which is the iPad and
their competitors are Samsung, Microsoft and Nokia.
using Apples products have previously complained about their phones being
hacked by using iCloud and leaking inappropriate photos of the all over the
internet. Apple have responded to this by having a brand new
feature, this feature is having face recognition on the IPhone X. You could
sign into your ICloud with your face ID. Therefore, the demand for this product
has increased, because of this security issue.
What is Gross Domestic
Gross domestic product is the total value of
goods and services produced by a country per year.
The current GDP for the UK is £488,907 millionJE5 . This growth in the UK economy is good for Apple as
it means people will have more money, which could mean that they could buy
5 forces model – AppleSuppliers
Apple has managed more of a complex chain of suppliers that
are spread internationally over many nations including US, China, Japan, Mexico
and several other small and big nations. It has the largest number of
suppliers and potential suppliers that limits their bargaining power. Apart
from that Apple products are not developed entirely by any single supplier.
While one part may be supplied by a supplier in Mexico, another by the US or an
Japanese supplier final might be then made and completed in China.
The threat of new
If the threat of new competitors stays weak for
Apple, then it’s because of two factors. First, because the cost to develop a
brand new technology company is extremely high and second, brands cannot assure
Apple’s kind of brand image and recognition over a small amount of time. Still,
the threat comes from the existing companies, big brands which will
compete with apple for shares. An example could be Google who have brought
their smartphones into the market that can be effective alternatives for the
customers who cannot afford Apples products. Although Apples products are innovative,
premium and unique, they are priced at very high prices. This is a place where
Google have seen an opportunity and been able to take away market share from
Apple. However, while the threat of new entrants in Laptops and smartphones
market is low, existing technology companies can divert into these areas, still
have a chance of becoming successful.
Threat of Substitutes
The threat of substitutes has increasingly
grown overtime for Apple. This is because some brands in the smartphone market
have made cheaper alternatives that are average priced models, compared to
Apples high priced products. Whilst the brand loyalty of Apple customers is
high, some of the models from Samsung and Google are a potential threat because
of their efficiency and design.
from Google and Galaxy from Samsung are huge competitors of IPhone. This
threat increases outside of the UK and internationally, where Apple’s brand
loyalty is relatively lower. Apple can barely do anything to dismiss this
threat but to bring out more effective and efficient products with new and
improved features, so that their customers could purchase their products with a
bit of satisfaction know there’s new and improved features.
Buyer power from customers
Despite the fact the bargaining power of individual customers
in the case of Apple or its competitors is low, it is not so in the case of
customer groups or markets. For example in the last few years Apple has lost a
huge market share in the Asian markets in PC industry to competitors like
Lenovo. So, when considering the shared bargaining power of the customers in
individual markets, it is high.
Apple has tried to counter this threat by investing time inro
research and development, also by bringing new and unique products that could
maintain its brand value and image. However, over time while in the world
market, the influence of customers has increased, that of Apple has reduced.
One important factor that has worked in the favour of Apple is brand loyalty
which has led to high sales. So, the bargaining power of buyers can be
considered as weak to average.
The rivalry of competition between the bigger
companies in the technical industry is extremely high. There are several
competitors of Apple in the industry including Google, Amazon, Microsoft,
Lenovo, Samsung and others. All these brands are engaged within the intense
competition, where the loss of one can be the benefit of the other. Although,
competition is a key factor affecting Apple’s performance and profits. Amazon
is a threat to its IPad and Google and Samsung’s smartphones to its IPhone.
Supply is the total amount of a
goods or available for purchase at any specified price.
What is price elasticity of
Issues that affect Apple
Apple is one of a number of American companies that
has gained a large amount of money. It had $34.7 billion in the bank on June
30, 2015. This is generating calls for higher corporate taxation in the United
States, where income inequality has become a huge political issue.
The cost of finding alternatives to Chinese
manufacturing could be high for Apple. This could lead to increased prices for
Apple products and therefore less profits for Apple.
More than half of Apples sales of their products come from countries
other than America.
The bad relations between US and other countries could have bad outcomes
for the company.
issues that affect Apple
A strong U.S. dollar could
increase exchange rates, making it more expensive for Apple to do business in
key markets like Europe and China.
Increased labour costs in China could take away the
profits of some Apple productsJE6 .
Impact of global
Increased rate of
inflation in US
issues that affect AppleJE7
Rising use of mobile accessJE8
Rising use of social media
issues that affect AppleJE9
Fast changing technologies and the making of new technologies.
High costs of making and purchasing new software.
Apple have to release new products often to outdo competitors
issues that affect AppleJE10
In 2009, Nokia sued Apple for infringement of Nokias patent relating to
wireless technology. (https://www.slideshare.net/NinadJape1/apple-inc.swot–.pestle.analysis)
Domestic legal stress
Breach of IP lawsJE11
SWOT analysis – AppleJE12
to different products
products sells them easier
reputation as it’s the largest mobile company.
are quiet expensive
could access apples iCloud and leak pictures.
TV could be a success
Apps could be a success
biggest competitors who are Samsung
to Corporate Social Responsibility –
Supporting local communities
This campaign was to get employees to volunteer in local communitiesJE13
Educating and giving experience to employees –
Apple took workers to different factories, free of charge to gain experienceJE14 .
Employee health and safety –
Apple launched an 18-month program that aims to improve employee health
and safety in the industry throughout the globe. 240 suppliers and 270,000
workers have participated in this programJE15 .
Waste Reduction and Recycling by Apple
Apple offers recycling programs in 99 percent of the
countries it operates and the company has diverted more than 508 million pounds
of electronic waste from landfill since 2008JE16 .
Threat of new entryJE18
If the new companies are
not competing with Apple. then it is due to two factors. First, because the
cost to establish a new technology
company are very high and second, brands cannot generate Apple’s level of brand
image and recognition over a small period of time. Still, the threat comes from
the existing companies. A big brand with lots of capital and
good brand recognition can spread into this area to challenge Apple’s market shareJE19 .