Apple Inc. in 2020: SWOT Analysis and VRIO Framework

Subject: Case Studies
Pages: 3
Words: 960
Reading time:
4 min
Study level: College

Apple Inc. in 2020: Analysis Case Essay

Apple Inc. has a long history that revolves around ambition, innovation, and product diversification. Steve Jobs and Steve Wozniak founded Apple in 1976 and quickly brought it to the leading positions in the developing personal computer (PC) industry. Unfortunately, the early success of the Macintosh computers was short-lived. Apple could not withstand competition from IBM, which almost resulted in bankruptcy (Yoffie & Fisher, 2020). In 1997, Steve Jobs returned to reshape and save the dying company. Initially, Jobs slashed Apple’s product lines from 15 to just four categories to cut losses and streamline the supply chains (Yoffie & Fisher, 2020). However, Apple moved beyond its PC focus in the 21st century, as Jobs introduced the famous iPod (media player), iPhone (smartphone), and iPad (tablet). This expansion has turned Apple into one of the most successful brands worldwide.

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Steve Jobs died in 2011 and left Tim Cook, his chief deputy, in charge. Under Cook’s leadership, Apple continues to follow the pattern of product diversification and expansion into new segments. According to Yoffie and Fisher (2020), Cook tried to prepare Apple to become a major force in technology-related services. Steve Jobs, his late employer, managed to move Apple beyond the PC industry with tremendous success. Cook’s intention to enter the services segment might open new opportunities for Apple, as well as create new competitors and threats.

SWOT Analysis

Apple possesses two major strengths over the competitors in hardware and services segments. Most importantly, the company has one of the strongest brands in the world. The customers loved Apple’s hardware and were willing to pay premiums over the competitors’ products (Yoffie & Fisher, 2020). Secondly, a diverse range of hardware products and services ensures financial stability even if some of the products are not successful from the launch. These advantages will help Apple significantly during the strategic shift.

In regard to weaknesses, Apple might struggle with market saturation and a perceived lack of innovation. For instance, this was the case with the iPad tablets, which sales declined gradually from 2014 to 2019 (Yoffie & Fisher, 2020). Each new generation of Apple hardware requires pushing the boundaries even further. Eventually, sales rates might stagnate and decline, and Apple must be prepared to find innovative solutions instead of abusing customer base loyalty.

However, Tim Cook might have predicted this scenario, as he had already started a paradigm shift towards the new wearable Apple hardware and technology-related services. Such services as Apple Music, iCloud, and iTunes are already quite popular among customers; in addition, Apple started developing its own self-driving car project (Yoffie & Fisher, 2020). New business directions provide Apple with an opportunity to remain relevant in the changing market.

Finally, the key threats for Apple are the loss of innovative brand identity and the resulting damage to the brand’s reputation. Steve Jobs was able to distinguish Apple hardware from the rest, which played a significant role in the company’s rise to the top. However, Apple’s services are often very similar to competitors (Yoffie & Fisher, 2020). In this regard, the lack of innovative thought combined with higher prices might undermine Apple’s appeal to customers.

VRIO Framework

The VRIO framework offers four criteria that allow evaluating of Apple’s products and determining whether the company has an advantage over the competition.

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Value. There are several global PC manufacturers, several major smartphone manufacturers, and several providers of technology-related services. However, Apple is arguably the only company that offers the whole package — from various unique hardware models to digital services. Therefore, Apple holds a substantial competitive advantage in terms of the value provided to its customers.

Rarity. One can claim that Apple is currently in a competitive parity position in terms of rarity. Apple services are almost identical to competitors — for instance, Apple Music is similar to Spotify, and Apple TV+ uses a similar strategy to Netflix (Yoffie & Fisher, 2020). Apple hardware conveys a message of exclusivity, but at the same time, PCs or smartphones of other manufacturers offer comparable functionality to Apple products.

Imitability. When it comes to the imitability aspect of Apple products, it is possible to state that Apple hardware can be imitated to a certain degree, at least in terms of functionality. In regard to services, one can state that Apple is trying to imitate the competitors’ products. As such, this situation can be considered a competitive parity.

Organization. Finally, it is too early to judge whether Apple’s internal organization is fully prepared for new challenges. However, Yoffie and Fisher (2020) claimed that most CEOs would have loved to be in Tim Cook’s position since Apple has the cash to develop in any direction. Given that Apple is a strong and profitable company, one can argue that it holds a sustainable competitive advantage in times of strategic paradigm shift.

Recommendations

The SWOT and VRIO framework analyses allow the formulation of strategic recommendations for Apple. Firstly, the shift towards services should be continued since hardware sales may decline. Secondly, priority should be given to directions that would uphold and reinforce Apple’s image as an innovative brand, such as AI or self-driving car development. Furthermore, Apple should preserve its philosophy of product diversification since it ensures financial stability in the long run. Lastly, Apple must strive to justify high prices for its products with actual technical and functional superiority.

Action Plan

Given the recommendations above, Apple management should undertake the following action plan. First, it is necessary to ensure strategic consistency and continuity of leadership after Tim Cook’s stint as a CEO. Next, Apple should invest in innovative projects in technology-related services while maintaining a presence in the hardware segment simultaneously. Finally, Apple must uphold customers’ loyalty by providing actual technical superiority over the competitors’ products.

Reference

Yoffie, D. B., & Fisher, D. Apple Inc. in 2020. Harvard Business School, 1-31

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