Five Forces
Large businesses that directly compete with Apple in the technology industry face intense rivalry. Apple competes directly with businesses like Google Inc., HP Inc., Samsung, and Amazon. Like Apple, each of these businesses makes significant investments in R&D and marketing. Therefore, there is fierce rivalry within the sector (Weinstein, 2020). The comparatively cheap cost of switching is one factor in the industry’s intense competition. Consumers do not need much to switch from Apple’s iPad to the Amazon Kindle or other tablet PCs.
The previously mentioned aspect of low switching costs confirms that Apple should give serious consideration to consumers’ bargaining power. The potential for a huge exodus of clients to a rival is a potent force. By continuing to make significant investments in R&D, Apple is able to create new and innovative products like the Apple Watch and Air Pods while still fostering customer loyalty. In this area of competition, Apple has had great success, building a sizable client base that actually wouldn’t switch from their iPhones to those of rival smartphones.
The likelihood of a brand-new competitor severely threatening Apple’s market share is rather low. This is principally caused by two things: the extraordinarily high start-up costs for businesses in the sector and the high supplementary expenses for increasing brand recognition (Weinstein, 2020). Any entrant to the industry needs to have a sizable budget available for R&D and production in order to build their own line of products. Before goods can be sold and begin to bring in money, this must be completed.
In the market for Apple products, supplier bargaining power is a relatively insignificant influence. Given that there are so many possible suppliers for Apple and so much competition, vendors’ bargaining stance is weakened. Apple is able to select from among a wide range of prospective channel partners for its products. Computer processor makers, for example, are part of a highly competitive parts supplier sector. When Apple switches suppliers, the changeover costs are often affordable and are not a significant obstacle.
In Porter’s Five Forces concept, substitute items are those that could replace the firm’s products rather than being in direct competition with them. A landline phone that may take the place of an iPhone is an illustration of a substitute in Apple’s scenario. The majority of possible competitors’ goods have less functionality than Apple products, such as a landline against an iPhone. In this regard, iPhone is capable of more than just making calls.
Thus, the two biggest market factors that can have an impact on Apple’s profitability, according to an examination above, are rivalry and buyer market power. The danger of replacement product choices from customers, the threat of new competitors, and supplier negotiating power are all weaker aspects of the industry’s primary strengths. Apple’s dominance in the market is virtually uncontested, but a significant challenger might appear in the future. To fend off any possible rivals, the business must remain innovative and cultivate brand loyalty.
Apple’s Leadership
Apple uses a framework based on functional knowledge to produce such advances. Core conviction is that individuals with the most expertise and understanding in a field should have the authority to make choices in that field (Kao, 2017). This is supported by two arguments: first, Apple competes in industries with rapid technological development and disruption. As a result, it must rely on the expertise and instinct of those who have an in-depth understanding of the technologies that caused the failure. The second motivation is to get rid of the conflict of interest brought on by obtaining superior items and making quick money.
Since Steve Jobs developed the functional organization, all Apple leaders – from the senior vice president to the lowest-ranking employees – must possess three essential traits. They can work because of their extensive expertise, in-depth understanding of these aspects, and willingness to discuss additional roles in the process of group decision-making (Kao, 2017). When managers possess these traits, coordinated choices are made by those who are most suited to make them.
It should be noted that the effectiveness of leadership is manifested through a number of indicators. Efficient leadership results in a healthy working environment and productive relations between employees. Usually, this is reflected in the extent to which corporate social responsibility is developed. In this vein, Apple seems to be among prominent companies and pays the necessary attention to the appropriacy of its approach toward leadership (Ceil, 2018). Then, the latter is significant when a company demonstrates stable and considerable profits, given that personnel interrelation is coordinated properly. Apple is among the most profitable and developed corporations, which, again, stresses the relevance of its functional leadership model.
In Apple’s case, sources of managerial power when leaders are effective seem to be expertise in a specific field and the capability to work in a team. The functional approach has been a great option for the firm for a long time, and no drastic shifts in this regard are needed. However, a few recommendations to advance leadership affairs can be proposed. First, Apple can appeal to adaptive leadership in situations when a particular department is under pressure – this can result in increased flexibility. Second, in addition to the mentioned three essential leader traits in Apple, the one of advanced risk management seems to be a good variant.
References
Ceil, C. (2018). Corporate social responsibility at Apple. SSRN.
Kao, R. (2017). Disruptive leadership: Apple and the technology of caring deeply – nine keys to organizational excellence and global impact. Productivity Press.
Weinstein, A. (2020). Creating superior customer value in the now economy. Journal of Creating Value, 6(1), 20–33.