Apple
Apple
Volume 13 • Issue 1
ABSTRACT
Apple Inc. (Apple), is one of the world’s most valuable companies in terms of market capitalization.
Apple led the global technology market by creating innovative products such as the Mac, iPod, iPhone,
and iPad, all of which redefined their respective markets. This case examines Apple’s approach to
innovation, and the founder’s role to foster a culture of innovation and inspire employees to create
game-changing products by thinking outside the box. Apple has always surprised the world with its
innovation, beginning with the 1976 invention of the Apple I computer circuit board and progressing
to become one of the world’s most successful personal computer and electronic devices manufacturer
and, more recently, smart devices. Adopting a systematic review method the focus here is to discuss
the innovation management benefits of Apple’s distinct and ever-changing organizational model and
provide a SWOT analysis. Recommendations are then given based on the SWOT analysis so that
other companies can adapt to this competing rapidly changing environment.
Keywords:
Approach, Computers, Creativity, Culture, Leader, Learning, Phones, Role, Technology
INTRODUCTION
In defining innovation, there is a need to distinguish the subtle difference between an “invention”
and “innovation.” According to Merriam-Webster On-Line Dictionary, invention is “a device,
contrivance, or process originated after study and experiment”.1 However, the same source defines
innovation as “the introduction (emphasis is ours) of something new, a new idea, method, or device.”
Schumpeter (1996, p. 81-86) describes innovation as a process of creative destruction which is
continuously revolutionizing macro level markets and structures. The widespread sub-categorization
of the innovation process into the consecutive phases of invention, innovation, as well as diffusion
and imitation can also be attributed to Schumpeter (1939, p. 84-102; Milling and Maier, 1996, p. 17).
The invention phase is characterized by the discovery of a previously unknown solution to a problem.
In form of an innovation, the invention is economically used for the first time during the innovation
phase. In the subsequent diffusion and imitation phase, the innovation spreads through the market,
thereby increasingly realizing the potential technological progress (Milling and Maier, 1996, p. 17-18).
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Apple’s distinct and ever-changing organizational model and did a SWOT analysis of Apple Inc. and
recommendation based on the SWOT analysis in the hope that it will be useful for other companies
competing in rapidly changing environments.
SITUATION ANALYSIS
Apple was founded by Steve Jobs, Stephen Gary Wozniak (Wozniak), and Ronald Gerald Wayne
(Wayne) on April 1, 1976. Working out of Jobs’ garage, they created a personal computer that was
sold as Apple I. Early January 1977, Apple Computer, Inc. was incorporated. Following that, the
company expanded by introducing numerous innovative and commercially successful products,
including the Apple II (1977) and Apple III (1980). Apple has always been committed to creating
great products using cutting-edge technology (Ashraaf, 2010). Jobs and Wozniak insisted on a strong
R&D focus, which helped Apple differentiate itself from its competitors. Among end- users, Apple
products enjoyed wide recognition both for their attractive designs and their powerful applications
in high-end computing in the education, multimedia, and entertainment industries. Jobs deserves
a large portion of the credit for this, as he had always viewed himself as a product architect rather
than a businessman. In the early 1980s, Apple released several innovative products and innovative
features. Apple’s early product development strategy was to replace existing products with new ones
at regular intervals. For example, Apple I was replaced by Apple II, and Apple II was replaced by
Apple III (Ashraaf, 2010).
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Innovation Challenges
Apple faces a few challenges that limit its ability to innovate. Apple always launches any new idea
early and announces a future product launch date; it begins its marketing activity early. So, to meet
the deadline, Apple must be efficient, which precludes any further innovative changes to the product
as its focus shifts to production. Furthermore, under time constraints, products are made expensive
rather than cost-effective. Administrative pressure increases as the products must meet the launch
date, and they stop thinking differently. Under the constant pressure to meet deadlines and stick to
budgets, innovation takes a back seat until the goal is met. Apple sometimes tries to avoid risks, but
low risk leads to low rewards, so Apple must take some calculated risks if it wants high rewards.
Apple’s culture and organizational structure can sometimes limit innovative thinking even when
the technology is available, so the culture must be shared by all and communication must be open. The
general public sometimes doubts the effectiveness of some Apple products and has high expectations.
This expectation can be a significant burden for Apple, so constant efforts must be made to maintain
innovation. Apple sometimes tries to protect its reputed identity to increase its credibility and sustain
itself, so it creates limits, assigns responsibilities, and establishes rules, but innovation transcends
the organization’s boundaries. Instead of limiting its network, it should broaden it and effectively
manage all stakeholders. Apple sometimes calculates the value of innovation in quantifiable terms
such as market share and profits while overlooking factors such as reputation, leadership, talent, and
so on. These things, when neglected sparingly, increase the firm’s value, so it should change the way
it values innovation.
Apple leads customers rather than following them, which can be detrimental to the company in
the long run. Customers should therefore be prioritized. Apple may have a diverse workforce, but as
their thinking becomes more similar, the company’s innovativeness may suffer. Apple tries to make
all of its products look the same, which suppresses design innovation. Apple’s market research is
limited, which can be detrimental to their organization because the customer is the ruler, not Apple, and
importance should be placed on their needs. Apple has also encountered some barriers to innovation
when it outsources some parts to other companies and they fall short, or when some suppliers fail
to deliver on time. Apple relies heavily on logic, but logic does not generate innovation, and some
assumptions are made that may be incorrect.
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SWOT ANALYSIS
According to Smithson (2022), Apple Inc. uses its business strengths to manage its weaknesses and
external threats and to successfully capitalize on opportunities in the industry environment. A SWOT
analysis of the technology company gives strategic insights on maximizing business growth based
on its strengths and opportunities (Smithson, 2022). In this case, Apple Inc.’s SWOT analysis scans
the company for relevant strengths, weaknesses, opportunities, and threats (SWOT variables), taking
into account various industries and markets. The company is involved in the industries of computing
technology (hardware and software), consumer electronics, cloud computing services, and online
digital content distribution services. This condition necessitates the development of a diverse set of
strategies by Apple to ensure its competitiveness and business growth.
SWOT analysis presents the strategic factors that influence managers’ decisions in developing
the business. With operations in various markets around the world, the company deals with various
sets of SWOT factors based on regional circumstances. Furthermore, Apple Inc.’s Porter’s Five
Forces analysis shows that the company faces a strong competitive force due to the aggressiveness
of other technology firms such as Google, IBM, Amazon.com, Samsung, Microsoft, Sony, Lenovo,
Dell, and PayPal. To achieve continuous business growth and development, as well as to fulfill
Apple’s corporate mission and vision statements, this competitive landscape necessitates innovative
strategies and tactics (Helms et al, 2010). The SWOT analysis framework identifies the strengths that
allow Apple to overcome weaknesses, capitalize on opportunities, and resist threats in its technology
business environment. Figure 1 below presents the SWOT analysis.
Strengths
These strengths are internal factors specific to the business organization’s conditions and technological
capabilities. In this case, Apple Inc.’s most notable strengths are as follows:
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Apple is one of the world’s most valuable and powerful brands. Because of its strong brand image,
the company is capable of introducing profitable new products, such as new lines of mobile devices, in
the context of this SWOT analysis. Furthermore, Apple’s marketing mix includes a premium pricing
strategy with high-profit margins. This internal strategic factor is a significant strength because it
maximizes profits even when sales volumes are limited, as with MacBook laptops. Furthermore, Apple
Inc.’s generic competitive strategy and intensive growth strategies include effective rapid innovation,
allowing the company to stay current with the latest technologies and maintain a competitive advantage
(Benzaghta et al, 2021). According to this aspect of Apple Inc.’s SWOT analysis, the company’s
strengths are difficult to compete with, thereby supporting the company’s continued leadership in
the global industry environment.
Weaknesses
The emphasis in this aspect of the SWOT analysis is on Apple’s weaknesses or inadequacies, as
well as its technological product development and marketing capabilities. Weaknesses are internal
factors that inhibit business growth, taking into account the relative performance of other technology
businesses. In the case of Apple, the following business weaknesses stand out:
Because of its exclusivity policy, Apple Inc. has a limited distribution network. The company, for
example, carefully selects authorized sellers of its products, such as iPhones and Macs. According to
the SWOT analysis framework, this exclusivity strategy limits market reach, making the company’s
consumer electronics unavailable in many areas. This weakness exists despite the benefits of
exclusivity, such as Apple’s strong control over product distribution. Furthermore, as a result of its
premium pricing strategy, the technology company’s sales are reliant on high-end market segments.
High prices attract customers from the middle and upper income group, but they may prevent customers
from the lower income group from easily purchasing Apple’s consumer electronics. Because high-
end segments account for a small portion of the global market, this internal strategic factor is a
weakness (Benzaghta et al, 2021). Apple Inc.’s pricing and distribution strategies impose limitations
or weaknesses in the business based on the internal factors in this aspect of the SWOT analysis.
Opportunities
This aspect of Apple Inc.’s SWOT analysis identifies the most significant opportunities available
to the company. External factors based on the industry environment, such as the on-demand digital
content market, are examples of opportunities. These elements have an impact on the strategic
direction of business organizations (Benzaghta et al, 2021). The following are the most significant
opportunities in Apple’s case:
1. Expansion of the distribution network for wider consumer electronics market reach
2. More widespread and aggressive marketing for higher sales volumes based on high demand
3. Development of new product lines in consumer electronics and online services
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Apple Inc. may be able to expand its distribution network. This opportunity stems from the
company’s limited distribution of products such as smartphones and tablets. This SWOT analysis
emphasizes the importance of changing the distribution strategy of the technology company. Apple
can reach more customers in the global market by expanding its distribution network.
Furthermore, the company has the opportunity to explore new product lines, such as online
services, to supplement existing ones. With more innovation, the company can develop and introduce
new products, as it has done with the Apple Watch. Creating new product lines helps businesses grow,
especially when competing against other technology firms in the international market (Benzaghta et
al, 2021). Thus, despite the aggressive competition, this aspect of Apple’s SWOT analysis indicates
that the company has significant opportunities for further growth.
Threats
The focus of this aspect of the SWOT analysis is on the threats that Apple faces from various sources,
such as competitors like Samsung. External factors that limit or reduce the financial performance of
a technology-focused business are referred to as threats (Benzaghta et al, 2021). The following are
the most major threats to Apple Inc.:
1. An aggressive competition involving large multinationals like Samsung, Amazon, and Microsoft
2. Imitation involves firms that compete based on low prices
3. Rising labor costs in various countries where the company maintains production facilities
Much can be learned from Apple’s emphasis on innovation and performance within the company, as
proven by the fact that Apple owns one of the most valuable empires of all time. Because innovation
is the primary driver of Apple’s organizational structure, it is obvious that innovation is the primary
attribute that all businesses require to be as successful. Nonetheless, “while experts remain optimistic
about Apple’s future,” they predict that politically unrealistic growth expectations could undermine the
strength of the Apple Empire (Bosker, 2012). It is debatable whether this means that Apple’s future
remains uncertain, but given the innovative nature of Apple’s business structure, it is unlikely that
Apple’s success will fade as new products are introduced into the market. Thus, even though Steve
Jobs is no longer with Apple, his innovative legacy will live on thanks to the innovative organizational
culture that has been established. If innovation management and promotion had not been a part of
Apple’s business structure, the company would have been doomed from the start, demonstrating
the importance of innovation. As a result, innovation and creativity have long been regarded as the
backbone of organizational success. Furthermore, in the twenty-first century, innovation practices
and initiatives have become more important than ever due to a fast and unpredictable changing
global business environment. Innovation has never been more important, and because of societal
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advancements, the principles of innovation management must be embraced by all. This is because
organizations that do not manage and promote innovation effectively will not survive.
In a classic paper, March (1991) distinguished between “exploration” and “exploitation” in the
work of organizations. He argued that in order to grow and develop, organizations must explore new
products or services or modes of delivery —in other words, innovate. In order to be achieving their
goals, however, organizations must perform core functions well every day, and must ensure that what
they learn—their exploration—becomes a central part of what they do—is exploited. While March
does not specify a balance between these two functions, one could infer that he believes a fairly
small amount of exploration must be levered into a much large amount of exploitation. That is the
essence of scaling innovation. Typically when people think about scaling innovation, they may think
of models such as franchises or other ways of spreading successful products or approaches across an
entire industry. It turns out, though, that scaling innovation is a problem in all fields, whether in the
public or the private sector, and is complex in any field (Bradach, 2010).
Accordingly, scaling of innovations presents a dual challenge. On the one hand it is important to
maintain the key components of an innovation, as these can easily be watered down or abandoned.
On the other hand, it is also important to apply the innovation in a way that is appropriate to each
different setting and group of people so that it achieves its purpose. A further question has to do
with what amount of adoption constitutes “scaling” an innovation. While some innovations could
potentially operate in every institution or district and designed to be universal, but some are targeted
at a particular need or niche. The assumption here is that the goal would be to have each of these (or
similar) innovations operate in at least a significant number of schools that stand the fitness tests.
The discussion therefore is based on these innovations being in place to meet approximately 25% of
the potential demand. That is an arbitrary figure but constitutes much wider use than any of them is
currently achieving, yet without expecting anything like universal adoption. Wider adoption would
increase costs and other challenges, though it could also, in some cases, produce economies of scale.
RECOMMENDATIONS
In short, progress depends on how human skills and technology interact to improve processes and
raise performance. Moreover the convergence of information, communications and technology
is making a huge impact and having a multiplier effect in knowledge creation, dissemination and
applicability (Baporikar, 2014). Innovation enhances this total factor productivity. The internal and
external factors discussed in this SWOT analysis show that Apple Inc. has significant strengths that
can be used to effectively address organizational weaknesses. These advantages can also be used
to capitalize on opportunities, such as expanding its consumer electronics distribution network.
Furthermore, the company can successfully develop and launch new technology product lines by
leveraging its strong brand image and rapid innovation processes. However, Apple faces challenges
from aggressive competition and imitation, which affect players in the global markets for consumer
electronics, computer hardware and software, and online digital content distribution services. Based
on the strategic issues highlighted in this Apple Inc. SWOT analysis, a recommendation is to continue
the company’s aggressive and rapid innovation in developing products. Technological innovation
mitigates the negative effects of imitation. It is also suggested that Apple improve the automation of
its production processes and support the automation of its contract manufacturers to address rising
labor costs. Another suggestion is to build partnerships with more distributors to expand the overall
market reach of the company’s consumer electronics products.
CONCLUSION
Overall, the findings above show that innovation and performance are essential components of a
company’s structure. This is because businesses that do not create an innovative organizational
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culture will not be successful. Effective management of innovation is the lifeblood of any organization
in today’s society. Because technological advances are constantly being made, new products must
be introduced into the market regularly to satisfy consumers. As a result, organizations that fail to
introduce new things will eventually fail because they will be deemed irrelevant in the twenty-first
century. Innovation was the main attribute of Apple and because of this, the Apple Empire will
continue to live on. How innovation can be effectively managed is open to debate but given that the
general principles are followed, an innovation culture will be created.
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Endnotes
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Merriam-Webster On-Line Dictionary - https://www.merriam-webster.com/dictionary
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Neeta Baporikar is currently a Professor/Director (Business Management) at Harold Pupkewitz Graduate School
of Business (HP-GSB), Namibia University of Science and Technology, Namibia. Prior to this, she was Head-
Scientific Research, with the Ministry of Higher Education CAS-Salalah, Sultanate of Oman, Professor (Strategic
Management and Entrepreneurship) at IIIT Pune and BITS India. With a decade-plus of experience in the industry,
consultancy, and training, she made a lateral switch to research and academics in 1995. Prof Baporikar holds D.Sc.
(Management Studies) USA, Ph.D. (Management), SP Pune University, INDIA with MBA (Distinction) and Law
(Hons.) degrees. Apart from this, she is an external reviewer, Oman Academic Accreditation Authority, Accredited
Management Teacher, Qualified Trainer, FDP from EDII, Doctoral Guide, and Board Member of Academic and
Advisory Committee in accredited B-Schools. She has to her credit many conferred doctorates, is a member of the
international and national editorial advisory board, reviewer for Emerald, IGI, Inderscience, Wiley, etc., with more
than 300 scientific publications and 30 plus authored books in the area of entrepreneurship, strategy, management,
and higher education.
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