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Apple is a technology company majorly dealing in the design, manufacture and marketing of smartphones, tablets and personal computers. The global smartphone market has become highly fragmented into high-end and low-end players. Apple being a high-end market player faces competition primarily from Samsung. In 2018, Apples share of the global smartphone industry had fallen to third, behind Huawei and leader Samsung. It is the first time Apple is not in the top 2 global smartphone firms in the world since 2011. Apple has also lost market share in China, falling from top spot to 4th as it battles low cost Chinese rivals. 

Using Porters five forces, the report examines how Porters five forces of competition have shaped the global smartphone industry, leading to the commoditization of smartphones at the low end of the market and the counter strategies Apple has devised in the battle against this increased commoditization and powerful low cost rivals.

HARVARD
Jonathan, K. Kush (2019) "Apple Porters Five Forces 2018" 123 Writing [Online] at https://www.123writing.com/sample/apple-porters-five-forces-2018

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Apple Business Strategy Case Study


Key Learning Outcomes

By the end of the case, students should be able to:
  • Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
  • Analyse the global smartphone industry and how the five forces have affected Apple and rival firms and the impact on industry structure, attractiveness, and profitability.
  • Understand how Apple has managed to defend against intense competition and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.

 

1.0 INTRODUCTION


In August 2018, Apple became the first company to reach a market capitalization of US$1trillion, beating old rivals such as Google and Microsoft. The Cupertino based tech giant is known for manufacturing a wide range of iconic consumer electronics such as the iPhone, iPad, and computer software like Mac OS, iOS and online services like Apple Music. Founded in 1976 by Steve Jobs, Steve Wozniak and Ron Wayne (Dormehl 2018), Apple now operates 492 stores across 19 countries worldwide (Dunn 2017). 
In 2017, Apple made annual revenue totaling $229.23billion up from $215.64billion in 2016 (Richter 2018) with a profit of $48.35billion up from $45.69billion in 2016 (Annual Report and Form 10K 2017). Apple’s three major markets include USA, UK and China with a market share of 45%, 37% and 17.4% market share respectively ahead of major competitor, Samsung with market share of 29.5% in USA, 35% in UK and 2.2% in China.

In the following section, we examine how Porters five forces of competition have shaped the global smartphone industry, leading to the commoditization of smartphones at the low end of the market and the counter strategies Apple has devised in the battle against this increased commoditization and powerful low cost rivals.

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