Apple's Challenges: Competition & Internal Issues - Essay Sample

Introduction

Apple faces various problems ranging from the industry in which it operates to its internal operations.

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In relation to the industry, the company faces stiff competition on a variety of fronts. These competitors include Blackberry, Hewlett-Packard, Lenovo, Dell and ASUS on computers; Xiaomi and Samsung on smartphones and Motorola and Samsung on smartwatches. These competitions go the extent of legal wars such as the one between Samsung and Apple on intellectual property rights.

The company also faces problems with collection and storage of customer's sensitive information thereby infringing on their privacy. Apple has some features on their cellphones that collect data regarding the phone's locations. Its Apple Pay feature also provides a risk. In the quest to venture into the mobile payment industry, it provides a potential platform for hackers to steal information from the mobile payment systems, which would be a great concern for both regulators and the company.

Apple incurs a cost in lawsuits regarding its intellectual property. Its quest to protect its technology from theft has led to many patent and copyright lawsuits between the company and other technology companies that include Microsoft, Franklin Computer Corporation, Samsung, Cisco Systems and HTC among others.

Its supply chain management also has various negative issues. With most of its products and components being manufactured in countries with low costs of labor, there is a high potential for misconduct due to the less direct oversight and varying labor standards. The company's suppliers are also associated with various problems that include non-compliance with the stipulated working-hours limits, failure to follow hazardous-substance management practices, failure to prevent worker injuries, falsified records, use of under-age workers and overcrowded worker dormitories among other labor violations.

The Future Direction of Apple

Apple is likely to face more challenges in the future. The company has not only been criticized for the violations in its supply chain but has also been questioned on the majority of its offshore production. With the high profits that the company makes and a tax break received earlier in its history, claims are being made by various political figures for the company to bring its production jobs back to the United States. The company is, therefore, likely to experience more pressure from its stakeholders to establish more manufacturing centers in the United States. However, this may have an impact on its profits, since it preferred offshore production due to the low production costs, resources and associated taxes from the respective governments.

Most Feasible Future Alternatives

There are various future alternatives for Apple to enable it to improve its performance as well as address its major problems. These alternatives include concentration, diversification, stability, and turnaround.

Concentration would require the company to focus on a single market or product. With the many existing competitors in the tech world, Apple will have to distinguish itself to remain more reliable in the industry since it is prone to the risks of people opting for lower technology solutions and preferring flip phones or substituting newer technologies for Apple products. It can do this by establishing a niche that would make it stand out, i.e., by focusing on creating IOS operating systems rather than venturing in new product creations that results in filling of the various lawsuits. However, such an alternative comes with various merits and downfalls. The advantages of this alternative are that the company will be able to focus on only one product and therefore gain specialization and competitive edge in its production and marketing processes (Parikh, 2018). It is also associated with horizontal and vertical growth processes through mergers and acquisitions. However, this may come with a lack of diversification which may be risky for the company, a lower customer base and saturation of demand for the product.

Diversification is another alternative feasible for Apple Company. It enables business entry into new markets or industry while also creating a new product for the market. Apple has been quite proficient in this method, with reference to its large portfolio of product offerings ranging from the iPods, iPads, iTunes, iPhones, and MacBooks among others. However, with the declining markets and increased competition, the company has to do more diversification to survive in the future. This may involve both concentric and horizontal diversification alternatives. The advantages of this strategy are that it establishes a balance due to the existing economic changes and reduces the risks associated with a single investment or product (as in the case of reduced sells in iPods). Diversification, therefore, helps to move away from activities that may result in a decline in business (Lioudis, 2019). However, some of the disadvantages of this alternative is that it limits the opportunities for growth in one entity (diversification to iPads led to a reduction in the sales of iPods), requires new sets of skills, results in the company taking too many directions at the same time thereby loosing on its ambitions and makes it cumbersome for a company to respond quickly to market adjustments.

Another alternative is for the company to establish a more efficient supply chain management system. This includes the use of multiple suppliers for the same component in the supply chain strategy and also incorporating the supply opportunities within the country (in this case the United States). The advantage of this alternative is that it helps to mitigate supply chain delays and disruptions thereby maintaining the gross margins, it increases the production capacity in a manner that responds to the market demand, it reduces the costs of supply and prevents the competitors from using the same production capacity through exclusive relationships with suppliers (Ashe-Edmunds, 2019). The use of internal supply platforms would also help to mitigate the losses associated with the various state regulations. The disadvantages of this method are that it provides a high chance of misconduct due to the labor standards in the different states and the less direct oversight due to outside sourcing. The low-profit margins made by the suppliers may cause them to establish ways to cut on costs, which may negatively interfere with product quality. It also demotivates the employees due to longer working hours, use of less expensive but more dangerous chemicals and establishes a working environment that is prone to mistakes and safety issues.

Recommendations

I would recommend the following alternatives as to the most feasible ones to meet Apple's objectives.

Diversification is an ideal alternative for Apple. It is an alternative that works for companies that come up with new products for new markets. This is the case for Apple as it's a company that constantly comes up with new products and services for the market as evident from the introduction of the iPods, to the iPads, MacBooks and later iPhones. The company is not expected to remain there but to continue coming up with newer products and services which would then be for a new market. The alternative enables a company to grow rapidly and outdo its competition in the industry. This can be done using either related or unrelated diversification strategies to achieve its goals. Diversification enhances innovation and new product and service offerings that are inconsistency with the technologies at the time. This alternative, therefore, goes in line with the company's objectives of creating groundbreaking products and innovating, dictating the movement of future technology, building hype and anticipation for new and upcoming products and sustaining and expanding a strong brand name through quality product delivery.

Establishment of a more efficient supply chain management system is another alternative that I would recommend for Apple. Among the major problems facing the company at the moment is its supply chain management that contributes to unsatisfied suppliers and poor working conditions for its employees in the various outsourced countries. An efficient supply chain management system would improve the company's manufacturing processes while establishing an efficient working environment for both suppliers and employees in the various outsourced countries. The company must, therefore, continue to address its supply chain management issues to improve its monitoring and compliance processes and coherence with its objectives. A streamlined supply chain process would enhance the achievement of the company's objectives of making products available in every possible retail channel and increasing the company's profit margins through low production costs.

Virtual Action Plan/Road Map

Road Map for Diversification

Apple's roadmap for diversification involves the establishment of a new augmented reality platform, virtual reality development tools, HomePod speakers and improvements to the iOS 11 on the iPad. While they may not feel revolutionary, they would provide the building blocks for technologies that would power the future of Apple.

References

Ashe-Edmunds, S. (2019). Strengths & Weaknesses of the Supply Chain. Smallbusiness.chron.com. Retrieved from https://smallbusiness.chron.com/strengths-weaknesses-supply-chain-75987.html

Lioudis, N. (2019). The Importance Of Diversification. Investopedia. Retrieved from https://www.investopedia.com/investing/importance-diversification/

Parikh, V. (2018). Concentration Strategy Advantages and Disadvantages. Letslearnfinance.com. Retrieved from https://www.letslearnfinance.com/concentration-strategy-advantages-and-disadvantages.html