Apple SWOT Analysis

Apple is a consumer electronics company which operates in hundreds of countries around the world. The company was founded by Steve Jobs and Steve Wozniak in 1976 where they produced a computer in a garage. The company has grown greatly since then but only gained worldwide popularity after the release of the iPhone. The share price of the company has been fairly stagnant up until that point, until it rose to make the company the most valuable company by market valuation.

Strengths

Innovation is the key to the company’s success. It has created unique products which have been ahead of the curve such as the iPhone which brought touchscreen technology to the mainstream. Other touchscreen phones were available at the time, but the products did not look appealing and did not have a good operating system. Other products like the iPad were created by Apple which also brought the market forward, in terms of design and in competition. This corporate culture towards research and development into new product ideas and thinking outside the box has created great goodwill within the company.

New way to access your phone and potentially pay for things.

One of things that Apple has been able to do with the successes of their product ranges is to collect a lot of money in cash. The company has over $100bn in liquid cash available on the balance sheet. The money has been criticised by its corporate investors for not investing it in companies or to return the money via dividends. Apple has started to take this information on board only after the death of Steve Jobs and has purchased companies, issued dividends and underwent share buy backs. This had inflated the share price more and also allowed Apple to use acquired companies technologies in their product range such as the Touch ID on the latest iPhone 5S.

Branding and brand loyalty is one of the best things that the company has going for it. Existing customers have been able to switch from on product to another product very easily due to the operating system. This has created a type of loyalty with consumers which is an excellent for Apple to keep and grow over time while it’s competition, particularly Android based smartphones, have found it hard to take some of this market back. The brand and the logo itself of the company is known globally by most people in the world and would be able to name at least one product made by Apple.

Weaknesses

The way in which the company prices it’s products can be seen as exploitative. The costs of manufacturing for the products are several hundred dollars less than the recommended retail price. This is the method in which the company has amassed its large cash reserve. The fact that the company has also been criticised for having questionable work practices in its manufacturing factories in China is also a problem which needs to be constantly monitored. These problems combined make it harder for the company to truly have a positive influence on the social aspects of the business.

How much premium per phone is too much?

The yearly product offerings of the iPad, iPhone and some MacBook products is a cause for concern for consumers and Apple also. When new products are expected to be released, Apple experiences a major decline in sales for that particular product which is expected. In most instances, consumers will be polarised in their opinions of new releases. Some customers can justify making a yearly purchase of a gadget which is useable just to get faster processors, while other consumers may not agree and find a product better for them elsewhere. Recently, the iPhone segment of the company has innovated in some aspects such as speed but lacks features which is found on various other mobile products made by competitors. Features such as near field communication (NFC) and better resolution cameras have been present in products other than Apple smartphones. Apple need to ensure that they can innovate enough on a yearly basis to justify a new contract renewal or upgrade from older handsets.

Opportunities

One of the main things Apple has been criticised about with the iPhone 5C is that the price point is too high. The greatest opportunity for Apple as a worldwide company to do is to create a lower priced budget smartphone to cater for the biggest developing markets in the world, China and India. Analysts expected Apple to price the iPhone 5C as a budget phone for the developing market, but was priced too high for that to be real. Under the new leadership of Tim Cook, Apple can create a budget smartphone for the developing markets to create brand loyalty from a younger age or to follow the wishes of Steve Jobs which is to be a premium priced consumer electronics company.

Growth is clear in the emerging markets. Why not cater to them?

There are various things the company can look into when choosing its future options. Reinventing existing products is the most common way in which all companies retain and possibly generate streams of revenue. Apple purchasing PrimeSense, which co-created the Kinect sensor for the Xbox 360, can yield future benefits. The way in which Apple could use this acquisition is to use the sensing technology in products like the rumoured Apple Television set or the Apple TV set top box. This would make the products have a unique selling point separate to conventional television sets or set top boxes.

Threats

Threats are usually considered to focus on the external factors, in the case of Apple, it’s the competition. The largest smartphone manufacturer Samsung is making it harder and harder for Apple to keep its customers. This is mainly done by the different features samsung offer on their smartphones. Even Nokia can boast the fact that they are creating smartphones for the developing market with their Asha range of phones which are available out of contract for a cheap price relative to the cheapest Apple product. Sony can use their imaging division to create smartphones with great cameras to entice photographer enthusiasts that want something compact which still produce compact camera quality images.

New features from old players.

The rapid movement in technology is a threat to Apple as well as a strength. If the industry moves faster than the company, Apple will lag behind. This is not the case but there can be potential for a rapid change in the way which products are used and interacted with in the long term. This would need to be considered when looking at the disposable incomes of its target market and how that will change as the global economy improves.

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Nike SWOT Analysis

This is a post based on the sports apparel company Nike and will look at the business model focusing around the SWOT analysis.

Strengths

Nike has a strong global brand which everyone will know by its logo. The logo itself needs to be presented without the name and everyone will know what it is, that is how powerful the brand is. Some companies require their names to be present but in this case that is not true. This is garnered a long term customer loyalty base where the products are synonymous with high quality clothing and fitness trainers. The power of the brand is also evident in the fact that Nike has well known athletes and other celebrities which will put further backing to the brand if it is deemed to be “cool” to wear. Athletes like LeBron James, Roger Federer and others such as Andrew Luck where each of these people represent a different sport from basketball to tennis to American football respectively. They promote the company by wearing Nike branded clothes from head to toe to more recently wrist in the form of the Nike FuelBand.

Nike FuelBand

The company is a clothing brand and there is little to innovate in. However, Nike has managed to find ways to innovate their products and to provide a range for various different price points to cater for different demographics. This shows that the company is versatile in its product offering, whilst also remaining relevant as the industry leader. The new Flyknit running shoes, the FuelBand wristband and the Dri-Fit clothing technology are all innovative and are applicable to different products. The Flyknit trainers are very unique where they allow the runner to have a bare foot feel experience, while the FuelBand moves into the new market of wearable technology with a focus on keeping active. The FuelBand allows the user to connect it to their smartphones and to compete against their friends to give a competitive side to always moving and being active.

Weaknesses

Due to the strong brand, the company can be seen as exploitative and greedy. The company can stick their logo on a plain white t-shirt and sell it for over triple the manufacturing cost, not to mention the fact that the company has had problems in the past with its manufacturing processes. The high mark up on the basic products allows the company to generate large levels of profits which can be a seen as unethical, but they do operate as a for profit company. The supply chain is the most important aspect of Nike’s business model, as they need to ensure that they have a solid supply chain from sourcing raw materials to manufacturing and to delivery logistics. Each of these areas creates a cost for the company, much like any other, and they could try to squeeze their factory workers with lower wages and/or bad working conditions.

Workers rights violated?

The profit margin of the company is impacted by other factors which aren’t the supply chain. The other main restrain on the margin is the retailer cuts where the retailer will push for a lower wholesale price in order to keep lower prices for their customers. The only way Nike can bypass this is by having their own physical stores, however this would result in an increase in fixed overheads such as wages, rent and utilities which can make it counterproductive. The only way in which this would work is if the store is locating in a central location with a high number of footfall, the best example for the UK is London Oxford Circus, which gets domestic and international tourists entering the branch.

Opportunities

Technology is moving very quickly, and the industry is coming up with new different form factors of usable technology. Mobile phones became smartphones, CDs became MP3 players and VHS became Blu-Ray discs. Nike has dabbed it’s hand in technology when it created Nike+ with a collaboration with Apple where is was sold as a smartphone feature to track running distances and calories burned. Nike had then moved onto making its own wearable fitness technology with a fitness watch, the FuelBand and with a game with the Kinect camera for Xbox 360. Nike could look at investing into more of these types of wearable technology so that they technology is already placed in smartphones. This would be an excellent way to create licensing revenue as well as having a wider reach of consumers.

There are various different types of shoes that Nike offer and the products are seemed to be blurring into other product ranges. Within the Nike Free range, there is Freerun 3.0, Freerun 5.0, Freerun+ 2ID, FlyKnit, FlyKnit Lunar1 +ID and it can be confusing when picking a running shoe. There are only slight differences in the product but the differences can be hard to understand when there is no expanded explanation. The only way in which a consumer can understand these differences is to spend time reading each one and comparing it, or physically going to a Nike store and getting a sales person to assist, and there is no guarantee that the sales person knows everything. Nike could try and streamline the naming of some of their products within certain ranges. This will allow the company to maximise the customers understanding of the products on offer and the features they represent.

nike

Threats

For large multinational corporations, the profit generated from different countries is a great way to continue operating when the domestic market is reaching saturation. The main risk with this is currency fluctuations and how a massive change in the foreign and domestic currency will make any profits overseas can turn it into a loss. Companies have had to create finance divisions specifically to manage their currency risk, most likely using a combination of forward contracts, futures contracts and call/put options. The recent decline in the Indian Rupee shows how the company can benefit from drops in foreign currencies where the goods that Nike will ship to other countries will be even cheaper. The main problem with any currencies changing would be domestic currency for Nike which will be the US Dollar. The US Federal Reserve choosing to continue its asset purchase scheme has allowed the US Dollar to strengthen stock markets to be more risk taking and choose the US market to invest in and the Federal Reserve seems to be continuing asset purchases for the foreseeable future.

All that money

The recent collapse of a Bangladesh clothing manufacturing factory caused major publicity problems for fashion retailers. The collapse brought to light the bad working conditions and the major problem of cutting corners in countries where building legislations are sometimes ignored, especially in the case of the Bangladeshi factory. Nike has had problems with their factories which they have actively and vocally created internal codes of conduct to address concerns of the public. When it comes to the problems of the collapse, the developed world would find it ways to boycott a company is there are seen to be unethical. Nike could find difficulties domestically if they encounter problems with sales if they have any problems with their factories.

Sony SWOT Analysis

Sony

Strengths

Sony has got a strong brand image which is known globally by most people in the world. The company produced the Walkman where people could play audio cassettes while on the move which was a strong product when it released. The company has been able to monopolise their brand loyalty by having repeat customers which would purchase different products such as a TV with a home audio system etc.

Sony is an innovative company such as the Walkman, the Blu-Ray discs, the original PlayStation and most recently with 4K resolution televisions. The company has a strong corporate culture of investing in research and development for a long term approach. As technology is always changing, it is important for a company to remain innovative so that their products can compete with others in the market. The fact that Sony operate in various markets also allow it to diversify its risk, for example the video game segment for Sony has been profitable for a long period of time and has been keeping the company from having larger losses.

Weaknesses

Sony has seen its TV division lose a lot momentum in the past 2 decades. The TV division used to be a key area for Sony where they made high quality, long lasting products, but their market was eroded by LG, Samsung and others. This was mainly due to the fact that the prices for the competition was lower than that of Sony and the products also had more features.

The decline in its sales has led to Sony reporting losses for the past 5 years. The senior management have made major structural changes in order to save money from various departments and this involved staff layoffs as well as closure of offices in different countries. Sony has made its first annual profit in May 2013 for over 5 years due to the changes they made. The CEO had changed to Kazuo Hirai, who was the head of the gaming division, and he is changing the strategy of the company to allow features to work on multiple devices.

Opportunities

Sony has been making strides in the mobile and tablet market with its Xperia range of devices where some products are waterproof and shockproof. These gadgets would help Sony to generate sales and profits in the long term if they are able to gain customers who will purchase next iterations of future phones and tablets.

The company can become the leader in the video game industry in the future as they have had a great response from gamers for the PS4 console. When compared to Sony’s competition which is mainly the Xbox One console, the PS4 is at a lower price point to the console unveiled by Microsoft and has the potential to have backwards compatibility with Gaikai technology. Sony has developed the console with indie developers in mind and this would be a great way for the PS4 to have exclusive content which will not be on the other consoles.

Sony’s photography division would be a great way for the company to generate revenues. The NEX range of cameras is a compact camera system which is cheaper than the high range of cameras but produces excellent images. Sony would promote their cameras more via different forms of marketing, such as using photo social media sites like Tumblr where images would be taken from the cameras made by Sony.

Threats

The Xbox One console is a threat for Sony. The main reason this is because Sony generates most of its profits from its gaming division, and if Microsoft were to become the market leader in gaming, this would impact Sony tremendously. The other company which could affect Sony would be Nintendo and their home console, the Wii U which has exclusive games such as Zelda and Mario.

Sony’s stock price has decreased greatly over the past decade and this is mainly due to the problems they have been facing. The way in which investors sell their investments can affect the way in which Sony generates external financing. If investors are cautious of the long term viability of Sony, they can be seen as a risky investment for lending institutions.

Samsung SWOT Analysis

This will be my first post in a long time.

Samsung

Strengths

Samsung has a great market for selling televisions which have innovative features such as internet based applications and recommendations on programmes based on user views. The company has been able to make tremendous strides over the years, and the products for the television division have a wide range of price points to accommodate different consumer groups.

Samsung is one of the largest and the most dominant smartphone manufacturer globally. The company has sold more phones globally compared to its closest competitor, Apple which is the second largest manufacturer. The Samsung Galaxy S series phones are the main reason for gaining a large market share over a 4 year time period. The latest handset had sold millions of units within one quarter of release which shows that the company can shift millions of units through innovation.

The camera division of Samsung is also making impressive changes to the overall market. The company has produced a camera which has the Android operating system by Google which is a first in the industry. The camera allows the user to manipulate images and be able to share their photos instantly to popular social networking sites via its built in 4G and Wi-Fi functionality.

Weaknesses

The laptop division and the tablet division of Samsung is somewhat lacking compared to the overall market and its competitors. The company is trying to release new products within this area but global sales of laptops have declined for a few years now and tablet sales have increased. The company has yet to monopolise on this change in technology as the tablets they have released are not that attractive to consumers.

The fact that the company is selling millions of units of mobile phones is a great achievement, however the biggest problem with this is that the company is not making a good margin on the those sales. The manufacturing of their products is highly fragmented as well, where Samsung has made dozens of different types of handsets to accommodate different price points. This maybe creating mixed messages to investors who may find that a streamlined product offering would better in the long term.

Opportunities

Samsung is said to announce a smart watch in the month of September 2013, but this is not confirmed. IF Samsung were to release a smart watch, then they would the first company to release a product like this to the market. Although there are other smaller start-up companies planning to release their own smart watches, Samsung would be the first large company to produce them on a global scale.

Another aspect Samsung could look into is having a health application and product, much like the Nike Fuelband or Nike+. Samsung could try and partner with Adidas to create a similar product which would allow both companies to enter a market which they do not operate in at the moment. Creating a product which would be bundled with a similar health wristband with a compatible smartphone would allow the companies to attract a different consumer base. Adidas could use celebrities such as Andy Murray to promote the product in advertisements as well as be endorsed by Samsung.

Threats

Apple releasing new flagship mobile devices is the biggest threat to Samsung at the moment, especially the release of a budget iPhone product. The fact that a budget iPhone would allow Apple to sell to developing markets such as India would cut Samsung’s market share. The popularity of the iPhone is evident as customers are loyal to the company they buy from and can make it hard to transfer to another handset.

Other areas which can be threats to Samsung are the fact that the manufacturing factories of the company can be hit by natural disasters. The supply chain would be disrupted which can cause major problems especially if a new product were to be released soon. The company would need to act fast in making sure that the supply can meet the demand of consumers, as well as ensure that the factories are maintained properly during and after the natural disaster.

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