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Apple and Porter's Five Factors

In: Business and Management

Submitted By orenkiwi
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Apple Inc.

Executive Summary Apple was not just innovative; the company was disruptive. The ability of the tech giant to go from an electronics company on the fringe of obscurity to creating an ecosystem of “must-have” products has been nothing short of amazing. The company did it by being disruptive. When Apple launched the iPod, Steve Jobs created a device that changed not only how the consumer listens to music, but also how he or she communicates, takes pictures, reads, or just passes time. Apple took smartphones to a new level, creating something sleek and innovative. Jobs created a cool new music player for “cool” people. The company established a high-cost narrow-focused market segment (Baltzan, 2011). The iPod and Apple would end up with a high perceived-value that meant, while the consumer always paid a premium price, he or she also always received an operationally superior product and great customer service. Applying Porter’s Five Factors Model, Apple demonstrates its superiority in the smartphone/tablet industry. While the company does not dominate the global market, it does dominate in profits. As a result of large profits, Apple has more financial leverage in negotiations with suppliers and manufacturers. Rivalries and substitutes are generally not an issue among existing Apple device users. Brand loyalty is extremely strong among Apple users. The examination of Apple through Porter’s lens reveals a company that is sustainable.

Do you agree or disagree that Apple’s iTunes, iPhone apps, and iPad apps give the company a competitive advantage? Be sure to justify your answer. I agree that Apple’s iTunes, iPhone apps, and iPad apps (App Store) do give Apple a competitive advantage. However, to understand why, I believe you have to understand the success of the Apple brand and its products. Steve Jobs first created a competitive…...

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