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Apple Inc iPods And iTunes Case Solution
This case study pertains to the evaluation of the music industry and its trends that brought it forth these lines. The evolutionary process is described in a terse manner after which the industrial analysis describes the environmental factors assessed through the PESTEL analysis and the Porter’s Five Forces Model. These two models attempt to define how piracy was the prime source of all problems. The rising youth population wants access to cheap or free music; hence, they tend to favour piracy, as opposed to purchasing for a cost. Another determinant was the income factor that did not allow this primary target market to be able to afford such a product if it was portrayed as a luxury as it was with the advent of iTunes Music Store.
Following questions are answered in this case study solution
Case Analysis for Apple Inc iPods And iTunes
Following this analysis the study looks at the Triple Bottom Line methodology to analyse the importance of people, profitability and planet as part and parcel of the music evolutionary process. The analysis depicts that within the organization, much importance is given to employees with respect to their compensation, incentive and motivation. The industrial evolution has created a potentially comprehensive process of eliminating increasing assortment of waste material, which was perpetuating critical speculation regarding environmental degradation. Especially this can be attributed to CD’s, cassettes, so on and so forth, which created physical waste. Eventually, as the Mp3 and digital music took its increasing demand to a level whereby it was clear that music was now not posing any threat to the environment.
The SWOT analysis additionally emphasizes the peculiarities of the music industry with respect to competitive forces analysis that depicts the strategies incorporated by Napster, Zune, and the like. It was analysed that the strengths of Apple Inc. demonstrated a strong financial background, and a popular brand image. The prospect of podcasts has raised the bar of utilization of new applications, which target a class of consumers interested in saving their favourite stations or records. Additionally, the advent of iPad has been shown to increase demand. On the other hand, Apple Inc. certainly faces a few drawbacks which include the drop in sales of iPod on a rather current note which is depicted by a monotonous reflection between various models of iPod and iPhone. The new iPhone has amalgamated the benefits of the popular iPod and the iPhone. These amalgams lead to cannibalization of iPod sales during recent years.
Lastly, the case study makes a recommendation as to incorporate a self-reliant segment of record labels to enhance their business profitability. Additionally, Apple Inc. can tap into the gaming industry which is as yet still passing its growth strategy. Furthermore, Apple Inc. can expand into new territories such as Indonesia, India, South Africa, and Russia. This expansion may lead to increase in profitability and benefit the stakeholders in terms of increasing awareness and rising demand satisfaction.
The case study is basically an analysis of Apple Inc. understanding of the situation in the music industry and its attempt to create a solution. Before the advent of Apple Inc. with its revolutionary IPod, there was a whole series of evolutionary attempts to the concept of Creative Destruction. It amalgamates the two segments of innovation within economics and the industrial business cycle. The purpose of bringing it up here is to give an idea that destruction of businesses and labour so on and so forth are to be seen as a positive situation because it calls for new ideology to be created and move towards a state of perfection (Besanko, 2004).
The next in line of this evolutionary timeline was the creation of Napster, which was a P2P software allowing free sharing of songs through one system of Napster managing traffic, the illegal sharing of records aggravated the Recording Industry Association of America (RIAA), who thereafter continued to legally proximate Napster’s activities. Napster was eventually shutdown. However, this did not stop the piracy procedures and amplified their efforts and lead to the creation of LimeWire, Gnutella, BearShare, Morpheus, Grokster, and Kazaa which were made by the same underpinning code which was made available to all by hackers. The difference between Napster and these other programmes was the elimination of a centralization to manage traffic: therefore, could not be easily tracked down and thus could not be shut down (Elmer-DeWitt, 2012).
In 2001, with the advent of Apple Inc. in the music scene with its IPOD, the industry felt a slight shiver of change due to the excessive capacity of this little product which was so elegant but then in 2003 with the launch of iTunes, Apple gave 200,000 songs for download, each costing $0.99. In 2006, more than 1 billion songs had been downloaded, and iTunes Music store was amongst the top five retail sellers of music in the industry. In the next 18 months, Jobs held meetings with the RIAA executives trying to strike a deal with all four major labels indicating to them how easy it was to tap this huge market whereby individuals could buy their favourite records through the much proclaimed credit cards (Maithya, 2012).
This topic essentially reviews the implications of subsequent situation in the context of the music industry’s evolution. The economic situation has worsened due to the recessionary time frame which has led to a decrease in the purchasing power of individuals. Moreover, it has transitioned the priority spending aspect which aims at utilizing income on a priority basis and thus music spending has been deteriorating. Much emphasis is placed on piracy in times of economic hardships because more and more people tend to find ways to access their materialistic needs at a lower cost.
Public torrents have gained much importance due to its provision of easy access to a humongous amount of data. This data is not only limited to the music industry but also movies, books, games, and applications. The aspect ratio has been on the rise as a result of Creative Destruction concept described earlier.
For the purpose of analysis, the paper considers same economic status and the presence of piracy being a prime concern of numerous industries.
Private torrent is another innovation that has allowed for the bulging segmentation of the piracy segment creating an industry in itself. Further innovations include the optimization of mobile phones in an attempt to synchronize the usage of two very popular technologies, mobiles and music players. Apple Inc. has been successful in an attempt to perfect this effort with its much annual anticipation of iPhones. IPhone has reinforced a new image of convenience to customers and thus eliminating much competition. Samsung has followed suit which would be discussed in greater detail during the progression of the analysis.
4. Situational Analysis
The progression in this segment would be through a funnel approach whereby the environmental factors would be analysed through the utilization of PESTEL analysis, which would then pave the way for the industrial analysis and lastly the analysis of Apple Inc.
i. PESTEL Analysis
PESTEL analysis essentially depicts the framework of macro-environmental factors utilized in the environmental scanning component of strategic management.
Political: In case of Apple Inc. the government involved itself to eliminate piracy through its legal arms i.e. US Department of Justice and the US judicial court system who explicitly stated that file sharing companies can be liable for copyrights infringement if their products encouraged consumers to illegally swap songs and movies. Additionally, Apple manufacturing partner Foxconn admitted to the breach of child labour laws after it buoyed that minors as young as 14 years old were hired as interns while the legal working age in China is 16(Comai and Tena, 2007). Furthermore, Apple also underwent agency agreement investigation to clear out if Apple was fixing prices to the point that competition has been stifled for other booksellers and record labels (Besanko, 2004).
Economic: The global economy underwent a recessionary period which affected all businesses due to the heavy pressure exerted on purchasing power of individuals (Apple, n.d.). Growing risk aversion impacted prudent investors to spend less. Additionally, the currency of EU and the US went through rigorous speculation whereby Gold appeared as the new attraction with its prices spiking each day to a new level.
Social: As previously stated, the age distribution in the US was twenty per cent of youth with respect to ages of 10-24 during 2006. However, career attitude and emphasis on safety are additional components of Social agenda. The increase in the music industry awareness perpetuated the process of piracy. This flip side to the demographical blessing makes it rather tedious for record making labels to make profits and thus as the case study represents creates groups with singular motives of eliminating such discrepancies that poses a threat to their legal business practices(Apple, n.d.).
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