The monitoring, evaluating, and disseminating of information from the external and internal environments is known as environmental scanning. This information goes to key people within the corporation to identify strategic factors and help determine the future of the corporation (Wheelen & Hunger). SWOT analysis is the simplest way to conduct environmental scanning. The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. These factors are important because before an organization can begin strategy formulation, it must scan the internal environment for strengths and weaknesses and their external environment to identify possible opportunities and threats (Wheelen & Hunger). In this paper I will describe the internal and external environments of Apple and Best Buy using an environmental scan. I will also determine what their competitive advantages and strategies are.
Apple’s Internal and External Environments
Apple is a very successful company and has many strengths. It is a geographically diverse business with a strong research and development team. Apple has an innovative culture and strong workforce. Apple has bargaining power with retailers and outstanding customer loyalty. Apple has a strong brand and reputation. Apple also makes a lot of money and don’t have any debt. Weaknesses
Even though Apple is a very successful company they still have some weakness. Apple products are expensive and some products lack customization. Because Apple products are so great, which makes them premium products they can be expensive for many consumers. Some Apple products are considers a distraction electronic device. Accidents such as auto-mobile crashes have been caused by people using electronic devices. Opportunities
Apple has some great opportunities such as off-the-shelf military procurement. To reduce cost and increase speed to development the Military is buying off the shelf Apple software and hardware. IPhone Apps is another big opportunity for Apple. Apple Apps produces thousands of small programs that utilize the iPhone’s unique capabilities which creates barriers to entry for the iPhone. This helps increase revenue for Apple. Threats
A big threat for Apple Face Time capability is Skype. Because Skype is becoming available on more devices it has a negative impact on Apple Face Time capability. Google’s Android smart phone is another threat for Apple because it’s the number one competitor in the smart phone sector. Cost of production is also a threat for Apple because it takes from Apples profit.
Best Buy Internal and External Environments
Best buy is another great company with many strengths. They are a global market leader with outstanding service. Best Buy Mobile and Bestbuy.com are also strengths. Best buy has international expansion and a unique in store marketing plan. They also have in-house brands like insignia and they have powerful customer loyalty. Best buy is engrossed on customer service and variety, also they have pricing power over their customers and suppliers. From the geek squad to sales people, there is an innovative culture at Best buy. They have exclusive brands and their brand name allows premium pricing. Weaknesses
Best buy also has some weakness such as bad customer service and they need more knowledgeable employees in specific areas. They have undifferentiated products and the none commissioned based sales cause’s workers not to be motivated. One of Best buys main attractions are DVDs and blue ray disc, and they are becoming less popular. The large store format at Best buy don’t fit all customers and their warranty programs could use improving. Opportunities
Best buy have some great opportunities such as online growth potential and the state taxes on online sales may possibly spir growth. There store branded products could increase margins and new products and services could increase revenue. More innovation could help best buy because it would add value. Threats
A big threat for Best buy is strong competitors and the digital media rely on physical products and is hurting best buy’s profits. Some of the smaller products that Best buy sell are becoming more desirable. But, they are brought over the internet easily. Electronics are cheaper online and they have intense competition for stores like Best buy. Lastly the substitute for lower margin products could hurt best buy.
Apple’s Competitive Advantages and Strategies
One of Apple’s competitive advantages is that multiple products that integrate as one and the constant, never-ending change in Apple’s business climate. It’s hard for Apple customers to tell the difference between their product apart from for the size and shape. There is no other company that has efficiently corralled customers to other seemingly different products by getting them to purchase just one. Another one of Apple’s competitive advantages that really stands out is in marketing. Apple recognizes what will get customers enthusiastic about its products, and then they fulfils that vision. Apple shows how the computer will make your life better, rather than talking the about features and technology. Apple has manufactured a truly sustainable competitive advantage and created value by locking in deals with big record labels such as Universal, Warner Sony, and EMI. ICloud’s generates 30% of revenue alone..
Best Buy’s Competitive Advantages and Strategies
Historicity Best Buy competitive advantage has been pricing. They also have competitive advantage by being the largest source for electronics in most cities. Locality is also a big plus for Best buy, they currently operates 1,347 stores across the United States. If Best Buy is the closest place to pick up a new television, computer, or Ipad, its likely they will get your business because, Best Buy is convenient for the majority of American populations to shop at. Now that other specialty electronics retailers have dropped out of the market, Best Buy has that sector of the market to themselves. Another one of Best Buy competitive advantage is service installation and advice.
In conclusion SWOT analysis is the simplest way to conduct environmental scanning. SWOT important because before an organization can begin strategy formulation, it must scan the internal environment for strengths and weaknesses and their external environment to identify possible opportunities and threats (Wheelen & Hunger). Apple and Best buy are two very successful companies and has many strengths, but you must consider the weaknesses, opportunities, and threats before you begin strategy formulation.
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