Environment Scan the Three Companies Chosen Are Essay

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Total Length: 1225 words ( 4 double-spaced pages)

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Environment Scan

The three companies chosen are Apple, Google and Starbucks. Apple has several strengths, including its design capabilities, high brand loyalty, vertical integration, distribution channels, brand recognition/reputation and a massive cash pile. There are few weaknesses for the company, although arguably stock market pressure to distribute its cash, which might harm the innovation it needs to thrive. There remain great opportunities for Apple to expand into new markets, to develop new products, both of which can drive earnings higher. There are threats, however, not the least of which is competition given that Android is by far and away the dominant mobile operating system, pushing Apple's market share down almost to single digits (IDC, 2013).

Google has several strengths. It has $50 billion in cash, so ample resources, and it has been named as the best place to work, attracting top talent (CNN, 2013). The company has a great brand, a suite of market-leading products and strong leadership. If Google has a weakness, it is that it is dependent on online advertising revenues, as it makes very little money on other products. This makes it vulnerable to innovation and competitors, which are both threats that could reduce Google's revenue. There are always market expansion opportunities for Google -- China is a good one -- and the company could benefit from earning more money on some of its other dominant products like Android and Chrome, neither of which have been monetized to any serious degree.

Starbucks has a lot of strengths as well from a great brand and successful formula to good geographic diversification. The company is well-run and is building a portfolio of other brands.

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There are weaknesses, however. Any time the company has tried to deviate from its formula, it has been unsuccessful, meaning that it has still only proven to do one thing well. The company has also never really succeeded without Howard Schultz in charge. The formula for the company does not work so well in countries with strong pre-existing coffee culture. It scaled back significantly in Australia and has not even bothered to enter Italy. There remains a lot of opportunities for Starbucks. The company is looking at other products like tea and juice, but it is also aiming to capture strong growth in key overseas markets like India and China. Starbucks faces strong competition, as there are almost always good local players, and the company is also dependent on a healthy economy for success.

Competitive Advantages

Each of these companies has distinctive competitive advantages. All three have the advantage of size and scale at this point. Google and Starbucks are market leaders, and Apple might not have #1 market share but it is the only firm in mobile that is genuinely earning a profit (Reed, 2013). All three have exceptional brands. But each trades on specific advantages that are distinct as well.

Apple has competitive advantages in design capability, retail channels and brand loyalty, all three of which are the best in its industry. This allows the company to carve out a niche at the premium end of the market, where the company is positioned as an innovator. The combination of premium positioning and brand loyalty equate to a lack of price sensitivity in the customer base, which in turn leads to sustainable.....

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