Question

Apple’s acquisition of Beats Electronics LLC for $3 billion is examined at the beginning and end of Chapter 4. From the discussion in the ChapterCase, we can create a SWOT analysis and use it to understand why Beats Electronics might have wanted Apple as a partner. The internal strengths and weaknesses for Beats Electronics as well as the environmental threats and opportunities are taken from the chapter. After completing the SWOT and placing the strategic alternatives, consider which strategic alternative you would have chosen.

Place the following in the correct space below:

Strong relationships with celebrities.

Increasing competition in streaming music

Acquire a competing headphone maker to reduce competition, increase audio quality, diversify product lineup.

Use relationships in the music industry (especially Hip Hop) to obtain exclusive content for the streaming music service.

Seek a partner who can: 1) leverage the brand and celebrity relationships into new product markets. 2) Strengthen ability to compete in music streaming and retail electronics

Use celebrity endorsements and experience in fashion headphones to create products for similar markets (i.e., personal Bluetooth speakers)

Strong relationships with celebrities.

Limited products (just headphones)

Growth in streaming music

Use celebrity endorsements and experience in fashion headphones to create products for similar markets (i.e., personal Bluetooth speakers)

Answer 1

External Opportunity Growth in streaming music Growing market for personal electronics Growing market for wearable computers Threats Increasing competition in streaming music New competitors in fashion headphones. Firms in nearby markets (earbuds) may enter Internal Strengths Visionary Leadership: Dre & lovine Market leader in fashion headphones Use celebrity endorsements and Strong relationships with celebrities. Create products for similar markets experience in fashion headphones to High perceived fashion value. (i.e., personal Bluetooth speakers) Strong brand: young, trendy, urban. Use relationships in the music industry (especially Hip Hop) to obtain exclusive content for the streaming music service. Weaknesses Beats streaming, weak market share Limited products (just headphones) the brand and celebrity relationships Seek a partner who can: 1) leverage Complaints about audio quality into new product markets. 2) Strengthen ability to compete in music streaming and retail electronics Acquire a competing headphone maker to reduce competition, increase audio quality, diversify product lineup.