Study Apple Strategy Management Essay Example

propelled the company into a new era of invention and distinction.

(reuters). Despite touch screens in mobile devices not being new, Apple was able to achieve widespread acceptance of this technology by creating and introducing the first iPhone series in January 2007. The iPhone was so far ahead of its time that it essentially created a new category in the market, leaving competitors playing catch up (Elliot, 2012). Apple's target market primarily consists of teenagers.

College and university students, concerned individuals, immature kids, and adults. As of September 29, 2012, this company had 412 retail stores in 14 countries across the world.

Based on the Apple 3-year PnL, in 2012, the company had a global workforce consisting of 72,800 regular employees and an additional 3,300 temporary employees or contractors. The fiscal report indicates that Apple's total net revenue for that year amounted to $156.

Apple experienced a substantial rise in revenue in 2012, with a total of $508 million, marking a growth of 63% compared to the previous fiscal year. The net profit for that period amounted to $41.733 million, showing an increase of 61% from the preceding year.

According to the study, Apple's gross net income margin has increased from 40.5% to 43.9% in the last two years. This growth is attributed to the successful execution of cost-leadership and differentiation strategies.

Culture: Steve Jobs, as CEO from 1997 to 2011, cultivated a culture that prioritized vision. He strongly believed in effectively communicating this vision to employees and creating innovative products (Elliot, Jay).

In 2012, Tim Cook became CEO of Apple and continued to maintain the company's culture and vision, which was essential for its strategic direction (Elliot, Jay, 2012). This culture

has been upheld to this day (Find that book).

Macro Environment Analysis

PESTEL Analysis

PESTEL analysis will be utilized to gain insights into Apple's external environment and determine the potential of its future business, market conditions, and operational strategies.

The PESTEL analysis includes six elements: Political, Economical, Social, Technological, Environmental, and Legal. By observing global developments, trends, and significant incidents, we can determine that the Social, Technological, and Legal aspects of the PESTEL analysis have a greater impact on Apple's mobile phone SBU compared to the others.


Social


Apple's social environment is a crucial factor in its current success and will continue to propel it to even greater heights in the future (wei kang. 2013).

The combination of simplicity, creativity, and luxury in Apple's "think different" motto reflects the user's unique identity and desire to be different (Schneiders, 2011). Apple's former CEO, Steve Jobs, had an innate understanding of what consumers truly wanted and adapted the company's product line accordingly. In essence, he guided them towards the things they should love (VERGANTI, 2010).

The phenomenon of cult selling, according to RAGAS & BUENO (2005), is when individuals are not aware of their desires until cult sellers introduce them. In essence, cult selling is a strategy tool used to enhance customer loyalty, as explained by Schneiders.

According to MacNN (2006), the component of client loyalty has a significant positive impact on Apple, allowing them to maintain the strongest client loyalty in the world and achieve the highest redemption rate in the electronic industry. This can be observed globally whenever Apple releases a new product. Apple's fans demonstrate their genuine love for the brand by camping outside of stores for days to obtain the latest invention,

distinguishing them from other users (NUSSBAUM).

Due to technological advancements, Apple's products such as the iPhone are now considered essential goods rather than luxuries (source, 2005).

Apple's guiding principle is to lead their customers, not follow them. To succeed in the long run, Apple must adhere to this principle. They need to offer superior options that differentiate themselves from consumer demand in the highly competitive market for mobile phones and other electronic products created by technological advancements (MacVarish, 2009).

According to a source, companies like Apple need to continually invest substantial funds in research and development (R) to stay competitive in a market known for short product lifecycles and frequent launches. They strive to create better performing, feature-rich, and aesthetically pleasing products. MacVarish states that one of Apple's guiding principles for their innovation strategy is to "Be your own toughest Critic".

Apple's strategy of introducing new merchandise lines to replace older ones has been successful in surpassing competitors. This is evident in the popularity of the iPhone, especially the iPhone 5, which became the top-selling Smartphone worldwide in Q4 2012.

Apple's 3 year Profit and Loss statement shows a significant rise in their R&D expenditure. In 2010, the expenditure was $1.782 billion, which increased to $3.381 billion in 2012 (2013).

Due to their research-intensive nature, Apple becomes less cost-efficient in concentrated markets and is exposed to greater risk if its R&D does not come through (source).


Legal


The intellectual property war has long been used as a tool in technology and management strategy by companies like Apple to gain strategic advantage against their rivals. Apple alone has filed as many as 250,000 patents for

the iPhone and other smartphones, covering the design and functionality of these products (Cusumano, 2008).

Apple faced legal battles globally with its rivals such as Samsung, Motorola, and Nokia. Both sides initiated lawsuits against each other for patent infringement. In the United States, a notable lawsuit occurred between Apple and Samsung, two prominent players in the smartphone industry. The jury awarded Apple $1 as a result of this particular case.

Apple was awarded $5 billion in damages and granted a removal order for Samsung's Smartphone products in specific US regions. This ruling enhances Apple's competitiveness, supports advertising their iPhones' uniqueness, and ultimately boosts their profit margin for that quarter. In summary,

While most cases Apple filed come with little success, any tribunal determinations that result in favor of Apple's patents will likely allow the iPhone to remain popular in the market (Cusumano, 2008).

Industry (Competitive) Analysis

Michael Porter's 5-forces theoretical model

Apple's competitive position and its attractiveness in the smart-phone market can be explained by analyzing Porter's 5-Forces model (Porter).

In 1980, the company utilized competitive forces to determine its position in the market and its ability to adapt through diversification. The company will showcase the sustainability and profitability of its iPhone series.

The likelihood of new competitors entering the smart-phone market is low due to high barriers to entry. The industry is already saturated with a few dominant players who hold a large market share and benefit from economies of scale. Additionally, their strong brand presence and loyal customer base make it difficult for new entrants to gain traction (Bostic, 2013).

Due to the substantial economies of scale, new entrants face a formidable challenge in competing with market leaders as they require considerable

capital investment. Consequently, it is highly unlikely for these newcomers to penetrate the market and acquire a notable share. In certain cases, innovation through the creation of distinct features or software may be necessary for new entrants to effectively compete.

However, this is typically caused by a lack of resources because investing in sufficient resources is expensive. Legal terms like patents and trademarks act as obstacles for new competitors. New competitors also encounter barriers in the form of legal terms. These terms are usually patents or trademarks held by dominant participants. For instance, market leaders like Apple Inc hold patents on their iPhone designs and software like iTunes. This deters new entrants from imitating similar ideas.

In conclusion, Apple remains a strong player in the smartphone industry, and competing against them is challenging due to the high costs involved for new entrants (Bostic, K., 2013).

"20% of Apple iPhone users have switched from Android in the past year", according to a study. The study was conducted by Apple Insider Porter M., who also authored the book "Competitive Scheme: Techniques for analysing industries and competitors" in 1980.

The smart-phone market is highly competitive, with a few big rivals controlling it, including Apple, Samsung, LG, and HTC Mobile. These dominant participants have made significant capital investments. Smart-phones have become essential commodities for individuals.

The emphasis on competitive pricing by dominant participants will give them an advantage over rivals, who are generally of comparable size to Apple. In order to stand out amidst fierce competition, Apple will differentiate itself through its design features and functionalities.

Its rivals have sought a leading position in the smart-phone market by constantly introducing new changes. The result of

technological advancements has also led to increased competition and a drive for innovation in the industry. This, in turn, creates competition among smart-phone companies to refine their products and regularly update their devices to meet consumer demand and stay competitive.

(Apple Inc Report. 2009).

Mentions

Menace of replacements – Moderate

It may seems that Apple has a assortment of replacements in the market, but the nature of Apple’s merchandises sets itself apart from rivals. Although it may look that Apple has an extended array of replacements in the market, but its proprietary nature of merchandises sets itself apart from rivals.

Currently, the threat of replacing its smart-phones (e.g. iPhone5) is relatively low for Soon. However, its competitors are capitalizing on its achievements by consistently launching and offering similar products in the market. Overall.

Apple sources its parts from various providers, allowing it to maintain its dominance in the smartphone market. However, to effectively compete with other strong brands and followings, Apple must continuously innovate and prioritize cost-effectiveness.

As a result, Apple's distinction scheme allows it to effectively differentiate itself from other brands. The bargaining power of buyers is low. Despite the presence of numerous smartphone brands as alternatives to Apple's iPhones, the main reason for this low bargaining power is Apple's focus on differentiating its products from its competitors.

The designs, characteristics, and cult following of Apple products are evidence of their authenticity to buyers. Additionally, the company's niche market in the smartphone industry reduces customers' price sensitivity. Apple customers and loyal fans are still willing to pay for their products regardless of the cost. While major retail merchants may have some bargaining power due to their large volume of sales, individual customers

still have no control over the pricing of Apple products.

Apple's lack of third-party options limits buyers' choices for alternative products.

Supplier Bargaining Power: Low

Apple relies on multiple suppliers for its smartphones, rather than being reliant on a single supplier for all components. Consequently, this diminishes the suppliers' ability to negotiate prices with Apple.

This allows Apple to achieve a competitive advantage over its competitors in the market (Apple Annual Report, 2012). With its large quantities of components, Apple Inc can gain an advantage over suppliers by negotiating better terms and pricing. This results in a lower cost structure for Apple and ensures a higher profit margin compared to its rivals.

Apple's Strategic Capabilities

Analysis

Apple's integrated system of hardware and software has enabled the company to effectively market and develop their most valuable strategic resources (Dhaliwal).

In 2009, Apple was brought back to the growing phase by their former CEO, Steve Jobs. Apple's talented team of software engineers, programmers, and designers are the company's key resources in innovation. This allows Apple to leverage their knowledge to effectively create a sleek hardware and software system, which are the company's core capabilities.

Apple Inc. has been able to create a competitive advantage and sustainability in the market through its integration of key capabilities (source: "Electronic Industry Citizenship Coalition" 2009). The VRIN model, which is a four key criteria resource-based perspective, is used to assess whether Apple Inc. meets these criteria.

Apple leverages its strategic resources to gain a competitive advantage. The company maintains strong relationships with its original equipment manufacturer partners in China, such as Foxconn and Hon Hai Precision Industry. These close partnerships ensure that the products are of superior quality. This

gives Apple an edge over other smart-phone manufacturers who choose not to outsource production.

Value: Apple is able to capitalize on opportunities through its strong relationships with its key partners, such as Foxconn, which results in lower manufacturing costs. This allows the company to deliver consistent value in its products and mitigates any potential threats (Barney, 1991).

Inimitability: Competitors can still imitate Apple by adopting their strategy of finding an original equipment manufacturer (OEM) partner.

What distinguishes Apple from others is its ability to consistently develop its software, which other companies face difficulties copying despite having an OEM partner. This is the purpose of Apple Inc.

Apple Inc. aims to integrate several maps into the development of its Apple products in order to maximize the value for users. By combining all five key strategic resources/capabilities, Apple ensures a comprehensive and superior product.

According to Barney (1991), the ability to outperform competitors and reduce risks enables the house to stay ahead in terms of sustained value and success.

Retail Locations

Apple's introduction of retail stores has given the company a physical presence and added convenience for its customers. These stores not only help create an appealing storefront but also provide exceptional customer service, thereby establishing a unique value proposition for Apple within the industry.

Value: Apple's strategic retail shop locations worldwide enable consumers to easily access its merchandise, giving the company a competitive edge over its rivals.

Rarity: Apple's strategy of positioning its shops and differentiating its products has put the company in a leading position. The unique aspects of its strategic retail locations are uncommon in the industry.

Talented software development teams: Apple has a skilled group of software developers who are meticulously selected by

the company. These individuals serve as Apple's most exceptionally talented coders.

Apple relies on these developers to showcase their high-quality products, although they are not unique or difficult to replicate in the IT industry. Consequently, other smartphone companies like Samsung Mobile can also cultivate or hire talented developers.

Industrial Design Capability

Apple Inc. possesses industrial design skills.

Strategic resource - a map illustrating Apple Inc.'s invention ability. The corporation's valuable advanced design squads, known for their strong teamwork, constitute another strategic resource. This invaluable quality sets Apple apart from its rivals and makes it difficult to imitate.

Tailored Hardware/Software Systems

Apple Inc. differentiates itself from competitors by having specialized hardware and software systems. This is a crucial aspect of Apple's business strategy as their products are uniquely designed and developed in-house. Additionally, Apple's closed system approach sets it apart from competitors who rely on third-party software. For instance, Samsung Mobile devices utilize Google's Android market.

The company's ability to bring together its own design, software development, and hardware coders gives it a competitive advantage. The value of having its own hardware and software ensures that the company provides value to its consumers. The rarity of having a dynamic team of talented staff allows the company to develop unique hardware and software that are exclusive to the company.

These are important factors that contribute to Apple's power in the industry. Inimitability is one such factor, as Apple's unique strategic capabilities give the company a competitive advantage over its rivals. For example, its software, such as the iOS app store, was developed ahead of its competitors.

Despite Samsung Mobile's adoption of the Google Play shop, Apple still maintains a

unique advantage with its talented team of software developers. This makes it difficult for competitors to imitate and surpass Apple's strong strategic capabilities.

The uniqueness of Apple's products lies in its brand identity and customized hardware and software. This distinctiveness cannot be replaced by any third-party alternatives, even though Apple's products are generally substitutable with other merchandise.

Sustainability as Competitive Advantage To maintain Apple's ongoing performance and competitive advantage, its management may consider pursuing exclusive partnerships or agreements with its OEM partners to reduce costs and potentially expanding into more countries through the expansion of Apple's stores. These strategies will enable Apple to consistently lead the market with its dominance and market share.

Value The objective of Apple Inc.

Apple's strategy is to combine multiple maps in the development of their merchandise, ensuring maximum value for users. By integrating all five key strategic resources and capabilities, Apple stays ahead of competitors through sustained value and success in taking risks and reducing threats (Barney).

1991).

Rare

In the smart-phone industry, there are numerous brands that directly compete with Apple iPhones. However, Apple excels in positioning and differentiating its products from competitors.

Apple is able to maintain its uniqueness in the market through its innovation in industrial design, specialized hardware/software, and strategic retail location. These factors contribute to the success of Apple Inc. as they ensure brand recognition and superior quality.

In most of its strategic capabilities, Apple's ability to imitate is what sets it apart from its competitors. Specifically, its trim software, iOS app store, was created ahead of its competitor Samsung Mobile, which opted for the Google Play store. Despite having a skilled team of software developers, Apple

still stands out in terms of competitive advantage.

This text emphasizes the following key points about Apple:

The distinguishing factor that sets Apple apart from its competitors is its unique brand identity and ability to attract and retain Apple fans. Apple's skilled teams of software developers and customized hardware/software are what make Apple unique, and no third-party can compare.

Business Strategy

Strategy Statement

An analysis reveals that Apple has undergone a shift in strategy for its smartphone business since 2012 due to a change in leadership. Apple's current goal is to provide its customers with the best product experience by offering high-quality and user-friendly products at both the high and low-middle price ranges that are innovative in design and features.

incorporate seamlessly and excellence gross revenues and post-sale support experience for consumers (forbes).

Generic Competitive Strategy

Apple is pursuing a hybrid combination of product distinction and cost leadership strategy. By combining these two strategies, Apple has successfully achieved a high profit margin by manufacturing its smartphones at a low cost and selling them at a premium price.

Competitive range (wide mark)

Under Tim Cook's leadership as CEO of

Apple from 2012 to the present.

Apple has begun exploring a new market by building upon the success of its current smartphone business and expanding into emerging markets. This strategy is being implemented through the release of the IPhone 5s and IPhone 5c, which target both premium and non-premium consumers with two different price points (Apple chief website).

The iPhone 5s will target the current market, while the iPhone 5c will be aimed at a price-sensitive client base, especially in emerging markets.

Competitive Advantage (Lower cost and Differentiation)

Since Apple is launching two iPhones with similar designs and features, both running on the same operating system (ISO 7), it will benefit from economies of scale, sharing costs for advertising and research and development.

Furthermore, the two models of iPhone cater to different market segments, enabling Apple to reach a larger target market. This allows Apple to achieve economies of scale by reducing supplier costs through increased order quantities. These factors contribute to Apple's ability to achieve cost leadership in the smartphone industry. However, despite efforts in research and development to innovate and differentiate their smartphones, Apple has been unsuccessful in producing enough uniqueness and features that are valued by their consumers.

Apple is reverting to its previous iPhone model with minimal introduction of "game-changing" features. The company's reduced pace of innovation is evident in its latest flagship iPhone, the iPhone 5s, which retains the dimensions and design of its previous flagship, the iPhone 5, with only small additions to its features and performance (Yahoo Intelligence).

Value Chain: Apple.

The Iraqi National Congress has successfully developed a cohesive process for innovation. This process starts with new product design

ideas from Apple, followed by research and development utilizing their strong capabilities and support. The product is then manufactured and marketed with full dedication. This transformation of inputs into outputs involves multiple primary and support activities (Hill and Jones, 2001, p.).

133). Value chain analysis is a powerful tool for managers to identify the key activities within a company that form the value chain. These activities have the potential to create a sustainable competitive advantage for the company. In this context, competitive advantage lies in an organization's ability to perform crucial activities along the value chain more effectively than its competitors. Technology Development

Buying and R ; D

Inbound Logistics

Most components are generally sourced from multiple suppliers; some components are currently sourced from one or a few limited suppliers. Hardware products are primarily manufactured by outsourcing partners in Asia.

g. Foxconn.

• Apple collaborates with its OEM partners to delegate the process of acquiring natural materials, but still provides supervision to ensure quality control.
• To expedite the receiving process and minimize the need for large installation and storage spaces, Apple has implemented advanced automated having systems.

The high profit margins of Apple's smartphones pose a concern for suppliers. However, when these margins are under pressure, Apple will compel suppliers to reduce expenses.

According to Alberto Moel, an analyst at Bernstein Research, flat-panel telecastings have seen a decrease in screen border sizes to the point where they are now nearly at break-even levels.

Outbound Logistics: Apple has employed a mixture of direct and indirect distribution channels.

including retail shops, online shops, direct gross revenues force, and 3rd party

cellular web bearers, such as jobbers.

Apple is expanding and improving its distribution capabilities by increasing the number of its own retail stores worldwide. This expansion aims to provide customers with a high-quality purchasing experience. Additionally, Apple has organized teams of design and technology experts to develop slim, lightweight, and protective packaging for its products. This efficient packaging design not only reduces waste but also enhances the overall customer experience.

It also aids in reducing emissions generated during transportation.

Generic Competitive Strategy

Apple is pursuing a broad differentiation strategy. Apple differentiates itself by providing high-quality, innovative design, and personalized service.

The scope of their program is extensive, targeting clients ranging from inexperienced beginners to advanced power-users with specific needs.

1. Cost-leadership
2. Differentiation

Business Suitability

Apple Inc. is concerned with determining which strategic directions and methods are recommended to address the issues faced by the corporation (Johnson & Scholes, 2008). It helps in evaluating the suitability of strategic choices that are related to the strategic position.

To evaluate Apple's suitability for its proposed business strategies, the Porter's value chain model is selected to analyze the internal factors of the organization.

Market Penetration

Apple's infrastructure is already well-established and developed. However, the company should continue investing in infrastructure development to regain its high market share in the smartphone industry.

The success of its market entry strategy heavily depends on its main activities, including inbound logistics, outbound logistics, and sales and marketing. In order

to continue moving towards the market entry path, the support activities also play a role. The technology development will then assist the support for the proposed strategy.

Merchandise Development: Apple may need to find a strategic impetus to gain a competitive advantage in its business strategy. The support activities, such as developing new products to meet customer demands, serve as the basis for the product development strategy. Apple is introducing new features, such as a fingerprint sensor on the new iPhone5s and also offering colored versions of its iPhone5c, in order to enhance its company performance and market share (Apple).

com). This new attributes or product development somehow acts as a determining factor for whether Apple will achieve its business strategy or impact its corporate performance.

Market Development

Currently, the company is pursuing the market development strategy. It helps Apple in entering new market segments. Thus, it is essential to focus specifically on the primary activities of inbound and outbound logistics.

Apple continues to heavily rely on its original equipment manufacturer (OEM) partners for resources, especially in manufacturing, which is considered Apple's main strength. To stay ahead, Apple may need to enter or develop new markets where it currently has no presence, such as developing markets.

With its robust partner network, including companies like Foxconn, Apple leverages its logistics capabilities and strong sales and marketing strategies to expand into new markets.

These three proposed concern schemes are appropriate for assessing the value chain, and Apple can implement any of these schemes beforehand. Apple will need to consider which scheme will achieve its overall business objectives in order to sustain itself in the market.

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