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June 17, 2014

Business Strategy of Apple Inc

Role of strategy in Apple
Strategic planning is becoming immensely important for organizations in today’s era. For companies to not only succeed but to maintain their competitive edge over their competitors, it is extremely important to have an active strategic development department which is continually analysing future risks and developing effective counter solutions to those problems. The ability to forecast an event is the core strength of any company that is operating in this global village.
            APPLE Inc. is one such company which in spite of being in extremely competitive industry has been able to maintain its market share which is growing every year, and has been successful in formulating and following its strategy very strictly as the annual report states APPLE’s strategy as  “Bringing the best personal computing, mobile communication, and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings.”
APPLE Inc. is a worldwide famous company for its Macintosh systems which are providing outstanding services and products to its customers around the globe. IPods, iPhones, personal computers, iPad’s are some of the products for which APPLE is famous and there are plenty of applications to which this organization has either developed or outsourced to stay on toes when it comes to development in the world of electronics and gadgets. APPLE Inc has its headquarters in California with many regional offices and hundreds of retail shops all around the world. APPLE has been one of the top most favorite brands of celebrities and corporate personnel for providing integrated and top of the line services to its customers.
However, it is not always a shining star for companies like APPLE, as it has been targeted several times for criticism which means APPLE’s strategic and technical department needs to do much more than they actually think, as many criticism APPLE for opening its manufacturing plants in China where the laborers are not given equal rights as in United states.
The following mission statement of APPLE is quite a detailed one which covers most of the major components that a mission statement should have:
“Apple computers is committed to protecting the environment, health and safety of our employees, customers and global communities where we operate. We recognize that by integrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conserving and enhancing resources for future generations. Apple strives for continuous improvement, health and safety management systems and in an environmental, health and safety management systems and in the environmental quality of our products, processes and services”
Apple clearly mentions that it has concern for its employees and public image. It also indicates the markets Apple intends to serve with products and services which it is offered. Apple knows it very well that its philosophy and self concept are integrated and they are devoted more towards CSR than any other area. It is not a surprise that Apple focuses on a diverse platform of customers but what is more surprising that it has failed to mention its concern for growth, survival and profitability in its mission statement (EDWARDS, 2012).
There is no hard and fast rule for formulating a company’s vision but one must know its importance as the vision statement holds the key to all of the future developments that the organization does and the road it chooses to drive on. Apple’s vision statement could have been penned down in a better way. Although APLE aims to become the industry leader but its vision statement states the company’s vision as limited and short termed. Following is APPLE’s vision statement:
“Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and internet offerings”
For a company like APPLE which has big goals to not only become the market leader but also to offer competitive edge to its customers, the current vision statement may lead the company to downfall’s. It is never too late; the strategic unit should gather and devise a new vision statement keeping in view the diverse needs of its customers living in a global village (Farfan).
Strategic Intent
Apple is one of the smartest companies to work for. It has very neatly positioned its products so that the company is not solely depending for revenues from sales of its personal computers only, rather APPLE generates revenues from multiple streams and each one is independent from the other. Even after the recent global economic slowdown, APPLE was one of the very few companies that did not suffer from adverse reactions rather it saw an increase in its revenues from sources such as music downloads, etc. Currently APPLE is the top most company earning from sales of music as compared to any other company in the music industry.
Core competencies
APPLE holds its competitive advantage in its design and technology which not only sets the company apart from its competitors but also offers its customers top of the line products. APPLE has always been proud of its technology and has also been successful in offering customized products to its customers which have been the attracting factor for many. APPLE has been able to change the definitions of a PC and a cell phone very quickly (Hitt, Ireland, & Hoskisson, 2010).
Future direction of competition
APPLE operates in three different industries, namely; cell phone industry, music industry and the personal computers industry. Therefore the extent of its current and future competition is extremely diverse. IN cell phone industry APPLE has to face extensive competition with many well established brands as well as upcoming new brands. It competitors includes Samsung, Nokia, HTC, and RIM. Whereas, its competitors in the PC industry are Dell, HP, Lenovo, Linux ad Microsoft. APPLE has been lucky not to find any major threats from the music industry but not to forget that Sony and Goggle are tapping all the windows of opportunities that may give them second mover’s advantage.
Needs of customers
APPLE knows how to stay ahead of its competitors and provide all what the customer needs. It will not be wrong to say that APPLE has even changed the needs of its customers as it has totally revolutionized the definitions of a cell phone which is not only a device for making calls now but you life line with applications such as GOS navigation, your personal assistant and much more (Barlow & Stewart, 2004).
Ansoff matrix
APPLE is a unique company in itself as it has been able to differentiate itself from its competitors by defining a very fine line and at the same time throughout the years it has been very cleverly distinguishing itself from all other companies in the industry. There are multiple options that APPLE can avail to further strengthen its strategic management and increase revenues. Mac books are not worldwide famous as iPhones and Ipads are, therefore APPLE can use the strategy of market development and introduce its Mac books in countries with an aggressive marketing technique to beat the sales of Microsoft and its other rivals. APPLE is already a very diversified business which makes its presence evident in music, cell phone and PC industry, APPLE has been successfully handling and maintaining its positions in these industries therefore it can diversify into other related industries such as manufacturing of small technology related gadgets for cars and etc. Whereas like always, APPLE can opt for product development as well by introducing new and improved product in market (Baines, Fill, & Page, 2013).
BCG Matrix
It is evident from the sales results as well as demand patterns of APPLE’s products by its customers that nowadays iPhones and iPads are the most demanded and purchased products of APPLE, with high market share and high industry growth rate. IPods are cash cows as the market growth rate is somewhat stagnant or low but APPLE holds a high market share in its sales. Mac books are dog as due to the advent of tablets the demand for laptops has decrease leading to a decrease in the market share as well as the market growth rate, so either APPLE should start pulling out of this market segment or it can add in multiple attractive features in its Mac books to increase its sales.

Planning at APPLE
APPLE is one of the few companies that have a specific department for strategic planning and offers careers in it. APPLE knows that in order to maintain its position and grow, it needs to be ahead of all it rivals and competitors and therefore planning is essential to achieve its objective. APPLE encourages its employees to give input in their upcoming years strategic planning by informally generating ideas and sharing its with the higher management (Muro, Murray, & Goode, 2010). The no doors closed policy has removed the barriers of communication that titles held but due to this employees are free to communicate and express their ideas with the team so that it can be considered and implemented in the upcoming years. However, final decisions are taken in a formal top to bottom planning board where formal decisions are made by higher management and implemented by the middle and tactical level management.

Stakeholders’ analysis
            Apple Inc. has internal as well as external stakeholders. The stakeholder’s analysis determines the level of influence the stakeholders have on the company and how the stakeholders benefit from the company. In case of Apple Inc. the internal stakeholders include employees, developers and the managers. The external stakeholders include suppliers, customers and the music industry as well.  The benefit the stakeholders are getting from the company is that the stock value has increased over the years. The employees are paid well and they get many other benefits like memberships. Especially the developers of Apple Inc. are eligible to get help from the engineers of Apple Inc. the stakeholders in the music industry have a lot of influence on Apple. The company took a stand by introducing iTunes to discourage the piracy (Eberhard).
Pestle analysis
Pestle analysis or the external factors analysis is very important for Apple Inc. because the strategies are developed by looking at the environment in which the company is operating.
Apple Inc. was accused of getting business from outside the US whereas it is an American company. But since most of the parts of the products are developed in other countries to reduce the cost, any tension with the US and that particular company affects the price as well as relations of Apple with its manufacturers.
Apple has been quite famous in the legal scenario as it had to fight with Nokia as well as Samsung on various legal fronts. Apple has also been accused of changing profits to affect the American taxes.
Apple deals in products that are priced higher as compared to the products of competitors. Whenever a country is hit by recession the price of products also rises and makes the demand of the products less. As people are unable to buy such high priced goods.
Apple has its products around the world. It is operating in an environment where each and every company is trying to reduce the carbon footprint. Apple has to make sure that it does not violate any environmental laws as they can cause the company to face a lawsuit otherwise.
Apple introduced products like iPod long time ago and most of them are at the end of product life cycle. Apple has a diverse product line and it is possible that if they do not focus on continuously innovating their operating system, the technological failure may occur. Samsung is continuously trying to copy Apple and therefore Apple has to focus on innovation a lot.
Now days the consumers are more aware of the environmental and social factors. And this can cause them to withdraw from Apple products. Apple has to come with something new so that the consumers do not view the products as outdated and switch to competitors (Hasan, 2013).
            The Porter’s five force analysis helps in understanding the power of suppliers, buyers and new entrants. It is a sort of industry environment analysis in which Apple is operating.
            Threat of new entrants
            The threat of new entrants is high but Apple has a lot of loyal customers especially those who love Mac.  But at the same time Nokia and Samsung are also trying to enter the market of tablets. Apple Inc. needs strategies to counter these threats.
            Threat of substitutes
            The threat of substitute products is high as the competitors like Samsung and Nokia are coming with similar smart phones. Other companies have started introducing tablets similar to iPad. It may be possible that Mac will be facing some competition as well.
            Power of buyers
The power of buyers is high as everyone these days is dependent on technology but at the same time it is pushing Apple Inc. to come up with new products as buyers can easily to switch to other brands.
Power of suppliers
Intel has always been a major player in the chip market. There are very few chip designers and power of suppliers is high because they can create monopoly or if the US-China relationship takes a wrong turn, Apple will suffer. It won’t be easy for Apple to have the products in low prices from China in that case.
            Competitor’s rivalry
The competitor’s rivalry is high. There is a lot of competition going on in the market of smartphones and technology.  The competitor’s rivalry will increase as more companies will enter this field (Herzog, 2010).
            SWOT analysis is a thorough analysis of internal and external strengths and weaknesses. It also shows what opportunities are left for Apple Inc. but at the same time the threats that can cause harm to the company.
Apple Inc has a very strong brand image and the customers are very loyal. Apple deals in smartphones and tablets therefore the switching costs for the customers is very high. Also Apple invests a lot in R&D and is famous for innovation as well as good financial performance.
Apple has most of the products parts made from other countries like China etc. This is a weakness as the tensions between US and China can cause the prices to go higher. Also there have been reported problems of inconsistency in the service provided by Apple.
Apple products are famous around the world and especially in developing countries the trend of buying smartphones is increasing. Apple can try and make products especially for those countries. Apple also does not have retail stores everywhere therefore opening up more retail stores can be a strategy as well.
Apple faces threats from Samsung and Nokia as they both deal in the mobile phones industry. Apple can try and expand in developing countries but the threat of terrorism will prevent it from doing so. Apple also needs to be careful as Samsung has tried to file lawsuits against them and they can do the same in future (Newlands & Hooper, 2009).
SPACE Matrix          
                                    The Space Matrix shows as Apple Inc. in the fourth quadrant.  Which means it is in the competitive position. The strategies used by Apple must therefore be competitive.
            It should go for forward integration, backward as well as horizontal integration. The market penetration strategy should be used for developing countries. It would require Apple Inc. to go for market development in a few countries by opening up retail stores. It can also try and develop products for those markets. In order to ensure success a joint venture in one of those developing countries can make the competitive strategies successful.
Growth Strategies
            Apple Inc. is in the competitive position. In order to compete properly it must go for strategies that ensure success. As the opportunities are there, therefore it should go for competitive strategies. The market needs to be developed in few countries. This may require Apple to go for backward integration, work with the suppliers and then finally with retailers to ensure that the product reaches the market at the price that is feasible for the customers. Apple Inc. can go for penetration of market as it will allow them to explore more opportunities (Cheney, 2010).
Strategy selection
            The strategy is always selected on the basis of the market. Some markets do not need aggressive strategies but since Apple is in the competitive position therefore it can also engage the music industry of that particular market where the company wants to penetrate. Apple also has to see if the market is going to take a lot of financial help to develop then it must not approach that market. Maybe a niche market selection can help Apple. Opening up of retail stores is extremely important in existing markets as they are useful in keeping the customers loyal (Yee, 2013).
Implementation of strategies (allocating resources and review and evaluation)
            Apple Inc. should develop teams to go to the developing markets and do a research on what the consumers want. Up till now Apple has always made the product and tried to sell it. But one way could be understanding the market and coming up with a cheaper smart phone. They can also use the parts of products being made in that particular country. But it is a long term plan and Apple would need a lot of project teams as well as money to develop the market. It is not impossible as they are already in the competitive mode and can go for forward and backward integration. Developing markets need time, resources, teams and ideas. Apple should take the decision to invest only if it is going to provide all this to the developing markets (Stark & Stewart, 2012).


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