Strategic Management Business - Term Paper Example

?Strategic Management Apple Inc. the electronics and software developing organization is recognizable to the common people as innovators of the computer industry. The company has been able to change the computation experience of the human beings. Apple keeps on launching new and hugely innovative products periodically in order to hold their existing market share. Recently the company has a huge fight with Exxon Mobil the oil giant in order to grasp the elite position of the stock market. However they are from different industries of business. The report will highlight about the issues or the problems which are faced by Apple. The report will also try to analyze the reasons for the problems and will try to present it in a meaningful way. Apart from that the report will also try to provide some recommendations by which the issues can be resolved. Table of Contents Table of Contents 3 Introduction 4 Facts 5 Tools 6 Conclusion 9 Assumption 9 Policy Recommendation 10 Limitations and drawbacks 11 References 13 Appendix 14 Introduction According to Bo Bennett ‘A dream becomes a goal when action is taken towards its achievement’ (Gordon Bell High School, 2012). The justification of the quote can be accomplished by none other than the personality who has given birth to the technical giants Apple. Apple inc. is a consumer electronics company which is headquartered at California, United States. The company is primarily indulged in manufacturing and marketing software, personal computers and other electronic products (Yahoo Finance, n.d.). Some of the iconic products of Apple include I-Phone, I-Pad, I-Pod and very shortly going to add I-Car to its product range (Paultan, 2012). Within a very short span of journey the company has been able to achieve the elite position in the IT industry. The case which has been selected to carry out the research is the article namely ‘Big Apple vs. Big Oil’. The case illustrates the ups and downs of the company and mentioned the staggering success of Apple in the share market. The case also highlights the reasons of Apple’s success in the market place and depicts the importance of the stake holders of the company. Moreover the case also illuminates the importance of Steve Jobs and his innovative and leadership qualities. The reason why Apple has been chosen in order to carry out the research is that the company offers tumultuous market narration. It has also witnessed economic slumps as well as path breaking success. The company is also the most noteworthy player in the digital entertainment sector with innovative outlooks for the future. Therefore it is assumed that Apple inc. will be the most suitable organization towards the completion of the study. Now the prime problem or the issue predating the company is the concerns of the health of Steve Jobs. The person is considered as the technical genius for the company and the sole personality behind every innovations portrayed by the company. Since Steve Jobs is the CEO of the Apple and with his absence the company will hugely suffer from leadership problems. However the investors of the company are gaming on the fact that the company will still pump out heavy profits. But still the question remains that will there be anyone ever who will fill Steve Job’s Shoes. The company is also comprehensively facing problem regarding the affordability of their products. The price of the products is meant for the higher income groups and thus the other section of people could not afford it. This also hampers the total sales volume of the company and ultimately lessens the revenue. Facts The chosen article i.e. ‘Big Apple vs. Big Oil’ illustrates that Apple Inc. was once on the verge of a bankruptcy but stabilizing the situation progressed towards being the market leader in IT industry. The company has also outperformed some of the biggest players of stock market. The day of 9th August will always remain momentous for the company as for a time being they have surpassed the oil giant Exxon Mobil in the context of the firms value. However during the closing Apple was just behind Exxon Mobile by a small margin. The case also outlines that oil has always been one of the most important raw materials but the digital gizmos are also making its path towards being significant. Apple has even succeeded to outshine the mammoth tech giants like IBM and Microsoft. Now in order to promote its range of products the company organizes a technical event to showcases its latest offering and unveils the future offerings. The reason of Apple’s mammoth rising has been cited as the growing importance of digital equipments in the global economy. The comparative success of Apple in the share market is also due to a sharp dip in the oil prices, which fostered in pounding Exxon shares. The confidence of the investors in the business model of Apple has also been cited as the rationale behind its glory. Finally the article reveals that the absence of Steve Jobs from the company due to his health issues can seriously impact in the performance of the company. According to the investors of the company they are confident that even if the creative genius needs to give up the position to somebody else, the company will continue to exhibit huge profits. Tools The tools which will be mainly used to analyze the problem of affordability are Porter’s 5 forces model, blue ocean strategy and value trade-off model. Porter’s 5 forces Model The five forces of the model includes 1) competition within the industry 2) competition with the substitute product 3) threat of new competitors in the market 4) bargaining power of suppliers 5) bargaining power of consumers (Simon, 2009, p.195). It helps to asses Therefore the model will help to assess the industry where Apple Inc. belongs. Competition Within the industry: - The competition among the IT companies is very much intense. Established market players such as Microsoft, IBM, Dell and others give a stiff competition to the company. Therefore the competition within the industry is high. Competition with the substitute product: - The substitute products of Apple are smart phones and tablet computers. However the mentioned substitutes are still under the expansion stages. Therefore the threat of substitute products is low. Threat of new competitors in the market: - Since the industry is mammoths it offers place for everyone. However there is always a possibility of market saturation. But a company with new, innovative and technically sound products can certainly enter the industry and give stiff contest. Bargaining power of suppliers: - The suppliers mainly provide the company with the raw material but the company deals with various suppliers. The only threat in this context that the company may face is the shortage of skilled labor. Therefore the bargaining power of suppliers is moderate. Bargaining power of consumers: - This is the characterized by the way by which the consumers lessen downs the prices of the product. The presence of other companies provides the consumers with a lot of options and thereby the bargaining power of consumers is high. Blue Ocean The blue ocean strategy proposes to focus on the chances which explores the virgin blue water i.e. the ‘blue ocean’ other than focusing on trying to strike the existing rivals of the industry (Koontz, 1990, p.115). In other words the strategy illustrates that to cater to a market which is still virgin and not to fight in a saturated market. There are four actions which should be considered while undertaking the blue ocean strategy. The first action is about recognizing and eradicating the less important factors in the context of a buyer, the second action states that if the elimination is not possible it should be reduced. The third action is to strengthen the unique factors and finally the fourth action is to develop new factors which are demanded by the consumers and overlooked by the competitors. Therefore the comparison in the context Red ocean and blue ocean strategies of Apple are illustrated below:- Red Ocean Strategy Apple should compete in its existing market. They should try to get an upper hand over the competitors. Must exploit the existing demand. Blue Ocean Strategy The company must find an unconcealed market to carry out its operation. The company must not consider competition i.e. it should be irrelevant. Develop and grab new demands by focusing on new and innovative products. Value Trade Off model Value Trade Off model is considered to be an important strategic management tool. A value trade off model refers to condition which involves losing a quality and on the contrary gaining another quality. In other words it proposes to make decision by considering both the sides i.e. the upside as well as the downside. A value trade model is carried out to explore the variety of aspects which influences the decision of a manger in the context of product differentiation and cost reduction. Conclusion Apple has been able to reach a height where IT giants like Microsoft and IBM also did not reached. They have even outshined the oil giant Exxon Mobil, to achieve the top most position in the share market. The growth of the company has been due to the huge importance of the digital gizmos and gazettes. However the support from the stake holders and the presence of the technical genius Steve has also made huge contributions towards the success of Apple. There are some issues which are hugely affecting the company such as the health issue of Steve Jobs. The company fears that absence of Steve Jobs can have significant impact on the overall performance of the company. The company may seriously lack leadership. The other issues pertaining to the company is the affordability of the product. The products are priced high and intended for higher income groups, which is hugely hampering the overall sales figures. Therefore to resolve such issues the company needs to make some changes in its pricing structure. Moreover the company may also manufacture feature based product which will enable the company to incur variation in the pricing of the products. Assumption The assumptions underlying the project are as follows:- Apple does not have any issues related to the financial condition. The company is financially strong enough to take some risks in order to get through with the mentioned blue ocean strategy. There is no external pressure on the company in the context of the production process and marketing those products. The company is capable enough to manufacture utility and innovative products in the future as it currently doing. The absence of Steve Jobs will not harm the company and they will be maintaining their level of performance. The stakeholders of the company will keep supporting the company and with the course of time the company will be able achieve new set of investors. The final assumption of the project is that Apple will find a new virgin segment and will also cater to that. Policy Recommendation The following are the recommendations through which the company can resolve the issue of affordability of their product. Apple must price its product on the basis of market. They must assess the affordability of their product in the market and price it accordingly. However apple is positioned in such a way that it looks only for the higher income group. So keeping in mind that factor it should price the product. The company must cut down the total cost which will allow them to be flexible with pricing. In order to create demand for its product in the market place the company may use different advertisement techniques such as viral advertisement. The company can also make different product for targeting the average income group. Without compromising on the quality of the product the company may introduce feature based product. This will also enable them to gain more market share. Limitations and drawbacks Although the study has been able to reach its desired objective, there were some constraints during the entire process. The constraints which will be mention are either unavoidable or had a major impact on the project. The major limitations are underlined below:- Time is the biggest constraint that has been faced while carrying out the entire project. There were huge tasks needed to be completed within a very short span of time. However due to proper planning and scheduling, the project has reached its final form. The research was only confined to data based on the secondary research which is also a limitation. If it was possible to support the project with primary raw data, it would have got a new form. The study was only based on the US market, the global market was not considered to analyze the study. Therefore it may be considered as a drawback of the project. However the project has been presented in such a way so that a generalized view about apple can be drawn. Only the major issues have been considered in the project and small issues were overlooked. References Cbe. (No Date). Michael Porter’s “Five Forces” Model. Retrieved from http://www.cbe.csueastbay.edu/~alima/courses/3551/murdercleaners/fiveforcesporter.htm. Gordon Bell High School. (2012). Green space Updates. Retrieved from http://blogs.wsd1.org/gordonbell/about-gbhs/greenspace/. Koontz. (1990). Essentials of Management. New Delhi: Tata McGraw-Hill Education. Paultan. (2012). Steve Jobs wanted to make an I-car. Retrieved from http://paultan.org/2012/05/18/steve-jobs-wanted-to-design-a-car-called-the-icar/. Simon, H. (2009). Hidden Champions of the Twenty-First Century: Success Strategies of Unknown World Market Leaders. Berlin: Springer. Yahoo Finance. (No Date). Apple Inc. Retrieved from http://finance.yahoo.com/q/pr?s=AAPL+Profile. Appendix Figure 1 (Source: Cbe, n.d.). Read More