Competing Apple Computers Inc management of innovation - Assignment Example

? Competing Apple Computers Inc – Management of Innovation Apple Computers, Inc., has firmly established itself as one of the most innovative companies of this century. Its ‘i’ product / service (i.e. iPhone, iPad, iPod, iTunes) series has become iconic. Imagine that you have been given a sufficient level of funding to set up and lead a company to compete against Apple. In this idealised scenario, what would you do innovatively to rival Apple’s approach? What are the potential gaps in Apple’s product and service strategy, business model organisational set up and so forth? What opportunities are there for disruption innovation? How will you distinguish your offerings? What strategic positioning would you adopt? 1. Introduction The ability of a leader to identify strategies that can disrupt rivals’ innovative strategies is critical in organizations operating in highly competitive industries. For organizations trying to compete Apple, the challenges that need to be faced are many: Apple is popular for its emphasis on innovation, a fact that limits the chances for gaps in its strategic choices. Still, the literature published in this field shows that the promotion of innovation in businesses of different characteristics can be achieved in a range of ways, not necessarily related to rivals’ strategies. The business model and the strategies proposed below aim to show that even firms that are highly successful, such as Apple, may have gaps in their strategic framework; the identification of these gaps by rivals can increase competition in the industry reducing Apple’s hegemony in the global market. 2. Apple’s approach in regard to innovation 2.1 Overview of Apple’s strategic choices for promoting innovation Apple has highly emphasized on research and development for the identification of unique products (Apple, Organizational website 2012). In fact, the firm’s strategy in regard to innovation seems to be based on the following three issues: a) the market for Apple’s i-products has still many prospects (Zeiler 2012), b) the firm highly emphasizes on advertising (Zeiler 2012) and c) new technologies, such as the i-TV, are continuously developed for enhancing the capabilities of the firm’s products. The ‘Near Field Communication’ (Zeiler 2012), a technology that ‘transforms the i-Phone into a digital wallet’ (Zeiler 2012), is one of Apple’s latest strategies for securing its strategic position in the global market. 2.2 Gaps in Apple’s business model and product/ service strategy The current performance of Apple, as a key competitor in the global industry is significant, if taking into consideration Graph 1 (Appendix). Still, gaps can be identified in Apple’s strategies in regard to innovation: a) the products of the firm are rather expensive, if taking into consideration the financial status of the majority of people in the global market, b) the customer services schemes provided to customers are similar to those provided by other firms operating in the same industry, with no particular schemes for securing innovation in this business sector. 3. Competing Apple’s strategies and business model 3.1 Opportunities for disrupting innovation as promoted by Apple In order to understand whether there are opportunities for disrupting Apple’s innovative strategies and business model, it would be necessary to explain primarily the key context of innovation, as related to business activities. According to Schermerhorn (2009) there are three modes of innovation: a) process innovation, which refers to the identification of effective techniques for developing business operations, in all their aspects, b) product innovation is related to the identification of unique products/ services and c) business model innovation focuses on the identification of ‘new ways to achieve profits’ (Schermerhorn 2009, p.188). This means that if a firm is interested in competing one or more of its rivals in regard to innovation, it has to focus on one, at least, of the above modes of innovation. Identifying innovative processes, products or business model can offer to a firm the opportunity to disrupt its rival’s innovative strategies, even in the long term. In any case, when seeking for improving its performance in regard to innovation, a firm has to adopt a unique, as possible, business model, i.e. a framework that will describe the terms under which ‘the firm’s value will be increased’ (Fasnacht 2009, p.42). After reviewing Apple’s key strategies in regard to innovation, the following opportunities for competing these strategies have been identified: a) offering of products of low cost but of similar characteristics, b) offering of schemes for product support at extremely low cost, c) offering the chance to customers to have access to services that are not incorporated in the customer services schemes of Apple. 3.2 A business model and product/ service strategy that would help to compete Apple’s strategies and business model For competing Apple the new firm would adopt a unique business model; it should be also proceed to the establishment of a series of strategies, as related to specific aspects of its products/ services. At the same time, the strategic positioning of the firm should be clearly distinguished by Apple, so that the organization has a chance to disrupt Apple’s innovative strategies. Reference should be made to the study of Koulopoulos (2009) who noted that a firm can effectively promote innovation if it manages to ‘focus on its core competency’ (Koulopoulos 2009, p.49). For example, IBM has managed to highly improve its position in the global market by incorporating the following strategy: ‘by offering integrate solutions that would, otherwise, require myriad pieces’ (Koulopoulos 2009, p.49). The suggested business model for facing Apple’s strategies in regard to innovation would incorporate three parts, as described below, in Graph 2 (Appendix). Part 1 would focus on the target customers. Then, the Part 2 would refer to customers’ need for identifying low cost products of high quality. Furthermore, Part 3 would show a strategy for approaching a high number of customers worldwide; saving time and funds would be critical at this level since funds would be left for emphasizing on products’ quality. Finally, Part 4 would focus on innovation as related to the customer-firm relationship; the specific Part refers to a technique that would help firm to increase its competitiveness towards its rivals, including Apple. At the next level, the firm should define the ‘strategic positioning of the innovation’ (Hulsmann and Pfeffermann 2011, p.148). This means that the key benefit of the innovation, the message that would be communicated to the public and the tools that would be used for communicating the above message would be clearly described (Hulsmann and Pfeffermann 2011, p.148). For the particular firm the strategic positioning of the innovation is presented in Graph 3 (Appendix). In addition, the new firm should introduce a series of strategies for promoting innovation: a) products with similar capabilities with those of Apple’s products should be offered to the public but at low cost so that they are accessible to all people, b) customer services schemes of extremely low cost, based on annual fee of as low as $20, would be offered to the firm’s customers, even after the termination of the free-service period, which usually lasts for 6 months or 1 year; c) customers of the firm would be offered the chance to enjoy benefits that are not offered to Apple’s customers, such as monthly discounts in large stores and supermarkets or discounts in tickets of athletic events. 3. Conclusion The identification of strategies that can promote innovation can result to the change of a firm’s strategic positioning. In fact, the introduction of successful innovative plans is often characterized as strategic innovation, showing the capability of a firm to increase its competitiveness by focusing on ‘innovative products/ services and business models’ (Kodama 2010, p.47). For rivals of Apple, promoting innovation can be a challenging task, as explained above. Still, it has been proved that Apple’s strategic choices in regard to innovation have certain gaps that can be used by rivals for securing their market position. The key challenge that a firm has to face when attempting such plan is the following one: innovation cannot have a long duration, since innovative products/ services are always like to appear almost every minute. In this context, for a firm to secure a high performance in regard to innovation it is necessary for an integrate scheme to be incorporated, as the one suggested in this paper. References Apple, 2012. Organizational website. Available at http://www.apple.com/pr/ [Accessed at 29th December 2012] Apple, 2012.Investor Relations. Available at http://investor.apple.com/ [Accessed at 29th December 2012] Fasnacht, D., 2009. Open Innovation in the Financial Services: Growing Through Openness, Flexibility and Customer Integration. New York: Springer. Hulsmann, M. and Pfeffermann, N., 2011. Strategies and Communications for Innovations: An Integrative Management View for Companies and Networks. New York: Springer. Kodama, M., 2010. Knowledge Integration Dynamics: Developing Strategic Innovation Capability. Singapore: World Scientific. Koulopoulos, T., 2009. The Innovation Zone: How Great Companies Re-Innovate for Amazing Success. Mountain View: Nicholas Brealey Publishing. Schermerhorn, J., 2009. Exploring Management. 2nd ed. Hoboken: John Wiley & Sons. Zeiler, D., 2012. The Three Innovations That Will Make Apple Inc. (Nasdaq: AAPL) the First $1 Trillion Company. Money Morning. March 1, 2012. Available at http://moneymorning.com/2012/03/01/three-innovations-that-will-make-apple-first-1-trillion-company/ [Accessed at 29th December 2012] Appendix Graph 1 – Apple v Exxon and Microsoft, from 2006 to 2012 (source: Zeiler 2012) Key advantage towards Apple: the new firm would become popular for its social image Graph 2 – Suggested business model for new firm Graph 3 – Suggested strategic positioning of the new firm Read More