Corporate Strategies at Apple - Essay Example

?Corporate strategies: Apple case study Introduction The current electronic and computer market has grown more in complexity and competition making it essential for organisations to develop more practical corporate strategies to survive. The ability of an organization to study the market, identify the flaws of the current available products, pick specific tastes of consumer, and convert this into products of choice is critical in its success. The current success of apple electronics has been attributed to corporate strategies developed by Steve jobs, which oversaw apple, grow into a major multinational with significant market control and capitalization (O'Reilly, 2011). Corporate strategies are considered the framework developed by an organization to highlight its scope and future direction while highlighting how different objectives of the business shall be achieved within a specific timeline. The development of proper strategic goals is critical in the 21st century computer and electronic market due to the high competition and innovation that characterise this market. Apple, a Cupertino California based American multinational is currently considered as the second largest electronic company slightly behind Samsung in terms of revenue. It is the third largest mobile phone manufacturing company in the world behind Samsung and Nokia in terms of market capitalisation, profits and market control. The growth of the company from a small computer company to a major industry player that rivals other giant multinationals is attributed to the corporate strategies adopted by Steve jobs and currently augmented and supplemented by the ideas of Tim cook (Burrows & Satariano, 2011). The world competitive market has significantly changed and this has enabled apple to make inroads into the industry and create an impact and niche for itself. In this paper, apple as a model company will be analysed to identify the strategic strengths of the company and how these has enabled the company to grow despite the high competition. The changes that have occurred in the market since apple’s entry to provide it with enough footing and space to make an impact will also be analysed. The paper will also provide a three dimensional analysis of the company which includes the identification of the financial strengths of the company, its current market share and relative market strength and the company has used these strategic strengths to succeed. To remain relevant in the current and mobile telephony industry, an organisation must remain highly innovative and quick in introducing new products and ideas. This paper will also discuss some of the product and process innovations developed by the company and how these have enhanced its competitive edge over other market players (Beale, 1998). Post Steve jobs Apple The 2014 global electronic consumer outlook report indicated that changes in the electronic market have resulted into suffering for a number of companies who cannot sustain the heat. Only two companies have remained steadfast that is Samsung electronics and apple Inc. that has been attributed to the organisations’ approach to strategic decision making. Samsung and apple today controls the lion share of the world’s electronic market, which has enabled them to grow their revenue base and increase their profitability. These companies are believed to have remained relevant in this dynamic market due to their abilities to blend talent, innovation and top of the class marketing and brand development strategies supported by clear mastery of the sector’s value chain and distribution processes (Cusumano, 2008). The position of the two companies and especially apple Inc has been attributed to changes, which have occurred in the electronic market, which has given the organisations an age over other competitors in the market. One of the major changes that occurred in the electronic consumer was the introduction of an environment that encouraged the winner-takes-it-all notion thus making second placed companies to struggle for survival. The electronic consumer industry changed into a sector that favoured the top two placed companies and discouraged the growth of the rest. The companies that emerged into the first and second position were provided with enough market support that encouraged cutthroat competition between them that bordered on innovation, market control and strategic management coupled with proper marketing strategies (Tabini, 2013). The market has for long encouraged the growth of Samsung and apple and this explains the high competition characterised by patent lawsuits between the companies. It is this environment that apple under Steve jobs manipulated and strategically managed to cut a major role for itself in the global market. A comparison of the top two firms in terms of revenue-generated reveals the disparity and demonstrates the advantage that this natural corporate occurrence gives to the top two companies. These companies generate revenues way much above the revenues of the other companies below them in the tier combined. In 2012, Samsung and apple had total revenue of 45% for apple and 22% for Samsung while the remaining was shared among the other companies. This shows the competitive advantage that apple has continued to enjoy despite the high number of traditional players in this sector who initially had consumers loyal to their brands (Hess & Rothaermel, 2008). With the market advantage that enjoy, apple develop proper strategic plans that enabled it to remain at the top through the development of proper marketing and distribution channels. One of the strategic decisions and approaches made by apple to benefit from the changes in the environment is the development of profit pursuit. To avoid increasing its market presence without significant market control, apple changed from the tradition of increasing product brands into developing a single great brand at a time. This enabled it to increase its pool of loyal consumers as most of its products had special characteristics that made them favourable to the consumers. This also enabled the company to reduce the cost of operations but increase the research and development cost thus increasing innovation and development of new better consumer electronics (Wooten, 2009). Strategic decision-making post Steve jobs During Steve jobs reign as the chief executive officer of the apple Inc., the company posted significant progress and this enabled it to rise to the second position globally. Some of the corporate and strategic decisions implemented by the organisation involved the development of strong corporate brands that increased the base of loyal consumers, brand image and innovation and marketing and distribution strategies. It has been noted that no organisation in business history has posed indefinite increase in stock price as apple did under Steve jobs. The leadership skills of Steve jobs motivated the organisation and gave it the momentum to grow and increase its competitive strength by asserting its presence in the highly competitive market. His exceptional leadership abilities and skills are attributed to the current position of the company as many analysts argue that the company still uses his strategies and approaches of leadership and management (Mintzberg, 1994). However, when Steve jobs died, pundits were first to predict the fall of apple, as they believed no individual had the capabilities to develop an organisation with great abilities and innovative spirit as done by Steve jobs. Tim cook took over the mantle after Steve jobs and the in tray was definitely full not just with the assignments that involve raising the image of the organisation, but proving critics wrong. This is exactly what cook did because two years since the death of Steve jobs; apple has maintained its stream of innovative products and retained its market position. This success can be attributed to the continued adoption of the strategies developed by Steve jobs years before he died which included a roadmap for the organisation to the top position. During his reign as the CEO, Tim cook has overseen the growth of the company’s profits to $4 billion in the last quarter of 2012 (Wooten, 2009). Three-dimensional strategic analysis of apple Three-dimensional strategic analyses involve the analysis of an organisation’s financial strength in relation to other competitors, the overall market share controlled by the company and the relative market strength. Apple has remained a major market player since Steve jobs reinvented apple and introduced new ways of doing business, developing new products and marketing. His approaches have enabled the business to remain afloat despite the challenges that other market players have continued to face due to stiff competition and a large number of market players (Ashcroft, 2010). On the background of statements like ‘apple is richer than the united states government’ lies the financial strength of the computer and phone giant apple. The company has grown to increase its financial strength significantly and is today considered as one of the richest American companies. When Steve jobs died aged 58, he left a company that was second largest in market capitalisation, second only to ExxonMobil. However, under the leadership of the able Tim cook, apple has grown and is today the richest company in the united states and holds a major role in the global business (Nurik, 2010). Apple remains of the most profitable businesses in the world currently holding the 8th position in terms of annual profits raked by the business on an annual basis. One of the advantages attributed to the massive strength of the company is its restricted product line, which has over the years focused on iPods, iPhones and iPads among other specific product brands. The company sold over 20.34 million phones in the first quarter of 2013, which translates to 4.6% of all phones sold globally and 9.7% in the United States (Di Stefano, Peteraf & Verona, 2009). A comparison of apple’s performance since 2009 to 2011 with other companies including HP and dell shows that the company’s sales, income, ratios have been improving on the background of increased competition. In 2011, apple led in terms of overall sales by posting over $26 billion dollars followed distantly be HP and Dell. The operating profits margin of the company has also remained relatively high as compared to the two other companies with apples value significantly increasing within the three years (Helfat & Peteraf, 2011). Apart from financial ability and power, apple has continued to control a significant proportion of the electronic, computer and phone market, wrestling the dominance of the market from other players like Nokia, Panasonic and Samsung. In 2013, consumer score survey noted that over 192 million people in the united states owned apple smartphones in October, a figure that represented an increase from the July report. The company has thus remained the undisputed market kings controlling over 40% of the United States market and increasing its global share by 1.3% in October 2013 (Adner & Helfat, 2003). As apple dominance continue to grow in the international market as smartphone manufacturer and seller, other traditional companies who have over the years controlled the market like HTC and LG continue to go down. Apart from the smartphones, apple has also strategically positioned its mobile operating system in order to wrestle the market dominance of other companies like Google’s android operating system, which currently controls the market. Android is used by over 52% of smartphone users in the United States while the remaining percentage shared by apple and blackberry operating systems. The introduction of Microsoft operating systems for mobile phones continues to threaten the dominance of android and the infiltration of the market by apple. Microsoft launched its mobile windows 8 operating system by collaborating with major companies like Nokia Inc and HTC. This approach has continued to impact on the aggressive campaign by the apple to increase the dominance of its mobile operating system in the market of smartphones (Zollo & Winter, 2002). Despite the low presence of its operating system, the introduction of more mobile phone designs into the market has enabled the company to grow in market capitalisation and overall control. The company released its iPhone 5S, iPhone 5C and the iPad mini with retina display which has fared tremendously well in the market in global markets including japan and china (Hamel & Prahalad, 1990). The apple market strength has received mixed reviews from different market analysts with a significant number of analysts believing that the dominance of the company has slipped significantly and is currently controlled by Samsung. However, apple has had significant market presence in other countries especially in japan, china and the Middle East. The iPhone market in japan and china has increased significantly with the company moving towards controlling over 50% of the smartphone market. The logo of apple has become a much known and common brand in japan and china and the company continues to increase the base of loyal consumers in the region. The white headphones and earphones associated with apple iPad is growing common in the two countries with majority of the youths developing more taste for the product (Hess & Rothaermel, 2008). However, the United States mobile market has continued to slip from the hands of apple and this has been attributed to the massive campaign launched by Google and Microsoft to sell their android and Microsoft software for mobile phones respectively. Google’s android software has raked into the United States market and today controls over 79% of the total market compared to the 13.2% controlled by apple phone operating systems. The current trends post a worrying state for the company even as it continues to introduce more innovative products into the market using their traditional software platform (Steve, 2006). Mobile phones are based on platform markets, which are very essential in the success of any company, new or old in this market. In the platform model of marketing, the use of third parties is so common and this is the approach that Samsung and Nokia have adopted by using Google’s android. In this situation, other companies like Google build products on top of those already constructed by a company like Nokia and this increases the popularity of such products. Apple however manufactures both its mobile phone gadgets plus the operating system upon which they operate (Cooper, 2013). Despite android and apple looking like the dominant players in the global mobile market, apple’s grip is slowly fading and the decrease in relative market share significantly affects the company’s goal of increasing its market presence. While android posted total sales of over 75% of smartphone in the first quarter of 2013, apples sales remained at mere 15%. However, the company’s market share has remained relatively stable and has made significant progress since the beginning of the year (Steve, 2006). As common in other industry, consumer electronic industry has distinct key success factors, which influence the ability of a business to either succeed or fail. One of the major key success factors in consumer industry is the speed of decision and speed of action by the company. Technology is a dynamic area that embraces change on a daily basis and this change influences the ability of any industry player to remain relevant in the face of the stiff market competition and need for market control (Adner & Helfat, 2003). Apple has for long mastered the art of speed in decision and action and this has been demonstrated by the ability of the management to move fast in introducing market specific products or correcting anomalies in their products or goods. When Tim cook appointed an operations manager and later realised the inefficiency that the appointed had created, he move so fast to eliminate office and this saved the organisation from further operational difficulties. Such speed in decision and actions was demonstrated in 2011 when apple withdraw an online application from the French market. This created widespread criticism from civil society and threatened to arm the company’s reputation in the country. However, to save face and in line with their understanding of the key success factors, the company withdraw the product and issued an apology to their French consumers (Helfat et al, 2007). Apart from decision making and action speed, the consumer electronic industry operates under a high-risk environment, which are encountered from different fronts. Inventory liabilities and shortages that have hit the company in the past increases the volatility of the demand for any company in this industry. The market demands high quality and the ability of the organisation to respond to the special tastes of the consumers and meet them through the development of innovative products. This has been the identity of apple for a long time since the company has been known for its ability to develop customer specific goods and customise them to meet the demands of different markets across the world (Wooten, 2009). The final key success factor in the electronic consumer industry is the ability of a business to develop business insight and develop more than just quantitative data on how the business is operating and how it should actually operate. Proper business foresights enable a business to develop proper consumer satisfaction and increase operational efficiency of the company. Business insights borders on the creation of business intelligence and this has been the main pillar of apple as it has been able to forecast the demands of the consumers and any expected change in taste to develop specific taste-oriented products (Helfat et al, 2007). First movers and first mover advantage of apple First mover is a marketing principle and tag assigned to organisations that move into a specific market segment first before any other competitor. A first market entrant enjoys specific advantages associated with the creation of consumer loyalty and the development of a strong consumer base. As a company that first developed the iPhone smartphone and introduced into the market, apple has continued to enjoy the first mover impacts against other companies like Google’s androids. When apple introduced the iPhone, a number of other companies began independent development of software application, which could operate on the smartphone (Smart Phones, 2014). This created significant market presence and knowledge of their products and earned the first mover advantage. Apple has used the first mover advantage to continue spreading its presence in other economies including japan and china despite tough competition from Samsung. It is based on the first mover notion that the company sued Samsung for patent theft and ended up being paid by the company. As a first mover, the company controls a significant number of patents related to the shape, operations and features of smartphone. Most of the smartphones marketed by the company have similar features and operate on a similar platform thus increasing the loyalty base among the consumers (Zollo & Winter, 2002). Conclusion Apple has continued to be a major market player in the consumer electronic company having entered the mobile telephony a few years ago under the leadership of Steve jobs. Steve jobs established the company on a strong foundation and strategic principles that has enabled it to grow despite the competition from other market players. 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