Apple Business - Case Study Example

Apple: Value Chain, Macro-Environmental Trends and Corporate Social Responsibility Analysis Introduction The first part of this essay explores the activities involved in the value chain of Apple’s production processes in order to determine how the organization creates value for the products. The essay then accesses the macro- environmental trends involved in the operation of Apple while also indicating the implication that strategic decisions of these trends have on the on the organization. The consequent part will then focus on corporate social responsibility used by Apple to satisfy the expectations of stakeholders especially with the realization that some of the functions of the organization are outsourced from external suppliers. 1. Evaluate the usefulness of the value chain in analysing Apple’s activities and demonstrate how it can contribute to adding value in each of the areas Due to the failure that Apple suffered when it choose to undertake all activities in-house, there have been changes in in-bound logistics that now includes outsourcing of some of raw materials. The Apple has resorted to outsourcing as an approach that would reduce the cost of operations. Outsourcing some of the raw materials means the organization also saves time as it acquires components that do not need further research, testing or creation of prototypes therefore increasing Apple’s competitiveness. An example of outsourcing is in the partnership between Apple and Intel which has resulted in greater profits and secure and timely delivery of hardware. Apple has been able to introduce products on time since integration of the technology used for by the two organizations works better than when Apple relied on Free scale (Floor, 2006). The usefulness of the value chain in analysing Apple’s activities in the ability of the organization to transform the high level of creativity used in developing products into sales that cover the costs involved in production as well as pay dividends to shareholders. Therefore, an important aspect that wills improvement sales for Apple is shift of strategy from being a technological company to one that is concerned with the necessary marketing strategy for sustainability of the organization. Marketing and Sales was therefore an important aspect of Apple’s success as it continues to brand products based on the needs of targeted customers. Marketing and sales for Apple products is carried out by a dynamic team of that develops the necessary marketing strategies and campaigns through such introduction of organization logo and use of catchy slogans (Nudd, 2011). This strategy has seen the use of effective slogans that have went on to be popular for instance the use “Think Different” which has already been retired but is still being linked with the brand. The organization also relies on sales and marketing that has well defined potential customers where the creative and educated section of the population has been preferred. Branding of Apple products has also made their outputs quite recognizable especially with the use of the letter “i” in products such as iPod, iTunes and iPhone. The benefit of this branding and advertising strategy is that customers are attracted to the products with the knowledge that new products will satisfy their needs just like previous models did (Nudd, 2011). Apple ensures competitive advantage over other organizations in the industry by having an operation that includes manufacturing of hardware and pre-installing the necessary software. Operation for Apple involves an assembly line that commences from suppliers to in-house functions such carried out by hardware engineers, software engineers and the industrial design department. The finished products are also released into the market through special branded Apple stores in all the countries in which Apple operates where third party branded products from organizations such as Nikkon, Canon, and Adobe are allowed based on their compatibility with Mac. Apple is therefore able to control its products from creation of ideas, manufacturing and at the selling point. The Apple stores ensure the organization interact with customers on a continuous basis therefore being able to react to consumer needs quickly (Floor, 2006). 2. Assess the major macro-environmental trends facing Apple as they operate in the computer software and personal computers sector and highlight the implications on the organisations strategic decisions of the trends identified Technology is among the major macro-environmental trends facing Apple as the organization strives to remain the leading force in the computer software and personal computers sector. The organization has to align its operations to fit in a sector that is characterized by rapid and sustained technical progress. The challenge in keeping up with technology is due to the fact that integrated circuits and other electronic components have continued to be transformed on yearly basis to respond to consumer needs of faster and cheaper components. Since Apple prides itself on being an organization that thieves in a culture of innovation, the technological rends within the sector provides Apple with an opportunity to improve existing computers and software while also designing a new kinds (Katie, 2012). On the technological front, Apple has had to invest on incorporating new ideas and creativity in its products in order to overcome competition from organizations such as Intel which produces highly innovative products and Microsoft Corporation that produces software. Apple has had to respond to the changing technological trends in a number of ways where for instance from 1976 the organization followed a proprietary system of production. This means Apple had to create personal computers by assembling the necessary components, develop operating systems such as MacOS and still develop the applications for the computers. This means Apple had to control the development of both software and hardware for its products which it managed to do based on the fact that the organization had the capacity to create personal computer that delivered great personal experience compared to competitors (Gadman and Cooper, 2009). Following a shift from the proprietary system to open structure by Apple’s competitor, IBM, there were new players such as Compaq and HP who wanted to produce components that were compatible with IBM personal computers. Other organizations that were attracted to the market were Intel for processors and Microsoft for production of operating systems. The following years saw Intel release improved processors forcing Apple to invest in production of faster processors to counter the competition created by new companies (Gadman and Cooper, 2009). There is also the economic environment which affects Apple functioning with the company having to adjust to the low entry barrier which makes entry of new firms into the market very easy. The organization has to introduce products that suit specific customer preferences in order to beat competition from competitors such as Dell, IBM, Asus, HP, Lenovo, Compaq, Ben Q, Acer and Gate Way. There is also a challenge when dealing suppliers of processors since this area has small number of organizations such as Intel, Cyrix and AMD. This circumstance means there is a strong bargaining position for Apple which has to go with the high asking prices of these firms. The organization is therefore forced to content with the low operating margins while also presenting challenge in sales as Apple is faced with a choice involving charging low prices to enhance market share or append premium prices for products to cover costs even with a reduced market share (Katie, 2012). Even as Apple has recorded success in its markets in most developed countries, there is a challenge in the entering new markets in the developing countries. The deferent between operating in markets in developed countries and those in developing countries is that those in developed countries have a higher bargaining power and can easily pay the asking price of the products. The developing countries are characterized by low bargaining power which means the organization has to content with low level of sales (Katie, 2012). 3. Analyse the extent to which Apple use techniques and policies such as Corporate Social Responsibility (CSR) to satisfy stakeholders’ expectations Being an organization that outsources some of the functions such as assembling of products, Apple relies on a strong strategy in its corporate social responsibility approach in order to satisfy stakeholders’ expectation. Among the strategy in place is the Supplier Code of Conduct which seeks to ensure suppliers provide professional conditions for their workers. Introduction of regulation frameworks for the suppliers is due to complains about operations of some of the suppliers who have been accused of malpractice in their dealing with labourers. For instance, workers in Wintek, one of the plants used by Apple suppliers, were involved in a strike over the use of n-hexane. N-hexane is a better cleaning agent compared to alcohol due to its quick evaporation. However, the use of this cleaning agent in Wintek which produced the touchscreens for the iPhones led to health complications for the workers. This was blamed on the fact that n-hexane was a narcotic that attacked the nervous system of labourers who were exposed to the compound. The move by Apple was therefore an important strategy in enshrouding it maintained its public relations through active measures (Barboza, 2011). Corporate social responsibility for Apple has also involved the requirement that suppliers must implement a training program that was designed by Apple. This training targets the awareness of workers on their labour rights with managers and supervisors being trained on important areas of management practice including anti-harassment policies, worker-management communication and worker protection. Additionally, labourers have to be informed about their occupational health and safety based on local laws. In addition to the Supplier Code of Conduct developed by Apple the organization has also trained over three hundred and fifty employees on the safety issues. These employees are regularly sent to plants used by suppliers to help improve workplace safety conditions for their workers (Apple, 2013). Conclusion and Recommendation Apple has been found to run the most successful value chain that relies on creating products that respond to the technological developments of the world, there are still a number of recommendation that will translate into further improvements in the level of sales while also improving the image of the organization. On the backdrop the allegation of human rights abuse by some of the suppliers, the organization should reduce the number of external suppliers or find alternatives for services that cannot be performed within their plants. Further, the organization should embark on extensive public relations strategy that will increase positive perceptions about the organization. Such moves might include introducing their corporate social responsibility in the social media to create more awareness especially based on the fact that the organization has over the years been accused of operating in secrecy. Overall, Apple’s strategies in value chain, macro-environment has been successful in creating an organization with a constantly rising profit margin due to established customer loyalty while it also penetrates new markets. References Apple, 2013. Apple Supplier Responsibility. Available at: [Accessed 22 May 2014]. Barboza, D., 2011. Workers sickened at Apple supplier in China. New York Times, [online] 22nd February. Available at: [Accessed: [22 May 2014]. Floor, K. (2006). Branding a store: How to build successful retail brands in a changing marketplace. Kogan Page Publishers. Gadman, L., & Cooper, C. L., 2009. Open source leadership. New York: Palgrave Macmillan. Katie, J. (2012). Critical marketing audit: The case of Apple Inc. München: GRIN Verlag Nudd, T., 2011. The Greatest Marketer of the Age Steve Jobs demanded that his company build great products—and great advertising campaigns. Adweek, [online] 10 October. [Accessed 22 May 2014] Read More