Apple Competitive Advantage - Case Study Example

Apple Competitive Advantage Name Date Course Introduction Global competitive advantage is the ability of firm to have an edge over its rivals in the global market and ability to generate greater value for the firm and its shareholders. Apple Inc is one of the companies that enjoys the global competitive advantage. The company is an American Multinational headquartered in Cupertino California. It develops and sells consumer electronics, online services, smartphones and computer software. The company is well known for its products such as the iPad tablet computer, Mac personal computer, iphone, smartphone, smartwatch and ipod portable media player (Choi, et al., 2011). The company enjoys global competitive advantage due to its high-quality products as well as good brand image. The company is well known all over the world due to its ability to meet the needs of the customers and hence giving it a global competitive advantage. The paper thus discusses using four components how the company reconfigures its value chain to achieve global competitive advantage. Discussion Home country features According to Porter’s diamond theory, comparative advantage resides in the factor endowment that a country is fortunate enough to inherit. A nation can create an environment or conditions that promote growth and development of an organization. According to the theory, the national advantage depends on factor conditions, firm strategy and rivalry, demand conditions, and related supporting industries. Apple is headquartered in the United States of America which its home country. In the United States of America, the skilled resources and the technological base are available (Oh & Li, 2015). This has enabled the company to tap into the skilled resources and developed innovative products. The availability of skilled resources in the home country has contributed to its competitive advantage. The levels of innovations in the country are also high which promotes the development of innovative products. The demand for the products of the company is also high in the country which has enabled the company to gain the national competitive advantage. This has set a strong trend which has enabled the company to anticipate the global trends. The strategy, structure and rivalry of the company have also played an essential role in promoting competitive advantage. The structure of the company allows for interaction and consultations among the employees leading to innovations. Apple has a few rivals in the home country which has enabled the company to focus more on the global market. Although the company has few rivals, the rivalry in the home country has pushed the company to innovate and improve leading to competitive advantage. The government in United States of America usually encourages the companies to raise performance through enforcing strict product standards (Clarke & Boersma, 2015). This has enabled the company to develop high-quality products leading to a competitive advantage in the local and global market. The conditions in the home country have contributed to the competitive advantage of the company in the global market. This is due to the availability of highly skilled labour, resources, and high-quality standards in the home country. The features in the home country contribute to the innovativeness of the company. Customer country features Integrated responsiveness framework involves the pressure that a firm faces in a bid to achieve the dual objective of global integration and local responsiveness. According to this framework, an organization is supposed to put in place measures to ensure that it meets the needs of the domestic customers as well as the global customers where the firm is carrying out its operations (Meyer, Mudambi & Narula, 2011). An adjustment of the practices of the firm may be required for ensuring that it meets the needs of the local customers. As a global brand, the company operates in different countries with diverse customer needs. The company has put in place measures to ensure that it responds to the needs of the host countries where it operates. The integration responsiveness framework has four distinct strategies that the international organizations can use. This includes global strategy, home replication strategy, transnational strategy and multi-domestic strategy. As a global industry, Apple is utilizing the transnational strategy for responding to the need of the local customers. The transnational strategy involves a coordinated approach to internationalization. When using this approach, the firm tends to be more responsive to the local needs while at the same time retaining sufficient central command of the operations. Apple usually uses this strategy by sourcing from a reduced set of global suppliers and carrying out the production process in few locations. The company also optimizes local responsiveness and flexibility for making decisions (Nicolás Marín Ximénez & Sanz, 2014). The competitive moves at the organization is usually coordinated as part of the transnational strategy. Apple is usually involved in a lot of planning, resource allocation and uniform policies on a global basis. The strategy has ensured that the customers can obtain standardized products. The quality of the products is the same in all the countries where the company is operating. This has created global competitive advantage for the company as the customers from the remotest part of globe can obtain high-quality products. Supplier features According to the firm boundary decision theory, determining the activities that should be brought inside a firm and the activities that should be outsourced is an important strategic decision for any organization. An organization that brings the wrong business activity to its boundaries risks losing its strategic focus. On the other hand, an organization that fails to bring the right business to activities to its boundaries risks losing its competitive advantage (Salonen & Jaakkola, 2015). As a multinational, Apple requires raw materials for the manufacture of its products. The manufacturing plants are located in different countries including China where the manufacturing costs are cheap. Reliable suppliers are required for ensuring that the company can manufacture high-quality products. The decision to contract certain suppliers is crucial to the company. The company considers its suppliers as partners as they contribute to the overall success of the company. A track record of any supplier is usually scrutinized by the company before a contract is made. Currently, the company is working with reliable suppliers from different countries. The decision to outsource contract a supplier is usually made at the highest level of the company. The managers globally have to inform the headquarters of any decision to contract a supplier. Reliability and ability of the supplier is the main feature that the company usually considers. The economic characteristic of the exchange is also a factor that is usually considered by the organization. The concepts of governance are usually applied when dealing with the suppliers for managing economic exchange (Clarke & Boersma, 2015). The bargaining power of the company is higher than that of the suppliers. However, the company is usually considerate and does not take unfair advantage of the parties to the exchange. The capabilities of a firm are of great importance to the company. It is for this reason that the company only works with suppliers that have critical capabilities. The company maintains a good relationship with the suppliers. This has contributed to its competitive advantage. Raw materials are usually delivered on time enabling the company to carry out its operations uninterrupted. Partner country Strategic alliance is an agreement between two or more parties to come together for pursing an agreed upon objective while remaining independent organizations (Sambasivan, et al, 2013). The partners have to provide resources for ensuring that the alliance is successful. A strategic alliance can be used by an organization for market entry or reducing the level of completion in the market. Apple has formed strategic alliances with various companies located in different countries. The strategic alliance is usually for reducing completion or promoting the brand image of the company. Sony is one of the electronic companies based in Japan that formed a strategic alliance with Apple. This enabled the company to promote its brand in the country and hence leading to competitive advantage. The company was able to enhance its brand image in Japan as a result of the strategic alliance. The level of competition between the companies was also reduced and hence increasing the market share of the company. Apple has also formed strategic alliances with other companies in the domestic as well as international market. The company has formed strategic alliances with other companies such as Motorola, Philips and AT&T in the past. This has seen the company gaining competitive advantage in the global market. The products of the company have been able to reach more countries in Europe, Asia and Africa as a result of the strategic alliances that it has formed (Choi, et al., 2011). The company recently indicated that it will be forming a strategic alliance with IBM which is also based in the United States of America. Strategic alliances in the country are common in the United States of America, and it has played an essential role in reducing the intensity of market rivalry among companies. As a result of the reduced rival in the market, the company will gain a competitive advantage as it will access more customers. Conclusion In conclusion, it is evident that the company can gain competitive advantage through forming strategic alliances, considering the needs of the customers in the global market as well as working with reliable suppliers. The main source of competitive advantage for the company is its good brand image as well as high-quality products. It is also evident that the company has effective strategies when carrying out its operations at the global market. The competitive advantage of the company is sustainable as a result of the measures that it has put in place. Bibliography Oh, C, H, & Li, J, 2015, Commentary: Alan Rugman and the theory of the regional multinationals, Journal of World Business, 50(4), 631-633. Meyer, K, E, Mudambi, R, & Narula, R, 2011, Multinational enterprises and local contexts: the opportunities and challenges of multiple embeddedness, Journal of Management Studies, 48(2), 235-252. Salonen, A, & Jaakkola, E, 2015, Firm boundary decisions in solution business: Examining internal vs. external resource integration, Industrial Marketing Management. Sambasivan, M, et al, 2013, Factors influencing strategic alliance outcomes in a manufacturing supply chain: role of alliance motives, interdependence, asset specificity and relational capital, International Journal of Production Economics, 141(1), 339-351. Choi, B, G, et al, 2011, Interpretation of remotely downloaded pocket-size cardiac ultrasound images on a web-enabled smartphone: validation against workstation evaluation, Journal of the American Society of Echocardiography, 24(12), 1325-1330. Clarke, T, & Boersma, M, 2015, The Governance of Global Value Chains: Unresolved Human Rights, Environmental and Ethical Dilemmas in the Apple Supply Chain, Journal of Business Ethics, 1-21. Nicolás Marín Ximénez, J, & Sanz, L, 2014, Financial decision-making in a high-growth company: the case of Apple incorporated, Management Decision, 52(9), 1591-1610. Read More