Digital Business Strategy of Apple - Case Study Example

Analysis of Apple Incorporation

Introduction

Apple Incorporation has long been known as a technological behemoth since its inception by Steve Jobs. It has consistently appeared amongst the top 10 companies in the world according to ratings done by the Forbes Magazine in its annual Forbes Global 2000 feature. In the year 2016 edition of this feature, Apple has been indicated to assume position eight globally. Indeed, the company posted impressive results in all the relevant metrics, which allowed it to outshine its peers and hold the first position in terms of performance. According to the figures released for the past year, Apple posted $233 billion in terms of revenue, $53 billion profits, $239 billion worth of assets, and a market cap of $586 billion. The performance of Apple in these metrics has made Apple the biggest tech company in the world at the moment, beating competition from other equally impressive competitors such as Samsung, Alphabet, and Microsoft. The above-mentioned metrics are the hallmark of a successful business model that Apple applies.

The financial success that has been enjoyed by Apple Inc. is attributable to a variety of factors such as its mission, vision, and company stakeholders. Apple’s status as one of the most valuable company globally is found upon its mission and vision statements. The firm has embodied elegance and design in its product innovations. Nonetheless, the characteristics are directly associated to Apple’s vision and mission statements that have been demonstrated to inspire the company’s workers to contribute and support the organization’s innovations (Kelly, 2015). In consequence, the company has gained unrivalled competitive edge over players in the same industry leading to consistency in its financial performances over the years. Similarly, the company has adopted a unique strategy of changing its vision and mission statements so as to conform to the prevailing organizational objectives as well as market conditions.

The company religiously follows its current mission statement and vision statement in order to conserve its competitive stratagem. The mission statement of Apple is used to indicate the necessary actions that will make the company to continue being successful. Similarly, the vision statement demonstrates the trajectory of Apple’s growth as well as its product development. Analysts believe that these two statements have been instrumental in raising Apple to its current pedestal.

Furthermore, Apple’s success is derived from its capacity to satisfy its key stakeholders. By engaging in varied social corporate responsibilities, the organization significantly alters the perceptions that stakeholders have regarding it. Given the fact that Apple invest in high value brands of mobile phones, the company ensures that its policies and strategies reflect the need of stakeholders. The firm’s knack to enact approaches that are firm and holistic sees to it that the interests of stakeholders are covered. A majority of the stakeholder interests that are captured by the afore-mentioned approaches are fundamental to the existence of the business (Kelly, 2015). As a matter of fact, the employees, customers, investors, and the suppliers’ and distributors’ employees guarantee that Apple meets its objectives since the company satisfies their needs. Therefore, the satisfaction of the stakeholders majorly through the implementation of effective social corporate responsibility by Apple significantly contributes to the excellence of the company.

Forces of Competition

The five forces have compelled Apple to formulate strategies that are geared towards addressing them and their impacts externally. The Porter’s five forces as they are famously known possess the capacity to limit Apple’s revenues and market shares. In the environment within which the firm operates, the competitive rivalries have been shown to be a strong phenomenon that has influenced Apple to invest a lot of resources in innovative ideas. Intrinsically, the prevailing bargaining power of consumers has similarly forced the company to produce unique products that will satisfy the consumers.

The individual bargaining power of suppliers is weak. The company is supplied by over 200 companies. As a result, the suppliers cannot impose their wills on the company. This has made Apple to disregard them to a certain extent when making innovative and industry leadership strategies (Mitchell, 2014). The existing threat of substitution has also impacted the way that Apple produces it products. In order to combat the threats that are posed by substitutes such as digital cameras, Apple produces products with advanced features thereby swaying customers’ preferences.

Lastly, the threat of new entrants into the market segment that Apple dominates has been indicated to be moderate. The capital-intensive nature of Apple’s business means that numerous companies will find it incredibly hard to start producing similar products. However, there are other giants such as Google that have the financial muscles to enter into the market. Other companies such as Samsung also used to be new entrants into the market implying that Apple may still be under threat from other established technological companies. Cognizant of the threats that these new entrants may carry, Apple has intensifies its marketing and innovative capabilities so that it may maintain its competitive advantage in the face of this onslaught by new entrants.

Apple’s SWOT Analysis

Organizations such as Apple surely have certain strengths, weaknesses, opportunities, and threats (SWOTS) that are related to them. The analysis of the above aspects is fundamental in allowing them to make relevant strategic decisions. With regard to Apple, the analysis is presented as below:

Strengths: This feature of the company’s SWOT analysis leads to the identification of the factors that enable Apple to combat existent threats in its business setting. They include the following: effective innovation processes, high profit margins, and powerful brand image. The company is amongst the most valuable as well as strongest brands globally giving it immense benefits in the market.

Weaknesses: This feature of Apple’s SWOT analysis focuses on the factors that may prevent the company from achieving its major objectives. Apple has shown a distribution network that is limited, which hampers its sales capacity. Also, the company sells its products at exorbitant prices while the gadgets that it produces are limited to high-end consumers. All those factors combined lead to missed sales in the potential markets for the company.

Opportunities: There are various opportunities that an established company such as Apple Inc. could still exploit. The purpose of opportunities is to impact the overall strategic direction of any given company. In this regard, Apple can still expand its distribution network, produce more phones and tablets due to rise in demand for the same, and create new product lines so as to capture a wider market.

Threats: Since it is at the apex of tech sphere, Apple is faced with numerous threats from different sources. Such threats have the potential to compromise the financial performance of the company. Apple’s business environment has been characterized by intensive competition from other players, imitation of its products from companies such as Samsung, and increasing costs of labor in nations whereby Apple plants are situated. All these have been identified as presenting a significant headache for Apple’s management.

The SWOT analysis has established that Apple Inc. has numerous strengths that can be employed to address its organizational weaknesses. Also, the strengths can be used to capitalize on the opportunity to enhance its distribution channels. Additionally, it has the strong brand image that can be utilized to launch new products in the market. However, the threats can be mitigated through the creation of a powerful portfolio for the organization. Continuous investment in innovations will also make Apple enjoy a competitive advantage over other players in the industry.

Competitive Strategies

The challenges that Apple currently faces is maintaining its competitive advantage over other parties in the technological arena. The company can use the corporate-level strategy to diversify into other products apart from the high-end ones that it is currently offering. In addition, Apple can employ business strategies such as continuing its policy if releasing few but highly innovative and anticipated mobile devices into the market (Mitchell, 2014). The organization can also bundle its products such as the iTune alongside the use of iPad and iPhone, so as to have a complete package, something that the consumers will absolutely desire to have. Since it already has an established and loyal customer base, the company should focus on improving the existing products so as to enhance the satisfaction of its clients.

It is conceivable that the company may also use a functional-level strategy to improve the experience of its consumers. Apple should consider slightly varying the prices of its premium products given the fact that the purchasing power of its customer niche differs in as much as they are rich. The alignment of the above-mentioned business strategies with the company’s marketing strategy can prove an effective tool in terms of making the business more dominant in its niche. Indeed, in the functional-level strategies, Apple ought to have in its possession programmers that can make its products not only high-end but easy to use by the intended consumers.

The above-mentioned plan are useless if they do not reach the intended recipients, stakeholders in this case. For this to happen, Apple needs a clear communication plan that will inspire confidence in the stakeholders, who will in turn invest in the plans. The achievement of this objective should begin with the CEO of the company, Tim Cook, making the announcement to all the users of the company products via various channels such as the social media and traditional news channels (Bharadwaj, 2013). He possess the capacity to be perceived in credible lenses due to his position and his earlier collaboration with Steve Jobs. In addition, the company should use its presence in social media spheres to communicate its plans to stakeholders, a majority of whom are found in these places (Heracleus, 2013). The messages themselves should contain both rational and emotional appeals. In the former, the company ought to tell the stakeholders how the company will satisfy their needs using the strategies while at the same time ensuring that profitability is not compromised. The emotional perspective will entail the organization using the strategies to assure the stakeholders that the company will continue producing high quality products. As a matter of fact, the strategies will be intended to improve on the existing quality of its products.

Apple’s Corporate Governance Strategies

Corporate governance is the system that governs and controls business corporations. Apple, as one of the most celebrated organizations in the world has made certain changes to its corporate governance structure. According to the latest policies, the company’s board of directors is supposed to contain independent board of directors occupying the majority of positions in the board. This allows them to make autonomous strategic decisions regarding the direction that the company should take since they are not behooved to anyone. The company has generally benefited from this governance policy as these board of directors do not have any vested interests while approving the company’s strategic decisions.

Moreover, there is no term limit to the membership of the board of directors. The absence of age curtailing in the board is significant since it permits them to have enhanced insight into the operations of the corporation. The immense oversight authority that the corporate governance policies have offered the company’s board members ensures that each strategic decision that is made is well thought of and is in the interest of the company and not a few individuals. In consequence, Apple will remain ahead of the pack as far as making strategic decisions is concerned.

Effectiveness of Leadership

The leadership within Apple Incorporation has always been effective since the times of Steve Jobs. Tim Cook, the current CEO, has virtually continued with the leadership style that was infused into the company’s culture by his predecessor. As a consequence, the organization’s leadership has continued to support innovations, a phenomenon that has always set it apart from its competition. However, there are certain areas that the company need to give emphasis. Recently, various allegations have been made to the effect that Apple does not treat their employees properly. As this falls within the realm of leadership, Tim Cook should perhaps intervene and change the situation to create a more effective brand of leadership that concentrates on employee welfare.

Efforts by Apple to be Ethical

Given the size of the company, it is integral that ethics form a fundamental part of the organization’s operation. Apple, in its Annual Supplier Report 10th edition, has taken it upon itself to formulate fair employment practices as well as safe working conditions within its supply chain (apple.com). The company has set the bar high for suppliers, which has ensured that all the facets of the supply chain operate appropriately. Also, the company has set steps to ensure that all of its workers are treated in a manner that respects human rights. The phenomenon has led to a fired up workforce hence the various innovative ideas that are produced by Apple. The organization respects the environment within which they work. This is especially the case with its suppliers as the company forces them to sign a Supplier Code of Conduct, which forces them to respect labor laws in their countries. As a result, the suppliers treat their employers better in as much as they come from low labor cost countries.

Conclusion

In conclusion, Apple has managed to stay ahead of its competitors due to suave business and corporate strategies that it has been making. The vision and mission statement of the company have been utilized by the corporation to influence its decisions and strategies thereby allowing it to blaze the trail in the tech world. There are several factors in the external and internal environment of the company’s operations, some of which the company can utilize during decision-making. As a firm that operates in a competitive environment, it needs to have more competitive strategies in place in order to compete with other players in the industry. In line with this, Apple has employed corporate, business, and functional-strategy levels of competitive strategies to beat competition from the likes of Samsung. Further, the organization has changed its corporate governance policies to reflect the present realities. Also, the performance of the company and its pedestal in the tech field is directly attributable to the kind of leadership that is offered by its current CEO Tim Cooks.