Competitive Environment of Apple - Research Paper Example

Nowadays, the world has experienced the rapid progress. In turn, it has positively affected business and facilitated the development of the majority of industries. For instance, one of the most recognizable brand in the world regularly produces different innovative technologies and software and distributes not only to the developed countries but also to different emerging markets. It signifies a brand of a similarly-named company called Apple Inc., which has a second-largest market share in the world’s smartphone industry. The purpose of this paper is to conduct an investigation and analysis of business-level strategies, corporate-level strategies and competitive environment of Apple.

Primarily, it would be appropriate to describe a company called Apple. It is an influential American multinational corporation, which produces and sells one of the most popular gadgets in the world, such as iPhone, iPad, iMac and the like. In addition, the company produces and maintains different software and applications including iOS, and iTunes. The company is famous for its positive global citizenship, social responsibility and business growth. To be more specific, in 2015, net operating revenue of the organization was $53,294 million, and operating margin was almost 30% (United States Securities and Exchange Commission, 2016). In comparison with 2014, gross margin was %39.9. These results directly point to the success of the company’s activity. No less important factor contributing to the prosperity of the company is its supply system, which one of the most complex and efficient in the modern world. In addition, the company has set appropriate long-term goals that have provided a positive impact on both Apple, its partners and customers; thereby, ensuring the constant advancement of the organization.

Business-level strategies are core competencies of organizations focused on satisfying customer preferences and needs so as to provide a high rate of return. According to Venkatraman and Ramanujam (1986, pp. 804), “business level strategies signifies detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets”. Thus, it can be concluded that it is necessary for an organization to choose a proper business strategy in order to succeed. In terms of Apple Inc., the most suitable business-level strategies are Differentiation. This strategy is a perfect decision when product or service is generic and standardized. A strategy of differentiation signifies that “value is provided to customers through unique features and characteristics of an organization's products rather than by the lowest price” (Venkatraman and Ramanujam (1986, pp. 805). It can be done by means of high customer service, peculiarities, high quality, image management, advanced technological features, as well as rapid product innovation. From the Apple’s perspective, its products are represented as a part of people’s lifestyle. To be more specific, in order to be a worthy and unique member of society, a customer should purchase the products of the company. The advertising campaigns of the company always spotlight that the products differentiate buyers. These business-level strategies are crucial for the long-term success of the company as they can secure Apple’s competitive advantage in existing products and geographic markets. In other words, these strategies perfectly fit the possible corporate-level strategies of the organization.

Drawing on Donald Beard and Gregory Dess, the corporate-level strategy is “the pattern of major objectives, purposes, or goals and essential policies and plans for achieving those goals stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be” (1986, pp. 665). In other words, a corporate strategy can be defined from the perspective of a variation in the employment of a company's resources among the industries’ portfolios within which all business firms compete. In order to choose the most important corporate-level strategy to the long-term success of Apple Inc., it would be proper to mention two growth strategies. It means concentration and diversification strategies. The first is concluded in the fact that “a firm attempts to achieve greater market penetration by becoming highly efficient at servicing its market with a limited product line” (Beard & Dess, 1986, pp. 668). In terms of Apple, the limited range of products includes gadgets such as iPhone, iPad, and MacBook. In general, the company is focused on promotion and quality enhancement of these products. In spite of the fact that the company manufactures and distributes a good deal more product including iPod, iMac and different applications, the primary endeavors are concentrated on this range of products.

The next corporate-level strategy of growth, which can be applied by Apple Inc. is diversification. It means “moving into different markets or adding different products to its mix. If the products or markets are related to existing product or service offerings, the strategy is called concentric diversification” (Beard & Dess, 1986, pp. 668). Undoubtedly, the organization applies concentric diversification as it tends to widen the variety of a particular product. For example, the company refurbish old models of iPhones in order to market them to various emerging. The main purpose of this move is to optimize outdated resources, increase profits, as well as widely promote the expensive brand across the world. The organization represents these products on different markets taking into consideration demand for a particular type. These strategies are essential for the long-term success of the company as the company is able to keep the high demand for its products; thereby, ensuring the constant growth and taking the leading positions.

Unconditionally, the most significant competitor of Apple Inc. is Samsung. According to NASDAQ, “Samsung controls 21.4% of the total smartphone’s market, compared with Apple’s 13.9%” (Nedobour, 2014). Samsung is a Korean transnational corporation, which produces different technologies and accessory. In addition, the organization provide a wide range of services including insurance and engineering construction. Apple and Samsung have been involved in the intense rivalry for the approximately 10 years. This rivalry started after the invention of the first iPhone. Samsung is the first producer and distributor of smartphones in the world. The leading models of smartphones represented by the organization are Galaxy S5, Galaxy S6 and S7, Galaxy Note and others. The technological characteristics of these products are similar to iPhone 5s, 6, and 6s accordingly. The business-level strategies of Samsung are similar to strategiy applied by Apple; however, there is one difference. Beside Differentiation, Samsung employs Cost Leadership strategy, which means that “organizations compete for a wide customer based on price, which is based on internal efficiency in order to have a margin that will sustain above average returns and cost to the customer so that the clients will purchase your product or service” (Venkatraman and Ramanujam, 1986, pp. 805). To clarify, a product should be acceptable to a wide audience, as well as be produced by the lowest price. Continuous endeavors to reduce costs associated with competitors is essential so as to succeed in being a cost leader. Samsung possesses a highly-effective and standardized manufacturing, which enables it to sell the gadgets by means of the low price. Besides, the product is widespread that lead to the economy of scale. Samsung always seeks to establish lower prices than Apple in order to overcome it. As a result, the prices for a product line of Samsung are significantly lower in the majority of markets around the world. For instance, in average, in the United States of America, Samsung Galaxy s7 edge costs from $670 - $750 while a price for iPhone 6s Plus is ranging from $900 to $1,200 (Nedobour, 2014). In terms of applying this strategy, Samsung seems to be more likely to succeed in the long-run; however, even so, the products of Apple are slightly expensive than the line of Samsung, the customers still desire to purchase them. Therefore, a determinative factor would be customer taste, which is formed by the pressure of a full range of agents, such as advertising, quality, technology and the like. The second business-level strategy deployed by Samsung is diversification, which is conditioned by the production of different budget types of Samsung Galaxy including J, C, A and E series. This move perfectly confronts the diversification of Apple. For instance, in order to compete with Apple in the luxury smartphone segment, Samsung produces Galaxy S7, and Galaxy Note. Therefore, it can be concluded that the both companies adequately apply this strategy.

As for corporate-level strategy, Samsung apparently employs diversification strategy as the essence. The reason is that in order to confront the perfectly positioned products of Apple., Samsung is to create and develop an exceptional value for its products intending to grab customer attention. Therefore, apart from smartphones, the company produces various tabs, laptops and smart watches, such as Galaxy Tab, Samsung Notebook, Samsung Gear, and Samsung Glasses. By this way, the organization involves profits made at other markets in order to withstand Apple. In addition, Samsung has more opportunities for growth due to the operating on several markets including television, insurance and engineering. Therefore, according to this strategy, Samsung is more likely to succeed in the long-run.

According to Donald Beard and Gregory Dess, “in slow-cycle markets, resources and capabilities are very difficult to imitate and products or services reflect strongly shielded resource positions” (1986, pp. 666). As a result, pressures of competitors do not easily penetrate an organization's sources of profitability and strategic competitiveness. It signifies that an organization may hold a monopoly position by means of a complex product design or unique set of product attributes. In a slow-cycle market, Samsung would be exceedingly successful in the long-run perspective due to the specific abilities for growth. Moreover, it would be sufficiently hard for Apple to create and develop products such as Samsung Glasses or set up an influential insurance company in order to substitute them and gain a competitive advantage on the global scope. Thus, Samsung would overcome Apple in the long-term perspective. In turn, “in fast-cycle markets, attempting to sustain a competitive advantage based on one set of resources and competencies may lead to competitive inertia and the company's position may be overrun by aggressive global competitors” (Beard & Dess, 1986, pp. 667). The reason is that in a fast-cycle market, it is easy to produce a substitute or change a strategic direction. Therefore, under such conditions, Apple would be able to surpass Samsung in terms of the growth.

In conclusion, the paper represented the investigation and precise analysis of business-level and corporate-level strategies of Apple Inc.. In addition, there was analyzed the competitive environment of the company. The analysis indicated that Samsung, which is the main competitor of Apple, applies one similar business-level strategy and one similar corporate-level strategy. However, according to the investigation, there was discovered that Samsung employs these strategies more effectively than Apple. Therefore, in the long run, Samsung has more chances for success. Furthermore, in a slow-cycle market, Samsung would be a leader under any circumstances while Apple is able to overcome Samsung in terms of the growth in a fast-cycle market.