Strategic Management, Sector Matrix versus Value Chains in Apple Company - Essay Example

Strategic management; sector matrix versus value chains in Apple Company s Submitted by s: 13th March 13th March Strategic management; sector matrix versus value chains in Apple Company This paper will look at the relevance or the effectiveness of the three analytical tools. It will also provide the remedies for improving the performance of a company from the models. The three tools that the paper will investigate are; porter’s value chain, thecommodities chain framework as proposed by Greffi and Korzeniewicz, and Sector Matrix as proposed by Froud and others. The values and limitations of the approach will be looked into in this paper with special reference to the operations of Apple Company. Porter 1985 observed that the firm is a culmination of activates that are often performed by the players in the market to design, make, promote and deliver these products to the final consumer (Walters and Rainbird, 2004). All the activities mentioned above lead to the satisfactions of the customer and they generally tend to factor in the needs of the final consumer. According to porter, the company can attain the competitiveness that it requires when it is able to successfully implement a generic strategy (De Kluyver and Pearce, 2009). The generic strategy focuses on the creation of differential products, focusing on the attainment of cost leadership and focus on the ultimate usability of the products. In the classification proposed by porter, the activities aimed at the attainment of generic strategy can fall into a class of inbound logistics, operations, outbound logistics marketing and support service (Ward and Mccreery et al., 1998, pp. 1035--1046). The aboveclass of activities falls into the primal category. Sector matrix The world is increasingly turning out to be very competitive (De Kluyver and Pearce, 2009). The competition among the business both at the local and international level is so high such that the success of any organization in the modern society has to understand the mechanisms of the market (Walters and Rainbird, 2004). The clear understanding of the market dynamics is important for the organizations that would be able to stay at the top of the business operations (Certo and Certo, 2006). Sector matric is one of the approaches that the organizations can use to stay ahead of the other by gaining significant competitive advantage by providing the organizations with the demand andsupply information. Sector matrix is an extension of the porter’s theory of value chain (Venkataraman and Pinto, 2008). It also incorporates the ideas from the commodity chain (Ward and Mccreery et al., 1998, pp. 1035--1046). This tool enables the creation of the idea of the market in the mind of a person (Nell and Argyrous et al., 2004). Unlike the value chains, the use of sector matrix has the ability to work with the processes and products that are complex (Tallman, 2007). The selections of the ford company, which is in the smartphone industry, will be effective in the indication of how the sector matrix can deal with the difficult aspects. The automobile industry has the characteristics of high commodity price, a complex distribution channel and complexity of the products (Vanek, 2002, pp. 12--24). Having an understanding of the industry is extremely important. The inventions of different scientific analysis techniques have led to the development of a lot of understanding of the industry (Hunger and Wheelen, 1996). However, most of the systems are limited to some factors. The methods are not sufficient in the determination of the actual variables that have an impact on the market (Vanek, 2002, pp. 12--24). For instance, the value chains is not capable of exploiting the entire variables that are pertinent in the decision making process. The value chain analysis is capable of making some analyses of a few aspects about the demand and supply (Certo and Certo, 2006). It may also fail to cover the effects of the other complex variables apart (Liestol, 2009, pp. 29--34). This makes the value chain an effective tool in the analysis of the commodities that are less complex such as the foodstuffs. For example, it is hard to point out that the processors fitted in some of the phones are made by other producers that do not work in the mobile phone industry (Vanek, 2002, pp. 12--24). This is because some of the items incorporated into the products of Apple Company come from companies that have little or nothing to do with the mobile making industry (Lee and Kim et al., 2011, pp. 681--690). On the other hand some of the products that are added in the production line are made by the companies are associated with the mobile making industry such as Samsung processors. This means that apple ought to adopt another approach of analysis apart from the value chain analysis since its operations are complex (Lee and Kim et al., 2011, pp. 681--690). The distribution of the products that are assembled into the final product such as the iPods, iPads and iPhones is very complex and the value chain may end up being ineffective in the analysis. The look at the phone making from a purely commodity perspective has led to the creation of the wrong notions in the minds of the people (De Kluyver and Pearce, 2009). The application of the sector matrix approach can help the people form the right concepts about the mobile phone and tablet manufacturing industry as opposed to the use of the commodity or value chain approach (Certo and Certo, 2006). The application of the sector matrix model makes the people have a better understanding of the mobile manufacturing industry, the demand behavior, supply and the common distribution channels since the approach assumes a whole some approach (Hunger and Wheelen, 1996). Therefore, when it comes to the explanation of the mobile manufacturing sector the use of sector matrix leads to the formation of the best scenario for the industry. (Venkataraman and Pinto, 2008)The sector analysis leads to the creation of the correct outlook of the entire sector. It also leads to the creation of the right assumptions on the interaction of the company with the other players in the industry (Jeffs, 2008). The sector analysis approach is directed by the demand for the product from both the people and firms that are involved in the sector (Dess and Miller, 1993). The demand is what makes it possible for the people to buy the products of Apple Company more than any other producer of mobile phones does. The understanding of this demand made it possible for apple to make products with dwindling bill of materials. The tool that apple should use is the sector matric for the analysis of the demand and general understating of the working of the market (Krajewski and Ritzman et al., 2007). Apple Company is a complex company and the selection of the apple company is because it is possible to use the sector matrix as the analysis tool (Dess and Miller, 1993). The paper will be able to analyze the issue of demand of the complex process of apple products. The other less complex industries would use of other approaches such as the commodity chains to analyze their demand patterns (Krajewski and Ritzman et al., 2007). When analyzing the demand, sector matrix of apple goes ahead and analyses the nature of the demand for the high-end smart phones and tablets (Oren and Seth et al., 2009, pp. 79--88). The matrix analyzes the consumer’s disposable income and the general spending by the households (Hoover, 2001). When one looks at the demand for the smart phones, it is hard for any one company to come up with the adequately clear image of the entire industry since there are many companies and consumers involved by the end of the day. During the recession of 2007 to 2009, the ability of the consumers to purchase commoditieswent down. This meant that the companies that were operating at that time whether in the high-end market or the less complex market had to increase their supply in order for them to attain the desired level of sales (Certo and Certo, 2006). The use of sector matrix in the economy will always lead to the provision of the right information of the demand for the product by laying most of the focus on the disposable income of the households that form the majority of the clientele for the organization. According to the natureof mobile phones, they are not the type of products that a person buys on a daily basis (Dess and Miller, 1993). The smartphones are by far a luxury to many consumers. This means that the people that have the ability to buy the phones ought to have high disposable income (Saloner and Shepard et al., 2001). The sector matrix can provide the company with such information such that the company designs products that meet the expectations of its customers in the right manner (Hunger and Wheelen, 1996). The application of the sector matrix does not help the organization come up with the actual demand for a product (Jeffs, 2008). On the other hand, the use of the approach helps the organization in the creation of the products that have the right demand from the people. The information is relevant in the creation of a product that can be maintained by the consumers at that time (Tallman, 2007). The sector matrix may also provide the company with the best strategies to be used in the pricing of commodities (Krajewski and Ritzman et al., 2007). The model may also be used in the determination of demand and supply levels in the entire economy. On the demand side, sector matrix has enabled the company to relate with the rest of the players in the industry such as the telecom service providers such that the service providers purchase the mobile phones from apple company at a higher price than the one that they sell to the customers on the condition that the customer subscribes to the service offered by the companies (Hitt and Ireland et al., 1999). Sector matrix framework and supply Similar to the issue of demand, the sector matrix has the capability of helping the interested parties in determination of the supply behavior for the part components that make up the smart phones and tablets from apple. The modern market is the interplay of the demand and supply sources. For example, whenever the supply of the smart phones and tablets is down the demand is high and vice versa (Hitt and Ireland et al., 1999). It is important for the paper to look at the issue of economy in the modern business environment. The business does not operate in isolation (Sutherland, 1989). The supply of the subcomponents may be limited by the activities that are recurrent in the industry and other issues related to the financial consolidation (Jeffs, 2008). Looking at the mobile phone manufacturing, it is important to understand that the market is composed of the products and the manufacturers in order to understand the concept of supply. The understanding of the individual suppliers calls for the adoptions of the sector matrix. As stated before, the sector matric help in the creation of an understanding of the market and all the players involved (Hitt and Ireland et al., 2005). The creation of a clear understanding of the industry is important in that the market for the production of the mobile phones is composed of different sectors that compete and produce the components suited into the mobile phones. The assembling of the mobile phones also calls for the interaction with the rest of the companies in the market that may not be related in the creation of the mobile phones. Therefore, the sector matrix provides the users with the information that is needed for the adequate creation of the best scenario for business interactionand collaboration between the supply partners in order for it to create value to the ultimate consumer (Hitt and Ireland et al., 2005). The ability of apple to master the use of the sector matrix has enabled the company to come up with best production relationships such that the bill of materials for the products inclusive of the manufacturing cost is low (Saloner and Shepard et al., 2001). In conclusion, the sector matrix is an important tool in the management of any modern organization. This tool provides the company with the information on the market trends and the willingness of the final consumers in the disposal of their income (Hoover, 2001). The sector matrix provides the company with the vivid image of the complex business situations. This paper looked at the suitability of the value chains and sector matrix as strategic tools for the mobile manufacturing industry and specifically for Apple Company. The industry is suited to use the sector matrix due to the complexity of the mobile phone manufacturing. The sector matrix is important in that it provides the respective users with adequate information for the modification of the products to suit the demand patterns. The value chain is only applicable in the organizations that have less complex products (Jeffs, 2008). References Certo, S. C. and Certo, S. T. 2006. Modern management. 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