Apples Strategic Management - Essay Example

Introduction The Apple Company is one of the leading firms in the electronics, phone, and the computer industry. Electronics, phone, and computer industry is one of the high-tech industries that require high levels of innovation. Companies operating in this industry face the compulsion of releasing new products into the market in accordance with the latest technology. Moreover, leaders in the industry determine the trend followed by other companies. Since the 1990s, the Apple Company has been a remarkable force in the industry. Products of the Apple Company include computers, mobile phones, operational software, portable digital music, and other accessories. The company has exhibited growth, focusing on high quality products. This paper will discuss the industry conditions in which the Apple Company operates and highlight its position in the market as well as the outstanding strategies. Industry Conditions The electronics, phone, and computer industry is highly competitive. Numerous dominant economic characteristics determine the level of profitability in the industry. Some of these characteristics include the market size, which has been increasing in the recent years leading to more customers. Initially, the industry did not have many companies. However, there have been a remarkable number of companies in the industry recently. There is a high level of competitive rivalry because many of the products have similar features and each company is struggling to produce differentiated products. Technology and innovation cannot receive any form of underestimation in this industry because they determine the rate of launching new products into the market. The market is full of technologically perceptive customers, a factor that compels the companies in the industry to invest in innovation. Moreover, the industry requires a high level of capital and immense investment in research and development. Other economic factors critical in this industry include scale economics, learning and experience defects. A combination of these economic factors determines the profitability in the industry. Competitive Forces in the Industry Rivalry among Existing Firms There is competition in the phone industry between existing firms such as Apple, Samsung, Nokia, and other emerging companies. On the other hand, the computer industry has competing firms such as Apple, Dell, Microsoft, Hewlett Packard (HP), and IBM (O'Grady, 2009). Competitive Force of New Entrants There is minimal chance that new entrants will emerge considering the numerous barriers that exist in the industry. For example, a high level of capital is mandatory for any entrants into the industry. Moreover, entrants must be willing to invest in technology and innovation. These factors limit the number of new entrants (Hill & Jones, 2012). Substitute products The substitute competitive force is of moderate strength in the industry. For example, phones, iPads, and iPods serve as substitutes for computers. Moreover, with the range of products from different companies available in the market, the substitute power is very high. Power of Suppliers Both of these have strong influence on the business. The Company has fewer suppliers, a factor that makes the supplier power very high. For example, in the computer market, Intel and Microsoft remain to be the leading suppliers (O'Grady, 2009). Power of Buyers On the other hand, the buyer’s power has increased recently because phones and computers have become a commodity like items. Companies in this industry have to remain highly innovative in order to release a diverse range of products that seem to satisfy the needs of customers. Succeeding in this industry requires a clear understanding of the customers’ needs and investing in innovation. The modern customers need differentiated products that are equal. Therefore, a company must not compromise quality in its production systems (O'Grady, 2009). The industry is attractive with high chances of profitability as phones and computers become common commodities that each individual seeks to have. However, proper strategies are of critical importance if a company is to register above average profitability. Some of the critical driving forces in this industry include the technological change, product innovation, in the internet, changes in the preferences of buyers, and the need for differentiated products. Company Analysis Apple’s Strategies One of Apple’s generic strategies is cost leadership. The company adopted this strategy after the 1980s, when it was facing bankruptcy. In order to regain its market position, the company developed smart business practices and focused on goods targeting the consumers. It began to rely on low-cost direct materials, allowing it to register minimal cost of production. Moreover, the company formed agreements for web hosting and numerous other applications while its focus was on developing new products (Hill & Jones, 2012). In addition, Apple has a unique differentiation strategy, which allows it to release a diverse range of products into the market while it remains highly innovative. Its products range from phones, iPhones, iPods, iPads, and personal computers. A close analysis of the company’s strategic indicators reveals that it is doing well in the industry. As highlighted above, the industry requires highly innovative companies that offer the customers a range of products. The Apple Company has succeeded in offering just that. The Apple Company registers remarkable profits in the industry. Moreover, the company does not have any outstanding debts and relies on equity for financing (Hill & Jones, 2012). Therefore, it is evident that the company’s strategies are working in the industry to give its competitive advantage. Apple’s Value Chain One of the elements of the company’s value chain is the inbound logistics, which comprises of hardware products, delegate raw materials acquisition, and the automated receiving systems. Operations are also a critical element in the value chain with the company, ensuring that safety receives a priority in the design of the products. Moreover, the company has operations, ensuring that it has a minimal burden of production management. Other elements include outbound logistic as well as sales and marketing (Hill & Jones, 2012). Apple’s Resources, Capabilities, and Core Competencies A close examination of the Apple Company reveals that it has numerous resources. Its smart and intelligent employees form a critical part of its human resources. Moreover, the principle guideline of the company is an innovative vision, which ensures that the company achieves the diversification of its products. This is in accordance with the company’s differentiation strategy. The Apple represents a quality brand and it is one of the Apple’s rare resources. The company enjoys loyalty from customers making the customers an important section of their resources. The company has outstanding capabilities such as cost leadership, designing quality products, proper research, and effective marketing. Its core competencies remain to be innovation, research, development, and differentiated products. Conclusion According to the company’s resources, capabilities, and core competencies, it is evident that the Apple Company has positioned itself appropriately compared to its rivals. Moreover, its resources, capabilities, and core competencies present it with some of the critical success factors in the industry. This explains why the company has maintained its market share since Steve Jobs saved it from bankruptcy. With its continued spirit of innovation and the launching of unique product into the market, the company will always have a competitive advantage compared to its rivals (Hill & Jones, 2012). References Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia: South-Western/Cengage Learning. O'Grady, J. D. (2009). Apple Inc. Westport, Conn: Greenwood Press. Read More