Apple Inc. Strategy Development - Case Study Example

Outline I. Introduction II. Best Value Discipline for Apple Inc. III. Generic Strategy IV. Grand Strategy V. Conclusion Apple Inc. Strategy Development Apple Inc. is one of the most successful firms in modern history. This company was not always successful in its lifetime. In fact, the current success is the result of a resurgence of the company through the pursuit of clearly defines strategic measures[Jef06]. In this sense, the company cannot afford to relent on its path towards market domination because its rivals and new entrants can easily catch up and take over the market leadership position that Apple Inc. currently enjoys. This paper explores the three levels of strategy that the company can use to consolidate its position. The three areas of strategy include the identification of the best value discipline for the company, the best generic strategy option, and the most effective grand strategy that Apple Inc. ought to pursue. Value Discipline All companies usually choose between three broad value disciplines. This three value disciplines are operational efficiency, product leadership, and customer intimacy[Tre93]. Operational efficiency refers to the ability of a company to provide a product without hassles and with minimal inconvenience to the customer. Usually, it calls for investment in powerful supply-chain management tools to ensure that there are no delays in the production process. Companies that attain efficient operations as a value discipline also tend to provide basic products made with little or no embellishments, and with a very small parts-count. They employ advanced levels of designed-for -manufacture concepts. In order to attain product leadership as a value discipline, a company must invest in advanced product research and development techniques because it requires that the company retain leadership in its ability provide new products for its customers[Tre93]. The IT industry seems to require this as a basic value discipline because of the high rate of innovation in the industry. The amount of game-changing discoveries in the IT industry renders new products obsolete within a very short time. Thirdly, adopting customer intimacy as a value discipline calls for the use of personalized methods of production and marketing that aims at developing a sense of personal attachment with customers[Tre93]. This approach works best for low volume and high margin products for the target market. The best value discipline for Apple Inc. is product innovation. This comes from the fact that Apple Inc. is an IT based industry dealing with personal products. The main competitive edge for companies producing IT devices for personal use is in the innovativeness of the products. Pursuing operational efficiency will limit the innovative edge that Apple Inc. enjoys because of the efforts it will divert to attain efficiency. On the other hand, Apple Inc. develops products for the mass market. It is very challenging to implement customer intimacy as a value discipline when it comes to productions for the mass market. However, there may be strategic benefits in pursuing a two-fold strategy both as a product leader and as an efficiency operator because Apple Inc. may not always be a product leader in the unpredictable IT industry. Product Innovation alone may also make it too expensive for Apple Inc. to return a profit because of the high cost of product development. Generic Strategy Porter identified three elements of generic strategy that informs the approaches organizations use to gain market share. In Porters model, the three strategies come from a matrix developed by comparing the scope of the target market with the source of advantage[Por80]. In this sense, a company can pursue a strategy aiming for a niche market or for the mass market. In addition, it has to make a decision regarding whether it will compete on cost or on differentiation. If it competes in cost in the mass market, then it is aiming for cost leadership. If it competes on differentiation in the mass market, them its goal is to attain leadership via product uniqueness. Thirdly, if a company either competes on the uniqueness of its product or in cost but aims for a niche market, then it its strategy is “focus”[Por80]. These three strategic positions under Porters generic strategies represent the options that Apple Inc. needs to consider as it works on its future prospects. Apple Inc. operates in a mass market. The company targets a broad range of customers in and out of America. Apple Inc. is not a cost leader in the segments it serves. Its products are more expensive compared to the those of its rivals. The company continues to have market leadership because the customers value the innovative edge the company has. It is also a producer of high quality products. Therefore, there is no immediate need for the company to consider competing on cost. However, at some point, if the rapid change that characterizes the IT industry declines, the company must be ready to compete on cost[Mon]. It is important to note that it has been possible for rivals and counterfeiters to replicate most of Apple’s products. It shows that the threat of substitutes, as well as the threat of new entrants is real for Apple Inc. Grand Strategy Grand strategy in business is a four-quadrant model that compares market growth and competitive position. Companies with a strong market position and strong market growth prospects usually seek to expand and take more market share[Pea05]. In this sense, such companies can afford to be aggressive by seeking integration in any direction to consolidate their competitive position. If the company is in this position because of one product, then product diversification is a worthy strategic aim to diffuse the risk of losing market share once the competitive advantage wears off. The second position a company may find itself in is slow market growth but with a strong strategic position[Pea05]. In this sense, the company will need to find ways of increasing its market share. This means that the focus of the company is market penetration to enable it attain acceptable profitable levels. As such, the company is free to find opportunities that will add tempo to its market growth. The third position is weak strategic position but with strong market share. This can come from the emerging threat of new entrants or access to proprietary systems and productions methods by rivals. The strategies a company in this positions employs aim at taking advantage of market share to rebuild competitive advantage such as deployment of new products or acquisition of rivals with a strong market growth potential. The fourth position is weak market position and weak strategic position. This is the position that dying companies or new entrants find themselves. For a dying company, it may make sense to wind up and distribute assets to shareholders. On the other hand, for new entrants, it calls for a process of building strategic advantage and market share. Currently, Apple Inc. is in a very strong strategic position based on its ability to produce trend-setting products for the growing IT-products market across the globe. This, coupled with a strong reputation for quality, gives Apple Inc. a very strong strategic position in the IT industry. The market for IT products is also on the rise since more countries are joining the ranks of the industrialized nations hence a growing middle class who are key consumers of Apple products. Apple Inc. seems poised for more growth in the years to come. In this sense, the best grand strategy for Apple Inc. is to concentrate on product development and market penetration. In addition, Apple Inc. need to consider the opportunities it has to integrate with other players in the industry to increase the efficiency of its supply chain. References Jef06: , (Jeffrey & Norton, 2006), Tre93: , (Treacy & Wiersema, 1993), Por80: , (Porter, 1980), Por80: , (Porter, 1980, p. 32), Mon: , (Montgomery & Porter, 1991), Pea05: , (Pearce, 2005), Read More