A Combination of Competitive Strategies of the Apple Company - Coursework Example

Module Number Table of Contents Executive Summary 3 Introduction 4 Background Information about Apple Incorporation 5 Objectives 6 What is business strategy? 6 Competitive advantage 7 Brief description of the competitive strategy used by Apple Incorporation 7 Strategy used by Apple Incorporation 8 Innovation and differentiation Strategy 8 Advantages of this strategy 10 Disadvantages of the strategy 10 Conclusion 11 Recommendations 11 References 13 Executive Summary This paper is about the competitive strategies utilised by Apple Incorporation, an American multinational corporation that has its headquarters located in Cupertino, California. Apple Incorporation develops, designs manufactures and markets software, personal computers, consumer electronics and peripherals, networking solutions and services. The company has produced many successful products like the IPods, IPad tablets, ITunes media, iOS operating system, Safari internet browser, the OS X operating system, Macs, iWork, iLife, and other professional software. Apple Incorporation is one of the few companies that bear outstanding competitive strategies that have enabled it to attract and retain a large number of customers. The Apple Company uses a combination of competitive strategies, which include the differentiation and innovation strategy. This strategy involves introducing entirely new services and products, which are better than the rivals’ products producing and releasing a wide range of products and services that the rival companies are not offering. Competitive Strategy Utilised by Apple Incorporation Introduction Many successful business people know that strategies shape the company’s destiny. In order to flourish in the current business environment characterised by stiff competition, organisations need to develop and implement strategies that will help them increase their market share. Strategies are confined to a set duration of time; therefore, companies need to keep changing their strategies with time in order to keep up with the customer needs. Different types of strategies exist in the business setting and they include technology strategy, financial strategy, competitive strategy and supply chain strategy (Furrer, 2011:7). However, this report will concentrate on the competitive strategy utilised by Apple Incorporation to set the company apart from its competitors. Competitive strategy is the highest level strategy and it aims at giving a company competitive advantage. It relates closely with the company’s vision and mission and helps to set other strategies utilised in the company. Apple Incorporation is one of the few companies that bear outstanding competitive strategies that have enabled it to attract and retain a large number of customers. The company has many strategies and utilises them in different ways. Apple Incorporation is made up of many subsidiaries that concentrate on a range of products. Some subsidiaries deal with software development, others are concerned with the hardware and other sections focus on entertainment products. These sections are responsible for the innovations taking place in Apple Incorporation and they assist in bringing differentiation in the company’s products. Steve Jobs, a former Apple’s Chief Executive Officer, is credited for many strategies used by Apple as he was innovative and had great leadership skills (United States Stocks and Exchange Commission, 2012, pg. 2). Background Information about Apple Incorporation Apple Incorporation is an American multinational corporation that was started in April 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. It has many subsidiaries in different countries but its headquarters are in Cupertino, California. Apple Incorporation develops, designs manufactures and markets software, personal computers, consumer electronics and peripherals, networking solutions and services (DataMonitor, 2009, pg. 4). In addition to these products, Apple Incorporation also manufactures and markets digital music players like the IPods and runs the ITunes media and its components. Some of the well-known software developed by Apple Incorporation is the iOS operating system, Safari internet browser and the OS X operating system (Bejarin, 2011). The company’s mission statement states that Apple aims at designing Macs, which are the best personal computers in the world, alongside the OS X, iWork, iLife, and other professional software. Apple’s vision is to contribute significantly in the world by manufacturing tools for the mind that ensure mankind advancement (Wooten, 2010, pg. 3). Apple operates more than four hundred retail stores worldwide and online iTunes and Apple stores, with the former being the world’s most prominent music retailer. Apple Incorporation is the second largest Information Technology Company and the third largest mobile phone manufacturer in the world. The only company that has surpassed it is Samsung (Morning Star Equity Research, 2012, pg. 1). Apple Incorporation is devoted to delivering the best customer experience by developing innovative software, hardware, services and peripherals. The company has proved that it has a huge capability of developing and manufacturing its own products that are superior compared to others in the market (United States Stocks and Exchange Commission, 2012, pg. 1). Objectives The report’s objectives are as follows, pg. 1. To define business strategy and explain the meaning of competitive advantage 2. To identify the competitive strategies used by Apple Incorporation and give illustrations of the actions carried out to implement these strategies. 3. To evaluate the competitive strategies utilised by Apple Incorporation and identify their advantages and disadvantages 4. To make appropriate recommendations that can be utilised to advance the company in the future What is business strategy? A business strategy can be simply described as the means by which a company or a business starts out to accomplish its intended goals or objectives. David Teece terms a business strategy as a way of articulating data, logic and other activities that sustain the value of a company, in a way that will help in proper utilisation through planning viable revenue structures to ensure that the enterprise delivers value to the clients (Teece, 2010, pg. 179). Business strategies can be short term or long term and they usually play a significant role in giving the company competitive advantage. As stated in the introductory paragraph of this report, business strategies are very important and they determine the success or failure of a particular company. Every activity in the company ranging from the employees’ duties to the management’s, should be carried out in line with the business strategy of the company. Business strategies usually have a time frame where some may last as long as ten years while others may be short term, therefore, last for a few months or years (Zekiri and Nedelea, 2011, pg. 63). Competitive advantage Competitive advantage can be described as the ability of a company to outperform its rivals by securing a larger market share, which means attracting more customers, and the ability to defend against competitive forces (Ehmke, 2010, pg. 1). Competitive advantage can be gained if a company offers its customers greater value by producing high quality products, lowering prices, providing outstanding customer service, locating the premises or retail shops in a convenient geographical area or offering the customers additional features or products for a low price. Other properties that give organisations competitive advantage include competent human resource personnel, access to cheap raw materials, innovative employees and new technologies that can aid in manufacturing the process. A company that has competitive advantage bears one or many attributes that enables it to minimise competition and stay ahead of its rivals (Collins and Porter, 1990, pg. 102). Brief description of the competitive strategy used by Apple Incorporation The Apple Company uses a combination of competitive strategies, which include the differentiation and innovation strategy. The founder and former Chief Executive Officer, Steve Jobs, was very keen on the two strategies. Innovation strategy involves introducing entirely new services and products, which are better than the rivals’ products (Wooten, 2010, pg. 4). Differentiation strategy involves producing and releasing into the market, a wide range of products and services that the rival companies are not offering. These two strategies complement each other because a company cannot use differentiation if it lacks innovation (Olsen, 2012, pg. 38). Strategy used by Apple Incorporation This report will discuss the competitive strategy that is used by Apple Incorporation, which include innovation and differentiation strategy. Innovation and differentiation Strategy As its advertisement slogan goes, “Think Different”, Apple Incorporation is definitely one of the most innovative companies when compared to other Information Technology firms. The company is known for releasing unique products and services that other companies try to copy (Doeden, 2012, pg. 7). The employees are put in teams where they brainstorm and come up with creative ideas, which are reviewed and improved by others until they are developed into new products or services. The company’s design teams are tasked with making intuitive products that will not require the user to spend too much time reading the instruction manuals. This helps the company to develop and design new products that are user-friendly, therefore, attracting more customers (Thomke and Feinberg, 2010, pg. 1). Apple Incorporation is known for introducing many products and services into the market. In 1993, the Apple Company introduced the personal digital assistant, popularly known as the PDA. This was a new innovation that gave them recognition (Shih, Lakhani and Nagy, 2010, pg. 4). In 1998, Apple Incorporation released the iMac with an operating system that the company had innovated. Unlike other personal computers developed by other companies, the iMac used an operating system specially designed for it. This was an innovation, which helped Apple Incorporation consolidate its customer base since they would have to purchase Apple products after buying the computer. The company was keen on the design, therefore, offered the customers a great experience (Harris, 2010, pg. 3). Another example of Apple’s innovation strategy came in 2001 when the company established iTunes. They introduced the iPod, which could be synced with the iTunes software and this made Apple a digital asset management company. They developed iTunes to become the leading music retailer in the world. Other unique innovations that Apple Incorporation has introduced to its customers include the iLife, iWork, Mac application store, iCloud, iPad tablets, Apple television and the iPhone series (Furfie, 2010, pg. 34). The new products that Apple Incorporation introduces in the market attract people as they are curious to see what new feature they have or the new services. The customers are now aware that every time the apple Company introduces a new product, there is something new and better about it (Islam and Ozean, 2012, pg. 27). As written previously, differentiation goes hand in hand with innovation. It involves manufacturing and releasing many new products and services, which the rival companies are not offering in the market. Apple Incorporation releases a product or service, which complements another preceding item (Apple, 2014). For example, the Mac was released in conjunction with the iOS. Years later the Mac application store where the customers could buy applications was released. This is differentiation. The applications can only be used in the Mac and are only available in the Apple-related store meaning that the customer cannot get the services elsewhere. Many of the products and services produced by Apple Incorporation rely on Apple developed software and hardware (Lusted, 2012, pg. 12). The company has also introduced very many programs that can only be used with Apple products. Applications such as the iBookstore are used in the iPad tablets to assist the customers in buying and reading books conveniently. The iCloud can only be used by Apple customers. The company has created a community and many people are attracted to it. For example, Apple Incorporation introduced a new experience when it released the iPod and iTunes. Many people wanted to experience the digital music Apple lifestyle, therefore, bought the products, which attracted more customers. Through branding their products and services, they have made an Apple community, which attracts many people (Lusted, 2012, pg. 9). Advantages of this strategy This strategy helps Apple Incorporation to beat its competition since it promotes brand loyalty. In order to use the company’s products conveniently, the customer has to rely on other services provided by the company. Luckily, the company offers great services and products, therefore, making it worthwhile for the customers (Harris, 2010, pg. 5). The customers can always expect new products from the company. Since the company released the iPod, it has continued to provide new technological gadgets for the customers, thus being able to attract more customers who want to be part of the new experience (Thomke and Feinberg, 2010, pg. 8). The company makes a lot of profits by introducing new products after a while. Statistics show that the customers usually pre-order the products due to the huge demand. This enables the company to make huge profits and persist in its main goal, which is to provide the best experience for the customer through innovations (Thomke and Feinberg, 2010, pg. 8). Disadvantages of the strategy This strategy was implemented during the leadership of Steve Jobs and many people wonder whether the company will be able to sustain the creativity levels after his death. The company had relied heavily on Jobs for innovation and designs and his death may affect the strategy. Secondly, the innovations are too pricy. Although Apple Incorporation releases new products after a short while, they tend to be expensive thus discouraging some people. This can make them lose some customers. Thirdly, some new products are faulty. Take the example of the Apple iPod Nano, which had a faulty screen and broke after being subjected to little pressure (Harris, 2010, pg. 6). Conclusion There are many business strategies although this report concentrated on competitive strategies, which are decisions and actions taken by companies to ensure that they have competitive advantage over their competitors (Teece, 2010, pg. 180). In order to understand the competitive strategy used by Apple Incorporation, we have to explain its meaning. Competitive strategy comprises of the actions and approaches that a company takes to attract customers, defy competitive pressures, and enhance its market share Successful business strategies are based on sustainable competitive advantage (Collins and Porter, 1990, pg. 103). The report indicates that Apple Incorporation uses innovation and differentiation strategy to gain competitive advantage over its competitors. Recommendations The Apple Company is doing well in terms of sales. However, there are some recommendations that can be made to ensure that the sales increase. Firstly, the company needs to offer reasonable prices for some of its highly priced products. If the company lowered its prices, it could penetrate some markets for example, Africa, Asia and some parts of Eastern Europe. Secondly, the company needs to innovate fast because some of its products have easily been substituted by other products from their competitor. Take the example of Samsung and Nokia. Samsung competed effectively after Apple released iPhone 5 with the Samsung Galaxy, which many customers view to be superior to the Apple iPhone 5. Thirdly, Apple needs to compete aggressively in the international markets with other competitors because it more famous in the United States than in any other country. If the company’s leaders can pursue the International markets, the company would make more profits (Islam and Ozean, 2012, pg. 39). References Apple. (n.d.). Apple. Viewed January 18, 2014 from . Bejarin, B. (2011, February 6). 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