Individual Strategic Management: Apple Inc - Case Study Example

School of Paper Prepared for Prof April, 29 Introduction Strategic management is known for being about reaching and understanding of the organization and its situation in order make choices about its future direction (Robson, 1994). This mainly involves an understanding of three factors namely: the environment, values and objectives and resources. As such, this paper summarises the strategies that are used by Apple in its operations in order to gain a competitive advantage. Section 1 Mission statement “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store and it also offers iPhones and iPads” (Blodget, 2013). Its mission statement is: “We want to leave the world better than we found it.” Social responsibility As part of its social responsibility drive, Apple Inc strives to reduce its impact on climatic change, uses greener materials and also tries to minimize the level of carbon emissions. The company does not use toxic materials in manufacturing its products since these may be detrimental to the consumers. The company also engages in other charitable events meant to uplift the welfare of the needy in different societies. Company stakeholders The company is comprised of a variety of stakeholders and these are individuals or groups of people who have a stake in the operations of the company. The employees, suppliers, distributers as well as management of the company are the stakeholders who directly control its operations. The shareholders and consumers are also major stakeholders of the company since these contribute towards the revenue it generates from its operations. Ordinary people in the environment in which the company operates are also stakeholders since they are affected by its operations. The government and other regulatory bodies are also stakeholders for this organization. Remote external environment Economic- The operations of Apple are shaped by global forces since it is a global company headquartered in California. Factors such as the global economic crisis are likely to impact on the operations of Apple. Economic factors in other countries also have an impact on Apple’s operations.   Social- the targeted consumers have different social values and these have an impact on the operations of the company in various places.   Political- political forces in different places where the company operates have an impact on its activities. Relative stability in the US and other parts of the globe where the company is based has contributed to its operations.    Technological- new technology owing to creativity and innovation has significantly impacted on the operations of the company.   Ecological- it is every company’s responsibility to make sure that the operations do not impact negatively on the ecology and environment. Apple is a good example of an organization which strives to make sure that its operations are not detrimental to the environment. Porter’s five forces model The external environment of the company can be analysed through the use of Porter’s five forces model which comprises of the following factors: barriers to entry by competitors, threat of substitute, bargaining powers of buyers, bargaining powers of suppliers and rivalry among the existing players (http://www.12manage.com/methods_porter_five_forces.html). Barriers to entry The mobile communication technology industry is capital intensive hence it may not be that easy for other new entrants to penetrate the market. This means that barriers to entry are high which cushions Apple in its operations since other players cannot easily penetrate the market and Apple also uses differentiation strategy. Substitutes There are various substitutes in the mobile communication market that can easily replace the products offered by the company. This poses challenges to the operations of the organization. In order to stay ahead of other competitors, Apple uses creativity and innovation to show that its products are unique. Bargaining powers of buyers This mainly depends on the buyers’ ability to influence the price. Apple products have premium prices which mean that the customers have little influence to change them. The products offered by Apple are specifically meant for the rich and affluent people and this strategy has helped Apple in targeting the customers. Bargaining powers of suppliers The bargaining powers of suppliers depend on the strength of the suppliers to determine the prices for the raw materials used. Apple uses highly priced quality raw material to manufacture its products which hedges against its competitors. Rivalry among competitors Competition in this industry is intense since there are also a variety of actors in this industry. These offer personal computers, smart phones, tablets among others just like Apple. This poses a serious threat to its operations though it uses innovation to manufacture state-of-the-art products that are hardly imitated by other competitors. Section Two According to Pearce & Robinson (2010), environmental analysis helps the company to identify the treats and opportunities that can help it to achieve its objectives while at the same time identifying the barriers. On the other hand, the company can harness on its strengths to direct strategy in the organization while putting measures in place to minimise the weakness. SWOT analysis for Apple is outlined below. Strengths Apple Inc is known for innovation and creativity in manufacturing its products It has a strong brand name It is responsibility to leave a small footprint It does not use harmful toxins in manufacturing its products Weaknesses Apple’s products are very expensive and this may scare away the customers Opportunities The major opportunity for the company is that it can keep pace with the technological changes taking place in the environment owing to its commitment to innovation and creativity. Threats The major threat facing the company is that competition is intense in this market. Customers can easily switch brands if they find the products offered by Apple exorbitant. Grand strategy for Apple From the analysis carried above, it can be noted that Apple has more strengths that any other factor. This is very important in as far as competitive advantage for the company is concerned. With such strengths, the company is in a better position to keep on improving its products and brand name and this helps it to be in a position to retain its old customers. This is also very important since the company is also presented with the opportunity to attract other new customers. Both old and new customers can significantly contribute towards the revenue generated by the organization. This can ensure its sustainability and viability in the long run. The weaknesses of the company can be transformed into strengths in order to help it to gain a competitive advantage. Thus, the grand strategy for the company is to harness on creativity and innovation Expansion through acquisition Assuming that the company is presented with the opportunity of expanding the market through acquisitions in order to increase its market share, it should ensure that it is acquiring a company that has a similar portfolio of products. The main strength of this strategy is that the company can be in a position to develop the product portfolio of the acquired company to suit its expected standards. However, the main weakness that is likely to be encountered is that the product portfolio may not meet the quality expectations of the products offered by Apple Inc. This may impact on the overall performance of the products offered by the company. Section Three There are quite a lot of successful organizations across the globe that have effective strategies that are difficult to be imitated by other competitors and this is known as competitive advantage (Porter, 1985). Porter’s model of competitive advantage 1985 states that there are mainly two sources of competitive advantage which namely: cost advantage and differentiation. ‘Differentiation’ is when a firm seeks to be unique in the market by offering differentiated products while ‘cost advantage’ is situation where the firm seeks to be a low producer in the market while it strives to maintain quality. Two significant recommendations for Apple In this case, it is strongly recommended that Apple should pursue with its differentiation strategy. This strategy is justified because the company can offer unique products that cannot be imitated by other competitors. For example, products such as iPod, Mac Computer, iPad and iPhone among other array of products are unique and they have premium prices. It is recommended that Apple should expand its market through targeting other new customers. Targeting a new segment of customers apart from the rich and affluent will help the company to generate more revenue from expanded customer base. Functional tactics In case of differentiation, I would focus on the functions of the products offered that make them unique from other similar products found in the market. The aim is to provide the customers with something uniquely valuable to them. In case of market expansion, focus would be put on the benefits that are likely to be derived from using a particular product by Apple. Section Four: Leadership Leadership is central to creating sustainability in any strategy direction or change initiative. It is widely recognized that for change to occur in organizations, leaders must get others to change and they themselves must also change (Jackson & Schuler, 2010). The leadership at Apple steers the company towards the attainment of the desired goals. The leadership in the company encourages strategic efforts though promoting the workers to be innovative and creative in their operations. Essentially, the leadership at Apple strives to make every person more valuable and this has positively contributed to the success of the company. Interview question “How can you, as our new leader, make our company innovative and entrepreneurial?” In answering the above question, I will categorically state that all new ideas from the employees are welcome and I will also encourage them to work as a team where they can share their ideas in a bid to create new knowledge. When employees are given the autonomy to generate new knowledge from their ideas, they are likely to be innovative in their respective tasks. Section Five: Summary and Conclusions The success of the organization mainly depends with the strategies it implements in its operations. Strategy outlines the measures that can be implemented in order to achieve the goals and vision of the company (Schultz et al, 2003). Such strategies need to be carefully managed in order for the company to gain a competitive advantage in its operations. As noted in the case of Apple Inc, strategic management is very important since it helps the company to gain a competitive advantage in its operations. The success of Apple in its operations can be attributed to the differentiation strategy it utilises in its operations. The company offers unique computers, smart phones, iPads among other valuable mobile communication devices. Premium prices are charged for the products offered to the customers since they are uniquely valuable compared to other similar products found in the market. Thus, differentiation strategy is very effective in giving the company a competitive advantage since it can appeal to the interests of the rich and affluent customers.  Section Six: Personal reflection From this course material, I have learnt a lot of things that can be applied in future whenever I decide to pursue my own business. It is essential to have entrepreneurial knowledge in order to operate viably in the market. I have also learnt that the success of any business venture mainly depends with the strategy used to achieve the set vision of the company. There are different strategies that can be taken in order to gain a competitive advantage and I am impressed that I have learned that differentiation strategy is very effective if carefully implemented in the operations of the company. I have also learnt that innovation and creativity are very important since they positively contribute to the performance of the organization. References Apple Inc. http://www.apple.com/ Blodget, H. (3 August, 2013). “Apples Mission Statement Is Making People Worry That The Company Has Gone To Hell”. Viewed from: http://www.businessinsider.com/apples-new-mission-statement-2013-8 Jackson, S.E. & Schuler R. (2000). Managing Human Resources: A Partnership Perspective. NY. South Western College Publishing. Pearce, J.A & Robinson, R.B. (2010). Strategic Management. Planning for Domestic & Global Competition. 13th Edition. J. Porter, ME 1985, Competitive Advantage; Creating and Sustaining Superior Performance, The Free Press, New York: NY. Porter’s Five Forces Model 2012, viewed from, Robson, W. (1997) Strategic Management and Information Systems. 2nd Edition. London. Prentice Hall. Schultz et al (2003). Organisational behaviour. CT. Van Schaik Publishers. Read More