Apple: Strategic Analysis - Assignment Example

APPLE Strategic Analysis Question Assessing major macro environmental trends which are facing apple as they operate in the sector and highlight implications on the organizations strategic decisions of the trends identified. Macro environmental forces In the business sector, the marketing department of a company focuses on a sales environment which could be impacted by certain factors which are external to the company and are often beyond its control. According to Teece (1991), Macro-environmental elements include certain crucial sales and marketing concepts such as demography, economical, technological, social and cultural factors as well as political, environmental and legal factors. PESTEL ANALYSIS One of the most suitable business models for analyzing the macro environmental forces affecting a business are the PESTEL analysis and they could be used to evaluate the forces which affect the business of Apple Inc. Political Factors In 2007, AppleInc earned around 52% of its total revenue from outside the United States of America. Because of some very crucial factors, such as, awful global relations, war and terrorism, Apple Inc’s performance has been affected globally, as Apple Inc has no such influence on these factors (Duhigg, 2012). What does it mean for Apple Inc. As Apple Inc produces many of its products in countries like China and Korea, hence, poor political relations of US with any of these countries can have an adverse impact on apple inc’s business. Apple has to comply with political regulations in this regard so that it does not get bogged down in its business sector. Economic Factors The global economic crisis adversely affected Apple Inc’s performance all over the world. The unemployment rate and the inflation rate, both went high in the United States of America, which adversely affected apple inc’s performance in the united states of America. Moreover, as Apple Inc’s products are classified into luxury products, hence many of the Apple Inc’s customers subsequently started to spend less on purchasing the Apple Inc’s products. Besides that, the international worth of us dollar continued to fluctuate, which also adversely affected Apple Inc’s business, all over the world (Low & Pittaway, 2008). What does it mean for Apple Inc. In order to prevent itself from the adverse effect of the global financial crisis, Apple Inc subsequently purchased foreign countries, which assisted Apple Inc to stabilize its economic position in the technological market and thus, Apple Inc managed itself to boost its revenue in the global technological market. Social Factors The two key factors because of which today Apple Inc is the leading and dominant organization in the technological market are the quality of its product and the design of its products. Globalization has played the most significant role in making apple Inc, the leading gadget manufacturer in the technological industry. As the modern world depends a lot on the gadgets, hence apple Inc has effectively capitalized this opportunity by manufacturing such quality products which helped it to become the dominant organization in the technological industry.According to Hoog and Strzempka, (2011), the purchasing power of people in various counters of the world has risen; hence they can afford to purchase the luxury products of apple Inc, like, phone, iPod and iPod.  What does it mean for Apple Inc. People in various regions of the world consider the products of apple Inc as a status symbol. Due to this reason, Apple Inc. would be able to further boost the sales of its products and can expand its horizons in various other regions.  Technological Factors The core behind the fact that how Apple Inc has managed to become the leading brand when it comes to manufacturing and launching the latest innovative products in the technological market, is because Apple Inc invests a significant portion of the amount of its total revenue on its product research and development activities (Nonala & Kenney, 1991).In the modern world, technology changes very rapidly, which has radically abridged the product life cycle. Moreover, the technological market is expanding and becoming increasingly cutthroat, because various brands are manufacturing and launching the latest innovative products in the technological market. What does it mean for Apple Inc. Amongst all the gadget manufacturing companies, Apple Inc has been the leading gadget manufacturing company in the technological market, because of the superior quality products which it offers to its customers. Environmental Analysis According to Lessin (2013), Various international laws and regulations have made manufacturers companies like Apple are directly responsible for reusing and recycling and that is certainly what Apple Inc. does by introducing domestic and local recycling facilities and never uses shipping waste overseas. What does it mean for Apple Inc. Apple Inc. has also enhanced its reputation formore greenerand environmental friendly production. This had made Apple Inc. a company who has felt its responsibility and has considers its importance in the business sector. Legal Factors The reason behind why Apple Inc should be prudent regarding the legal factors affecting its business strategy is that the rules and procedures of conducting business operations vary from region to region and if Apple Inc does not comply with it, than it would be very risky for Apple to sustain its global brand image. What does it mean for Apple Inc. It is necessary for Apple Inc. to continue to operate its business operations according to the relevant legal business procedures. References Duhigg, C. 2012. How Apple sidesteps billions in taxes. New York Times, Issue of 4-20-12. Hoog, A., & Strzempka, K. 2011. iPhone and iOS Forensics: Investigation, Analysis and Mobile Security for Apple iPhone, iPad and iOS Devices. Elsevier Low, D. K., & Pittaway, A. P. 2008. The ‘iPhone’ induction–a novel use for the Apple I-Phone, Pediatric Anesthesia, 18(6), 573-574. Lessin, J. 2013. "Exclusive: Apple Buys (Another) Map App, Embark". Jessica Lessin. Jessica Lessin. Retrieved August 24, 2013 Nonala, I., & Kenney, M. 1991, “Towards a new theory of innovation management: a case study comparing Canon, Inc. and Apple Computer”, Inc. Journal of Engineering and Technology Management, 8(1), 67-83. Question 2 At corporate level there are alternative strategic options available for growth that an organization can take in terms of choices about products or markets. The Ansoff Matrix can be used to identify various strategies which could be adopted by an organization to pursue growth. Using the Ansoff Matrix and making reference to examples, evaluate the various strategies that Apple could consider in order to pursue growth to develop their competitive position ANSOFF MATRIX Definition The Ansoff matrix has been designed for the purpose of facilitating the managers to evaluate various ways through which they can expand their business either by selling the existing or new products and services in the existing or in the new markets. The Ansoff Matrix can be a very effective business strategy for apple Inc because apple Inc is well aware regarding how to expand its business portfolio and also how toreduce the risks which possibly can arise because of different market pressure (Ansoff, 1980).The Ansoff matrix has been further divided in to four different marketing strategies, which are as follows: Market Penetration Market penetration refers to enhancing a company’s market share through selling either new products or services or further developed products and services to the existing customers in the market (Shimizu, 2009). Besides that, a company may also seek for a new class of customers for the purpose of selling its new or further developed products or services. It can be a very effective marketing strategy for Apple Inc because Apple Inc has sufficient resources for the purpose of marketing and promoting its products through its global brand worth. Example More advertisement and marketing and discounted prices on Mac Computers will propel potential customers which prefer Macintosh rather than Windows. It is a highly affective and beneficial strategy because it will help to capture markets which have potential and growth in such developing markets because in such developing areas, products will be at a rising stage. Product Development According to Solis (2011), product development refers to making new productsorservices or making further enhanced products or services for the purpose of selling them to the existing clients and customers. Apple Inc has also adapted this marketing strategy and it launches new products, on constant basis, in various markets of the world for its existing customers. Besides that, by further enhancing its existing products and fulfilling the needs and demands of its customers, on regular intervals, Apple Inc has quite successfully enabled itself to surpass its competitors in the technological market. Example With respect to product development, an example could be iPod. The first ever iPod introduced and developed by Apple was in 2001. The major reason behind the development of the iPod was it allowed potential users to hear their favorite music with relative ease. However, the first iPod had only 5GB of space and was black and white in color. Due to this reason, Apple introduced an iPod with an increased capacity of 40GB. After that it constantly launched new iPods with enhanced capacity. Market Development Market development refers to searching new markets for the purpose of launching new products or services in that particular market (Teece, 1991). Besides that, a company may also launch its existing products or services, which might be further enhanced, in such a new market. Although, Apple Inc has holds a huge market share in the technology industries of UK, Europe and North America, however, if Apple Inc develops its products in the markets of Africa and Asia, then Apple Inc can capitalize the opportunity to form a new class of customers in the technology industries of Africa and Asia. Example An example in this regard is whenever Apple is able to introduce a new product for the market, the company leaves its previous products in the market for customers which have relatively low income and are unable to buy it. According to Sheen (2004), customers in some parts of Asia and Africa are unable to buy the latest Apple product due to their low purchasing power and by this strategy, Apple is able to gain a new market and even make a modest profit as more and more customers can purchase its products. Diversification Diversification refers to transferring the new products or services in the new markets, for the purpose of launching such new products or services in such new markets (Porter, 1997).The adaption of this marketing strategy by Apple Inc may cause apple Inc a setback, because Apple Inc is an extremely reputable and acolossal brand and it carries on its back a lot of expectations of its stakeholders. Example An example in this regard was the introduction of iPad by Apple in 2010. By launching IPad, Apple tried to target the market with customers who were constantly using the internet and were unable to carry a laptop with them. By launching the IPad, Apple did not only enter a relatively new market but it even created a revolution in the technological sector. Risk Assessment through Ansoff Matrix After thoroughly analyzing the above four marketing strategies, it can be concluded that amongst the above four marketing strategies, diversification could be the most dicey marketing strategy for Apple Inc. The reason behind why the adaption of diversification can cause a setback to Apple Inc is because if Apple Inc adapts this marketing strategy then it has to expand its business portfolio and has to transfer a significant portion of its business operations in the other markets, which can adversely affect the stability in the business operations of Apple Inc. References Ansoff, H. I. 1980. Strategic issue management, Strategic Management Journal, 1(2), 131-148 Porter, M. 1997. How much does industry matter? Strategic Management Journal, Vol. 18, pp 15-30. Solis, B., 2011. Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web. John Wiley & Sons, Inc. Shimizu, K., 2009. Advertising Theory and Strategies.. 16th ed. Tokyo: Souseisha Book Company. Teece, R., 1991. Strategic management and economics. Strategic Management Journal, 12(52), pp.5-29. Question 3 Evaluate the usefulness of the value chain in analyzing Apple’s activities and demonstrate how it can contribute to adding value in each of the areas. VALUE CHAIN ANALYSIS Primary activities The primary activities in the value chain analysis are comprised of Inbound and outbound logistics and operations. Inbound Logistics Apple Inc.’s commitment towards its manufacturing operations started when apple Inc initiated to take the appropriate steps regarding the purchase of raw materials. The reason behind why Apple Inc. could not accomplish major success in the past in the technological market was due to its overpromising and under delivered market offerings. However, apple Inc soon realized the fact that the strategy to outsource the raw materials could facilitate apple Inc to gain a competitive edge over its competitors in the technology industry.Although, outsourcing the raw materials saves a lot of time, which is spent on research, testing andcreating aprototype and also the cost as well, which is spent on research and development, technology and manpower, however, the major issue which is involved in the outsourcing of raw materials is the high acquisition cost of such raw materials (Pearce & Robinson, 1997). Outbound Logistics In case of outsourcing the raw materials, a company would then be dependent on its suppliers for the raw materials (Hand-field & Nichols, 1999).For this purpose a company then develops a control mechanism which is known as suppliers code of standard, the objective of which is to measure the manufacturing standards, labor related issues, outsourcing of raw materials, and also the aptitude to meet deadlines (Cooper, Lambert & Pagh, 1997).Acompany also expects form its supplier to realize the factthat the company operate its business functions in a dynamic style, therefore it requires from its suppliers instant reaction time and concentration (Min and Smith, 2001).Furthermore, the company also offers training and support facilities, for instance, scholastic and life skills to its suppliers’ supervisors and employees.This facilitates apple Inc to eliminate the extra costs which is required to be incurred if apple Inc manufactures newsoftware. Besides that, supplier’s knowledge is also beneficial for apple Inc, because these suppliers concentrates a lot on the quality of the raw materials which they supply to apple Inc, that is eventually employed by apple inc in its hardware, which it manufactures (Wilkins, 2006). Operations Apple inc also utilized vertical integration, which it acquired from a company which had the technology of multi-tasking operating mechanism, this business strategy of apple inc eventually facilitated it to develop Mac Os X.Moreover, this business venture also assisted apple Inc to curtail the cost regarding the development of such technology, which has now become very lucrative for apple Inc (Tan, 2001). Apple Inc. is renowned primarily for the hardware which it manufactures and also for its pre-installed software as well, which is required to operate successfully apple Inc’s hardware. The process of the assembly line starts from the suppliers and ends up to the office of hardware and software engineers. The ease of control of Apple in areas of production has made this company a powerhouse and has solidified itself in the industry. Secondary activities The secondary activities of Apple Inc. in this regard are its sales and marketing strategy. Sales and marketing Apple has done extremely well in this sector because they have applied a highly aggressive marketing strategy with attractive products and has been able to create a massive buzz in the market by launching and developing new products such as I-Phone, IPad, etc. To develop its products in various marketing regions, Apple has consistently been able to carry out some highly effective and rigorous marketing surveys and has simultaneously been able to make accurate predictions with regard to each and every market it has tried to expand in (Solis, 2011). Conclusion The value chain analysis of Apple proves that the company has done well enough to develop its new products. Apple Inc. did have to face stiff competition in each and every business sector but with the passage of time and by devising shrewd business strategies, the company has made its mark in the business sector. References Cooper, M. C., Lambert, D. M., & Pagh, J. D. 1997, Supply chain management: more than a new name for logistics. International Journal of Logistics Management, Vol.8 (1), 1-14. David, F. R. 1999. Strategic Management: Concepts and cases. Prentice Hall, Freeman, R. E. 2010.Strategic Management: A stakeholder approach. Cambridge University Press Hand-field, R. B., & Nichols, E. L. 1999.Introduction to Supply Chain Management, Upper Saddle River, NJ: Prentice Hall. Lambert, D. and Cooper, M. 1998, Supply chain management: implementation issues and research opportunities. International Journal of Logistics Management, 9(2), 1-20. Pearce, J. A., & Robinson, R. B. 1997.Strategic Management: Formulation, implementation, and control. Chicago, Illinois: Irwin. Min, S. and Smith, C. 2001, Defining supply chain management, Journal of Business Logistics, 22(2), 1-25 Sheen, W., 2004, A Comparative Study on Corporate Sponsorships in Asia and Europe. Asia Europe Journal, 2 pp 283-295. Solis, B., 2011. Engage!: The Complete Guide for Brands and Businesses to Build, Cultivate, and Measure Success in the New Web.. John Wiley & Sons, Inc. Teece, R., 1991. Strategic management and economics. Strategic management journal, 12(52), pp.5-29. Tan, K. C. 2001. A framework of supply chain management literature, European Journal of Purchasing & Supply Management, 7(1), 39-48 Wilkins, 2006. The interaction among multiple governance mechanisms in young newly public firms. Journal of Corporate Finance, 12, pp.449-66. Read More