Strategic Management - Apple Inc, Walt Disney Company, Wal-Mart - Case Study Example

Research Paper: Strategic Management Contents Contents 2 Apple Inc. 3 PEST-NED 3 Porters 5 Forces 4 Porters Generic Strategies 6 Mission and Vision 7Core Competence 7 Walt Disney Company 8 PEST-NED 8 Porters 5 Forces 10 Porters Generic Strategy 11 Mission and Vision 12 Core Competencies 13 Wal-Mart (International) 14 PEST-NED 14 Porters 5 Forces 16 Porters Generic Strategies 17 Mission and Vision 18 Core Competencies 19 19 Reference List 20 Apple Inc. PEST-NED Political Apple Inc. is a multinational company that operates in various economies of the world. The company abides by political norms of all countries where it operates. Some emerging markets government authorities have reduced foreign investment related preferential policies in their economies for protecting domestic business firms against stiff competition. As in China, Apple stores need to pay special taxes under the regime of the new Foreign Enterprise Income Tax Law PRC (Grin, 2014). Political wars and bureaucracies across markets also significantly impact Apple Inc. stores commerce. Economical Apple’s business across dissimilar markets is subjected to numerous exchange rate and currency risks. After the recession in 2008, aggregate sale of Apple’s electronic gadgets from its stores located in certain western nations like, Portugal, Greece, Italy and U.K., have declined (Apple Inc., 2014). On the other hand, aggregate demand for its products from the stores of emerging markets such as, India, Indonesia and Turkey, have greatly enhanced. Social In the virtual world of electronics, Apple is considered to be a global leader. With rise in per person income level and discretionary spending, living standard of individuals worldwide has enhanced. This has helped to improve the demand for superior technological gadgets. Rather, some popular products available in Apple stores such as iPad, iPhone and iMac, serve as status symbol products (Apple Inc., 2014). Demand for such goods increases in the market with rise in its price levels. Additionally, it is estimated that global population annually increases by 1.7% (Apple Inc., 2014). Rise in aggregate population also enhances demand for Apple Inc’s products. Technological In the global forum, the computer software and hardware industry have significantly progressed with the essence of new technological innovations. However, preference patterns of consumers in the market for electronic products have become highly volatile with rapid advancements in technology. So, in order to make its products highly competent, Apple Inc. makes large research and development related investments in business. In 2012, gross investment of Apple in R&D was approximately $ 3.4 billion (Apple Inc., 2014). With the help of such investments, the company manufactures superior new innovative technological gadgets. However, cost experienced by the concern for patenting such rare and non-imitable products is high. Natural Environment The public and private authorities across most nations have become highly conscious about protecting and preserving aesthetic values of natural environment. The market powers and brand values of organizations are highly dependent on corporate social responsibility related activities. Apple Inc. claims to manufacture high quality green electronic goods. The company operates on the basis of Triple Bottom line, by virtue of which it attempts to improve outcomes relating to business profits, planet and people. Demographics The company aims to pursue business-to-consumer commercial dealings. The potential buyers of products of Apple Inc. are creative and commercial professional as well as academic students. Nonetheless, it should be noted that the company settles premium prices for its goods. Hence, in terms of demographics, target customers of the company are the rich and higher middle income group of customers. Porters 5 Forces Bargaining Power of Buyers (moderate) The computer electronics and hardware product industry is highly competitive in nature. Companies like, Microsoft Corporation, IBM, Samsung Electronics Co. and Dell Inc., manufactures high quality electronic gadgets (Apple Inc., 2014). These firms are potential competitors of Apple Inc. So, switching cost of buyers within this industry is low. Yet, Apple enjoys high brand value in the market and is able to charge premium prices for its differentiated products. Thus, bargaining power of buyers for the distinguished products of Apple Inc. is moderate. Bargaining Power of Suppliers (low) The scale and scope of business operations of Apple Inc. is extremely wide. Numerous semi-finished intermediate products and raw materials are procured by Apple from its suppliers. Since the company makes bulk purchases of such resources, bargaining power of suppliers faced by the concern is low. The Apple Supplier EHS Academy helps to train most loyal suppliers of the company in ways through which they are able to provide their best services (Apple Inc., 2014). Threat of New Entrants (low) The threat of new entrants in the computer hardware and software industry is very low. When a new company aims to manufacture electronic gadgets, huge capital investable funds are required. Rather, existing manufacturing technologies within the industry are all patented and cannot be used by a new company. Potential market players within such industries often create artificial entry barriers for new entrants. Threat of Exiting Rivalry (high) Apple Inc. conducts its commercial activities in a highly competitive market. Dell Inc., Microsoft Corporation and Lenovo Group Limited are some of the potential market rivals of Apple Inc. Apple Inc.’s personal computer’s (MAC) market demand have recently declined due to higher popularly of similar desktop computers manufactured by Sony, IMB and Microsoft. Moreover, pricy products of Apple are less competent in the market. Rather, it is also noted that product substitution effect of potential consumers for such goods are high. The popularity of major Apple products like, MAC, iPad and iPod, has declined in the current era (Apple Inc., 2014). At the same time, Apple’s music software, iTunes, has also lost its reputation due to increasingly trend of downloading free music from internet sites. Threat of Substitutes (moderate) The threat of substitutes faced by the company is moderate in nature. Personal computers, mobile phones, operating systems and tablets, which are produced by the company, have no threateningly close substitutes. However, it is true that the company’s music software, iTunes, is facing high threats of substitution (Apple Inc., 2014). Consumers primarily prefer to download music for free from numerous internet sites, instead of paying high prices for higher quality music from Apple’s iTunes. Hence, the firm experiences moderate threat of substitutes in the market. Porters Generic Strategies Cost Leadership strategy In order to gain higher competency and competitiveness in the technology industry, Apple Inc. implements the cost leadership strategy. The officials of Apple Inc. try to lower manufacturing and distributing cost in business. The company accrues cheap labor resource from nations with relatively lower currency values. It tries to maximize revenue and increase product production capacity for experiencing economies of scale in manufacturing process. Apple Inc. lowers its resource accruing expenditure by outsourcing certain resources over which it does not have competitive advantage (Fadaei, 2014). Differentiation Strategy The company conducts business in a monopolistically competitive marketplace. By implementing differentiation strategy, Apple Inc. tries to gain core competencies in the industry. The latest launched smart phone model of the company is iPhone 5 (Apple Inc., 2014). It has also declared to soon launch a new i-watch in the market. The company owns unique laser and mining machines, which helps to manufacture high differentiated electronic gadgets for customers. Focus Strategy The company employs focus strategy, which at a particular point of time, help to exploit resources in expansion of a single narrow industrial segment. By upholding its music software, iTunes, Apple Inc. tries to promote the value of digital music in the contemporary era. It also tries to win over the smart phone market by constantly launching a new version of iPhone every year. Mission and Vision Apple Inc. tries to foreground and emphasize upon quality and performance of most recent product lines. This is one of its primary business missions. It aspires to bring about a positive progressive revolution within the software and microcomputer industry. Though high quality services and products, the firm attempts to enhance utility levels of all its business stakeholders. Vision Statement The company claims to primarily concentrate on making new product and process related innovations. It aims to provide high quality products to its customers. The company also asserts on applying differentiated strategy in business (Grin, 2014). Core Competence From the above analysis, it is evident that the industry in which Apple conducts commercial operations is highly competitive in nature. At this juncture, a company can beat competition only by gaining adequate core competencies in business. The exclusive product and process innovations introduced by Apple are its core competencies in business. It is also found that the vertically integrated special buyer’s structure of Apple Inc.’s organizing body helps to accumulate free productive resources that are utilized for enhancing core competencies. The company enhances the competencies by designing superior user-friendly products for its clientele. Apple Inc. also implements the strategy of outsource manufacturing (Apple, 2014). Under this regime, the firm outsources several intermediate products over which it does not possess competitive cost advantages. Through outsource manufacturing, Apple Inc. is able to achieve higher efficiency in the manufacturing process. In addition, it should be noted that exclusive skilled labor force of Apple Inc also acts as a rare non-imitable business resource. Walt Disney Company PEST-NED Political Being a multinational concern, Walt Disney needs to abide by all political regulations across its different markets. As scope and scale of industrialization is rapidly increasing across nations, value as well as cost of productive land is incrementing. Political authorities of most nations have imposed heavy regulations and taxes on land trading. Companies like, Walt Disney, requires large amount of land to create theme parks and hence, have to bear heavy costs associated with land trading (The Walt Disney Company, 2014). Economical After the global financial crisis in 2008, gross employment opportunities and per capita income levels of individuals living in developed economies have notably fallen. This has reduced disposable income as well as demand for entertainment services of these consumers. On the other hand, aggregate spending on comfort services is increasing in emerging nations with rise in the proportion of middle income group. Due to such factors, it is found that Walt Disney’s business in countries located in West Europe and North America have drastically declined. Nonetheless, its commercial revenue from new Asian markets such as, Singapore and Hong Kong, are increasing with time. Social Over time, employment and income opportunities of individuals across different nations have significantly improved. The aggregate living standards of individuals are being enhanced with passage of time, which in turn is heightening demand for Walt Disney’s entertainment products and services. Moreover, individuals of the modern era are highly brand conscious in nature and like to avail world class entertainment services of Walt Disney. Technological As the extent of industrialization has increased across nations, state of technological knowhow has also enhanced. The companies in the contemporary era try to invent new technologies in order to enhance their market competency. International Association of Amusement Parks and Attractions (IAAPA) is an organization that conducts special exhibition events, where new technologies used in amusement parks are displayed (The Walt Disney Company, 2014). Walt Disney has appropriately acquired productive technologies in business for the purpose of designing exclusive rollercoaster rides and other audio video entertainment services. The interactive technology and special effects used in theme parks of the company have gained popularity among consumers all over the world. However, it should be noted that Walt Disney needs to invest large amounts of money in order to utilize modern technology while devising products or services. Natural Environment The entertainment and theme park business generates seasonal profits. Walt Disney’s annual sales and surplus are also subjected to seasonal fluctuations. The company is often forced to close its amusement parks during winter and bad weather conditions in some countries. A special forecast of storm or rain also lowers the footfall in these parks. Even so, during holidays in summer or Christmas, aggregate demand for videos and amusement park services of the company rises substantially (The Walt Disney Company, 2014). Nevertheless, as the company experiences seasonal profit, it only gets to reconstruct resorts and parks during off seasons (The Walt Disney Company, 2011). Demographics The most potential consumers of Walt Disney are children. Also, the amusement parks and resorts are visited by middle aged and young adults. Since, products and services of the company provides entertainment and adventure for students, children are its most loyal clientele. In terms of income demographics, most potential customers of Walt Disney are middle and higher middle income group of individuals. Porters 5 Forces Bargaining Power of Buyers (low) The prices of products and services provided by companies within the mass media industry have substantially increased with rise in market demand. Additionally, companies like, Walt Disney, enjoys high brand value and reputation in the market. So, the bargaining power of buyers for its products and services is low. It is also found that during recession in 2008, prices of tickets and services in the amusement parks were not lowered. This caused a slump in the number of buyers within this industry. Bargaining Power of Suppliers (moderate) There are various popular suppliers for companies operating in the mass media industry. Vekoma, Intamin, Bollinger & Mabillard Arrow, S & S Power and The Gravity Group are some prominent suppliers of the amusement park companies (The Walt Disney Company, 2014). These suppliers own certain powers to manipulate the prices of raw materials and technical semi-finished products supplied. Since Walt Disney is a very popular multinational company, it makes bulk purchases from suppliers, thereby being able to lower their bargaining strength. Even so, bargaining powers of suppliers within the mass media industry have increased because of extensive competition among companies. Threat of New Entrants (moderate) The cost of business operation is very high for a new company providing entertainment services as that of Walt Disney. Moreover, after the global financial crisis in 2008, cost of borrowing money has considerably increased for new emerging business firms. Geauga Lake (OH), Six Flags Kentucky Kingdom, Cyprus Gardens, Astroland are companies owning amusement parks, which have recently ceased operations due to excessive costs (The Walt Disney Company, 2014). On the contrary, in countries like, Dubai, Hong Kong and Shanghai, numerous entertainment and amusement parks are opening up. Hence, Walt Disney faces moderate threat of new entrants in the global market. Threat of Existing Rivalry (high) The degree of competition within the mass media and entertainment industry is high. Companies like, Cedar Fair, Merlin Entertainment and Universal Parks and Resorts, are potential market rivals of Walt Disney. Due to excessive competition, these companies invest large sums of money for modernizing business technology and marketing products and services to consumers. The bargaining powers of suppliers have also increased for extensive rivalry between companies within this industry. Threat of Substitutes (high) There are different types of substitutes for amusement parks and entertainment movies. Children often prefer to participate in various sports events like, football, cricket and soccer, instead of visiting theme parks or watching Walt Disney movies (The Walt Disney Company, 2014). Moreover, after school recreation clubs have also become very popular in western countries. Working parents send their children in such clubs, where they practice non-academic activities like, art, craft and dance. Such alternative recreation facilities provided to children are substitutes of Walt Disney’s products and services. Porters Generic Strategy Segmentation Strategy The focus strategy of Walt Disney encompasses features of segmentation strategy. The company utilizes the method of market segmentation for targeting potential business clients. Walt Disney operates in its target customers through demographic method of segmentation. On the basis of income and age, the company segregates its loyal clientele. Additionally, the company primarily focuses on the business of amusement parks. In 2013, Walt Disney had planned to open up a new amusement park in Israeli, claimed to be 30000 square feet long. It is also making a new Toy Story Land in Hong Kong since 2009 (The Walt Disney Company, 2014). Cost Leadership Strategy Business internationalization is actively pursued by Walt Disney. The company is making attempts to extend in some of the prosperous emerging economies. By increasing the scale of operations, Walt Disney aims to lower its manufacturing cost. The company has introduced special discounts during occasions and provides additional incentives to loyal customers. Such discounts offered helps to increase its market demand and in turn enhances the business scale. With rise in scale of operations, overall manufacturing cost incurred by Walt Disney greatly reduces. Differentiation Strategy Walt Disney operates in a monopolistically competitive market structure, which strongly demands implementation of differentiation strategy in business. The company parks a wide base of loyal customers by providing services, which are qualitatively superior to that of its market competitors. Theme parks, studios, shopping destinations and resorts of the company portray certain unique features, which provide superior entertainments to customers. Walt Disney tries to differentiate its brand name by regularly practicing social responsibility related activities. It had won the CR Reporting Award in 2008 for the same. All these activities enhance brand value of the concern in the market and improve business profit. Mission and Vision Mission Statement Walt Disney desires to become the most popular and leading provider of entertainment across the globe. It aims to provide creative amusements to customers, by utilizing innovative technologies in products and services offered. Through such activities, the concern also seeks to maximize profit subjected to minimization of cost in business (The Walt Disney Company, 2012). Vision The company’s primary business vision is to simply enhance its business economic surplus. Nevertheless, by doing so, it aims to increase utility level of its stakeholders by way of providing them quality services. Walt Disney also claims to be highly socially responsible in all commercial activities conducted. The mission and vision statement of Walt Disney focuses on attaining environment stewardship while meeting desired business goals and objectives. Core Competencies Walt Disney owns special resources in businesses that are non-imitable and rare. Acquisition of such factors enhances its market competency. Animatronics show, design storytelling, themed atmospheric attractions and story creation are some of the unique services offered by the concern. These services of the organization render differentiation strategy more effective and enhance its commercial competitiveness. Even so, skilled workforce of Walt Disney is considered to be one of its core competencies. The skilled and semi-skilled workers of Walt Disney are highly productive and ensure business progress. Wal-Mart (International) PEST-NED Political WalMart strictly abides by the business related policies imposed by political authorities of marketplaces, where it operates. The company’s operations and profits are greatly influenced by competition laws, labor training rules and taxation policies across different economies. It is found that in the current era, the company is facing certain legal problems associated with gender discrimination. The political authorities are very strict about regulations and norms relating to workplace equality and ethics. If WalMart breaches any such rules, then its brand value and economic prosperity can substantially decline in the market. Economical Over time, per capita income levels of individuals have improved in most economies around the world. The living standards of contemporary consumers are high as they are able to experience higher purchasing power to buy various useful goods and services. Due to such factors, the retailing industry has successfully gained a strong foothold in the global forum. WalMart is extensively sensitive to changes in the economy. Its business growth model aims to maximize revenue, but not profit. During the recession in 2008, WalMart aimed to increase volume of its sales by implementing low price strategy in business. So, upcoming risks and opportunities are tackled by the concern by way of analyzing trends of the global economy. Social The cultural values and social attitudes of individuals around the world considerably influence commercial activities of retailing companies. The aggregate demands for durable use consumer goods and services in the retailing industry have risen with growth of suburban communities worldwide. Retailing companies, like, WalMart, have established business branches with the essence of high degree of urbanization in major economies. Furthermore, modern professionals are extremely busy and hence, prefer shopping at one-stop stores of WalMart, where daily, necessary as well as comfort products are available under one roof. In 2008, it was estimated that in America, there are 4017 WalMart stores (Wei, et al., 2008). Technological WalMart has considerably benefited from improvements made in the state of technology in recent times. The company uses superior technical software services for keeping track of inventory or restocking its shelves. The company has made large investments for modifying its cross-docking inventory system (Wei, et al., 2008). By making use of modern technologies, WalMart has lowered its aggregate operational cost. Digital markets have become popular shopping destinations, which has been facilitated through greater usage of smart technical gadgets. The revenue generated by WalMart from its online stores is increasing rapidly with time. Natural Environment The public and private authorities across the globe have become highly concerned about protecting and preserving the natural environment. The brand value of an organization substantially depends on social responsibility related activities that it undertakes. WalMart claims that social responsibility is a part of its commercial accountability. The concern aims to use 100% renewable energy resources. The company asserts on generating minimum non-biodegradable wastes as well as selling environmentally sustainable products to its customers. Demographics The demographic segments of the company are globally determined. The factors that the company considers while segmenting markets are population strength, geographic size and age structure. The company classifies its customer segments in terms of age, income brackets and ethnicity by making use of sales and inventory data. Through such segmentation, the company tries to provide services that can help to enhance utility levels of the consumers. Porters 5 Forces Bargaining Power of Buyers (low) In general, bargaining power of buyers is high in retailing industry. There are numerous forms and types of retailing business organizations. So, switching costs of buyers are low in this industry. Nonetheless, WalMart has become a prominent retailing concern across all economies. Since its inception, the company has attracted a large base of loyal customers and hence, bargaining power of a single buyer is low for WalMart. Several consumer groups had complained about the concern’s unethical pricing techniques, but were unable to create a prominent impact on company operations. In addition, the distribution network of WalMart is vast and consumers across different marketplaces are able to visit its stores with great convenience. Sometimes, even though consumers are dissatisfied with the prices of WalMart, yet they visit its stores because of travelling convenience (Renkow, 2005). Bargaining Power of Suppliers (moderate) WalMart is a giant multinational company, which purchases in bulk from different suppliers and wholesalers. It often manipulates procurement costs of supplied products and hence, bargaining powers of its market suppliers are low. Procter&Gamble and Coca Cola are multinational suppliers of the company (Renkow, 2005). The bargaining powers of these suppliers are high against WalMart. Thus, overall bargaining powers of the suppliers are moderate for WalMart. Threat of New Entrants (low) The cost of borrowing money for commencing a new business is high in the current dynamic world. New business formation rate has declined after the recession in 2008 across several western countries. Small scale grocers can easily borrow money and become retailers, but availability of investable funds in the contemporary market is rather low. Contrarily, giant retailing companies like, Tesco and WalMart, experience economies of scale in business. Special price discounts and offers are offered by these companies owing to their large financial resources, high brand value and low average costs of manufacturing. Such factors create entry barriers for new companies in the retailing industry (Renkow, 2005). Threat of Existing Rivalry (high) The global retailing industry is highly competitive in nature. Some prominent competitors of WalMart are Target, Kmart, Tesco and Sears (Renkow, 2005). Several small scale retailers are also competitors of WalMart. Dollar store is a small retailing company that is found to capture several small niche markets, thereby taking away WalMart’s market share. WalMart desires to expand its business in some of the emerging markets like, China. However, Tesco, a giant retailing multinational of U.K., has turned out to be the company’s most potent market rival in China. Another popular retailing company named Target, has decided to expand its business by acquiring Canadian Zellers stores. It is claimed by some researchers that greater variety of goods are available in Target stores than the departmental shops of WalMart. Companies like, Metro and Shinsegae, are few popular rivals of WalMart in Germany and South Korea respectively (Renkow, 2005). Threat of Substitutes (low) Consumers can avail similar branded products from different retailing outlets. Then again, it is also true that very few retailers can settle prices as low as WalMart. Online retailing companies like, eBay and Amazon, also provide special discounts to consumers, as far as non-traditional way of purchasing is concerned. Certain researchers claim that both perishable and non-perishable consumer goods are most proficiently purchased through traditional shopping approaches. Porters Generic Strategies Cost Leadership Strategy The founder of WalMart, Sam Walton, had desired to conduct business operations in ways, which would benefit rural individuals. Other retailing companies like, Sears and Kmart, used to primarily serve urban customers. Since its inception, WalMart implements superior technologies and strategies in business; these help to experience low cost as well as to offer relatively less pricy products to buyers (George and Jones, 2002). Differentiation Strategy Some special stores of WalMart that are located on Saks Fifth Avenue and Neiman Marcus, Nordstrom serve unique, customized products and services to affluent buyers. The company provides services to low and middle income customers as well as caters to rich buyers by way of providing differentiated services. Apart from selling reasonable prices apparels, WalMart stores sell special branded clothes of Christian Dior and Calvin Klein (George and Jones, 2002). Focus Strategy The company primarily focuses on providing services to the middle income group of individuals. It is the most popular retailer in the world, in terms of discount offerings. The company emphasizes on extending business branches across emerging nations of the world. Mexico and India are few of the emerging countries, where WalMart desires to conduct expansion (George and Jones, 2002). Mission and Vision Mission Statement The primary business mission of the organization is to augment savings of consumers as well as improve their living standards. The primary goal of the founder of WalMart, Sam Walton was to enhance commoners’ quality of living. The concern also attempts to lower cost through its entire supply chain. The business mission of WalMart has helped to formulate unique policies for conducting business in an efficient manner. Some of such policies are: Open door policy Slowdown rule Servant leadership 10 foot rule WalMart Cheer The three basic activities of the company are: Respecting individuals Motivating for excellence Service to customers Vision Statement As business vision, the company desires to promote ethical culture followed to all business stakeholders globally. The company aims to work with integrity, fairness, diversity and respect. Core Competencies Core competency of an organization refers to special resources or activities over which a company owns competitive advantage. WalMart’s biggest competency is its low operating cost. By being able to set lowest possible prices for majority of products, the company has gained significant competitive advantage against its rivals. WalMart maintains profitability with a low profit margin and constant maximization of sales volume. The work culture of the company is also flexible and its workers are highly productive in nature. The wide business distribution network of WalMart is considered to be its unique commercial capability (Banjo, 2013). Reference List Apple Inc., 2014. Apple. [online] Available at: [Accessed 16 May 2014]. Apple, 2014. Supplier responsibility. [online] Available at: < https://www.apple.com/supplier-responsibility/> [Accessed 16 May 2014]. Banjo, S., 2013. WalMart retools international strategy. The Wall Street Journal, 15 October. Fadaei, R., 2014. Apple marketing analysis report: Apple iphone case study. [online] Available at: [Accessed 16 May 2014]. George, J. M. and Jones, G. R., 2002. Porters generic strategies. [online] Available at: [Accessed 16 May 2014]. Grin, M., 2014. Apple Inc. - An analysis [online] Available at: [Accessed 16 May 2014]. Renkow, M., 2005. WalMart and the local economy. [pdf] NCCES Available at: [Accessed 16 May 2014]. The Walt Disney Company, 2011. 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